Monday, September 13, 2010

Vendor part numbers – good idea or a bad plan?

It seems that every few months I am posed with a similar question from clients. They ask me about the impact of creating vendor specific part numbers in their inventory. It seems that they believe they would get more information about an inventory item if they set up each unique vendor/item combination as a different part number also some feel if they order the materials using the vendor part number then there will be less confusion for the vendor and quality data would be easier to track.
My reply is pretty basic – don't do it. Here are some reasons.
  1. Most ERP systems today support a Vendor/Item relationship. For those that do this they also provide a vendor part number, minimum order quantities and pricing associated with the vendor/item combination. When the PO is printed the Vendor part number is printed instead or in addition to the inventory number.
  2. If you have vendor part numbers in your inventory then when you perform a physical inventory you will need to count each item separately. You will also want to segregate the inventory from each other to facility finding the right part number when it comes time to use the inventory.
  3. When you consume the inventory you will need to specify which vendor item is being used. This requires more effort by the production folks and typically leads to less accuracy.
  4. Reporting becomes more difficult. To review usage of a material across vendor you would have to add values from multiple items. If these items are not in sequence then the task of reporting becomes much more difficult.
  5. Quality data should be tied to a LOT and not a vendor item number. You can still get the same quality data using a common inventory part number as long as you are lot tracking. The lot number will tie the receipt to an inventory item and also to the vendor.
  6. When you create formulas you do not want to substitute vendor item numbers from batch to batch. This will cause much more work than is necessary with little to no return.
So in a nutshell – there may be some reasons that at the surface look like a good idea. But take my word for it. There are a number of ways to get you to the goal – adding vendors to the part number very rarely achieves the desired result.

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