One of the most useful Lean concepts is Point of Use Storage or POUS. Point of Use Storage in its simplest definition is the storage of raw materials at the work centers where they are used. While this concept sounds very obvious and straightforward, it is a rare occurrence in most manufacturing plants. We are brainwashed into the accounting principle of inventory management and storage of raw materials in a central location for ease of counting and “control”. It doesn’t have to be this way!
As you begin the Lean journey and start the process of standardization of work at a work center you should address material storage locations. You should quickly recognize the benefit of POUS. One of the biggest wastes (non-value added activity) in any conventional factory is excess movement of materials. We move raw materials from the receiving dock to an incoming inspection station; then to an inventory location; then, when needed, to a work center. Tracking these movements (even with an ERP system) can lead to confusion in the inventory management system. Work in Process (WIP) often follows a similar routing. WIP goes from a work center to an inspection station, then to an inventory location, then to another work center.
The lean concept of POUS eliminates the intermediate steps and moves the raw material from the receiving dock to the work center where it is used. In some factories, the receiving dock location is omitted and the raw material is off loaded from the truck and moved straight to the work center.
What is this heresy?!! Let’s look at the omitted steps: The receiving dock (if you use the dock to accept raw material shipments and enter their receipt to your data base) could be justified as the point at which you enter the material into your ERP system. You eliminate the incoming inspection. Let’s face it; if you have to inspect the material from your vendor, you have vendor performance issues. Address those issues and get a vendor that will supply the material to your specifications, or get a new vendor.
When you move the raw material to the work center, it goes into a designated location that has been sized for the proper quantity. If the material shipment doesn’t fit, the vendor has delivered the wrong quantity. That is an issue to be solved with the vendor. You shouldn’t have to live with a vendor who can’t count properly.
The end result is material at the location where it will be used and in the proper quality and quantity. Isn’t that what you need to make a product?
There are challenges to be faced and new procedures to be worked out to get to this final solution. You need a vendor who can make deliveries promptly, and in the right quantities. This requirement may involve some negotiations by Purchasing. They may ask the vendor to deliver in smaller lots but to price the material based on the total expected deliveries over a 1 to 6 month time period. This would allow you to get the small shipments you need, and a bulk price; while the vendor gets a long term commitment from you to buy his material.
The Quality Assurance Department may have to make several visits to the vendor to ensure the material quality is acceptable. This may require work with the vendor’s manufacturing department to get their performance up to your standards. One of the requirements your vendor must accept is the marking of the material in a clear manner that your handlers can understand. Getting vendors to provide acceptable material is what QA Departments should be doing instead of inspecting incoming material.
You need to allocate the right amount of storage space at the work center. This may mean providing shelving and containers to hold the material. Consider good, clear signage to enable the material handlers to place the raw material in the right place with a minimum of confusion.
The result from this effort will be profitable! You will have simplified material handling, inventory management, storage, and material tracking. Because you have less handling of the materials, the waste and damage will decrease. In addition, you will have a vendor who is integrated with your production operation and can supply a better quality raw material.
This concept of POUS can also work in the office environment. Place the copying equipment and office supplies where they are needed, not in a place convenient to the office manager or copier equipment supplier.
POUS is a simple concept with a powerful result. Why not start now?
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