Backflushing to Inaccurate Records and False Inventory
Backflushing… What’s up with that? Many manufacturing companies track material consumption according to “backflushing”, basically multiplying the recipe or bill of materials by the number of units produced. This is inherently inaccurate, because both natural and manmade materials vary in quality, size, color, concentration, etc. necessitating deviations from standard recipe/BOM. ERP systems tend to do this because they don’t have a natural access to actual scale weight or quantity measurements in the context of the production activity.
Besides giving a false impression about manufacturing costs, the impact of the discrepancies from backflushing is felt in many other ways. As inventory accuracy deteriorates from subtracting incorrect usage, unexpected materials/ingredients shortages and overages occur, resulting in changes to production schedules. These disturbances lead to suboptimal reactive measures like more frequent manual physical inventory reconciliation and variance reports. Safety stocks can reduce the frequency of checks and reduce risk of running out, but that leads to spoilage or obsolescence and means more cash tied up and space occupied.
The “best practice” is providing actual consumption measurements to ERP systems automatically,from MES/MOM systems. It can make a huge improvement to manufacturing costs, and predictability of schedules.