May 1997 • Volume 7 • Number 5
May 1997 • Volume 7 • Number 5
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This department is provided to answer technical questions regarding problems in production and inventory control. Readers are invited to contact George Johnson, APICS National Research Committee, Rochester Institute of Technology |
Dear APICS: What needs to be done to establish an effective shelf-life program for materials?
Reply: Let's start with why such a program could be needed in the first place. Some things, like film, pharmaceuticals, food, explosives, chemicals, dry cell batteries, rubber, etc., have limited useful lives because their properties change as they are processed or stored (perishability). This is why we have concepts such as aging, contamination and lot traceability.
To accommodate such changes in material properties, it is important to associate certain kinds of information about specific items or materials with their part numbers (item master records), to keep this information up-to-date and to use it for systematic control purposes. A memo on "Shelf-Life Item Management Policy" from the General Services Administration (GSA) Federal Supply Service, Washington D.C., (last updated Dec. 12, 1996) provides a nice overview of some of the issues relating to management of limited life resources.
First, it points out that these kinds of items are more costly to manage than typical, because they involve extra controls, extra inspection/reinspection and testing. They also are subject to added disposal costs if they expire before use and may cause customer dissatisfaction if their useful lives are expired or nearly expired when received.
GSA's objectives for its policy are to:
(One could substitute the term "company" for "federal government" or "government" and the statements may be commercially applicable).
Following are descriptions of items referred to in the GSA document:
Shelf-life code. A shelf-life code must be assigned to each item which has "deteriorative or unstable characteristics" to reflect the suitable storage time period which will assure satisfactory performance in use. To avoid unnecessary costs of extra controls and inspections, the code assigned should reflect the most remote date consistent with satisfactory use when shipped and used.
Review. The policy requires that shelf-life code assignments be reviewed at least once every four years, sooner if regulations or item characteristics change in the interim.
Storage standards. Standards must be developed for all relevant items. The standards must contain:
Marking. All shelf-life items must be marked with the date of manufacture and the date of expiration (or reinspection date, if the life may be extended).
Age on delivery. The policy requires that all contracts for manufacture of shelf-life items specify delivery of these items within a designated period following manufacture.
Inventory policy. To foster close control and minimize the costs of reinspection and disposal for each shelf-life item, the sum of safety stock and economic order quantity will not exceed a time supply of one-half the item's shelf-life.
Storage. All shelf-life items must be stored in a manner consistent with the special requirements of FED-STD-793. If no special requirements are cited, normal warehouse procedures are appropriate.
Issue of items. Shelf-life items are to be withdrawn from stock and issued on a strict first-in-first-out (FIFO) basis. Exceptions to this requirement occur when dated material issued FIFO, combined with delivery lead time, would violate the objective of leaving sufficient time for satisfactory use. Specific guidelines exist for these decisions, and they involve the category of shelf-life code, the mode of transportation and the destination (e.g., continental U.S. vs. overseas).
This GSA document summarizes one kind of shelf-life policy approach. There are other such documents available, depending on the type of industry and product. Other approaches (with the same overall intent) can be found in the grocery industry, pharmaceuticals, chemicals, etc. Rossnagel (1986) reports on the implementation of a shelf-life management program at the Polymer Products Co. The challenge was to improve the management of aging material in its satellite warehouse system, which distributed the material nationwide. Several of the steps in their project (listed below) are similar to those cited above from the GSA document.
Lot numbering. A lot numbering system was created to capture information on the originating plant, the month and year of production, and provide a link to quality control data.
Aging criteria. An age standard was created by quality control for each material, which provided sufficient lead time for review and/or reanalysis prior to a meaningful change in declared product quality.
Action steps using criteria. All material was reviewed and coded for age, and:
a) If good, ship within 30 days or resample.
b) If over-age, have the material removed for disposition.
Keys to effective implementation. The enablers of this successful program were reported to be sound program development, good training, top management support, warehouse commitment and high-quality.
1. DoD 4140.27M, Shelf-Life Item Management Manual. Provides policy-level information on this subject.
2. DLAR 4155.37, Material Quality Control Storage Standards. Contains material-related storage standards.
3. FED-STD-793, Depot Storage Standards. Contains depot-level storage standards.
Note: The three documents listed above are most readily available to persons who work for the federal government (DoD) directly, or who are contractors to the federal government (DoD).
4. Rossnagel, G., "Case Study: Implementation of a Shelf-life Management Program," 1986 Spring Seminar Proceedings, APICS, April 1986, pp. 177-180.
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