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Challenges of Dealing with Quality Inspection Stocks in Supply Chain

Quality Inspection Stock is defined as a stock that is quarantined for inspection and is generally not available for unrestricted usage for customer orders. The process of Quality Inspection could be a long drawn process involving multiple kinds of product checks to as short as couple of hours involving some kind of sampling technique. Most of the ERP systems available in the market have their own Quality Management module along with other modules such as Plant Maintenance or Production Planning. By implementing a Quality Management module, it is possible for supply planning systems to take into account realistic release dates of quality inspection stock into unrestricted stock. With such release dates being accounted for, the Supply planning system can accordingly propose incremental supplies in the network based on demand supply calculations as a function of time.

One very interesting challenge in such a Quality Management context is the handling of inter-plant movements vis a vis customer order replenishment. While the customer orders can only be serviced out of unrestricted stock, it is usually not the case with inter-plant movements. While different organizations have different practices, in general inter-plant requirements are not subjected to the same level of scrutiny as is the customer order replenishment. In some unique scenarios, the inter-plant movement time takes into account the time needed for products to get "ripened" and be finally made available for customer orders.

Complex ERP systems do not take into account the possibility of differential treatments of quality inspection stock for different streams of demands i.e Stock transport orders, dependent demands through Production Orders and Customer Orders. Inevitably thus, one has to build countless pieces of customizations on the application to finally make this requirement to work.

Some such options include:
1. Make certain portion of quality stock as always available. This gets us somewhere mid-way but not wholly accurate.
2. Build different kinds of demand streams for Stock Transport Orders that bank on Quarantine replenishment. This is very accurate, however very intensive on customization and fraught with technical risks.
3. Make all quality stock as always available - which leads to a false positive signal while confirming orders. This would mean that the final shipment process has to account for possibility of stocks not being at the warehouse which again could be an ugly process.
4. Make all quality stock as unavailable - which leads to a false negative signals at order confirmation. This would mean that the inventory levels of Supply Chain would generally increase.

Based on the four above solution options, each organization may have to pick up the best and most convenient solution to meet the business need.

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