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Aron Govil- What Is an Inventory Root Code and Why is it Important in Root Cause Analysis?

In a manufacturing environment, inventory root causes are typically identified as the main reasons for defective products says Aron Govil. For example, a product may have many different component parts that go into it. Each part in turn can have even more components and so on. So it is very likely that one of the items going into the final product will be defective or not functioning properly. This can be easily explained by an inventory root code.

An inventory root code is a part of the material requirements planning (MRP) process. The MRP process identifies all amounts needed for an item, including all components that go into it. So there will always be some materials or parts that are not working properly and thus need to be accounted for in the MRP process.

There are usually three types of codes used in any manufacturing environment during the identification of defective products:

1) machine/equipment related codes;

2) Incoming quality related codes; and

3) Manufacturing quality related codes.

For example, if a product was to have multiple defects due to one machine breaking down or being malfunctioning, then the machine/equipment problem is the root cause. However, if no defects are found on that machine or equipment, but all defective products are observed to come from one area of the manufacturing plant, then it is likely that an incoming quality issue would be the root cause.

If no defects are observe at all within the manufacturing environment then it is likely that a material relate code would be identify as the root cause explains Aron Govil. For example, if too much material was into each part in comparison to what was need for production or there were some missing materials in some parts which lead to poor product quality this would be classify as a defective material requirement problem (material root code).

Manufacturing quality codes are also another important code that needs to be consider during root cause analysis. These types of codes are mostly observe in the final product or packaging. For example, if some products are observe wrap with incorrect or no labels these would be classified as a manufacturing quality issue (labeling/marking material root code).

If there were multiple stages within the production process where some kind of defect was observe then it is likely that an inventory root code had occurred. For example, let’s consider three separate stages of production on a machine for 3 seconds each where

1) One part is defective;

2) Two parts are missing labels; and

3) Four parts have improper markings which all need to be account for in the root cause analysis.

1) Defective part (machine/equipment root code);

2) Missing labels (incoming quality root code); and

3) Improper markings (material or manufacturing quality root code).

Example of Material Related Root Code in 3 Stages of Production on a Machine for 3 seconds each

1) Number of defective parts;

2) Material quantity; and

3) Machine time.

The same problem occurring over multiple stages may require additional analysis to determine which stage is the actual source of the issue says Aron Govil. For example, if there were 20 defective products at one machine and 24 defective products during another stage then it would be difficult to determine whether this was cause by a machine or a material problem or both.


The solution is to prioritize the combination of root codes as follows: 1) Machine; 2) Incoming Quality; and 3) Material. This will help you determine which root code should be at the top of your list when conducting your analysis. The goal is to identify which one(s) had the biggest impact on quality and then you can focus your efforts on those areas and not spread yourself too thin by attempting to look into every possible issue within multiple areas of production/inventory where different root codes may have occurred. Additional information about inventory MRP may be in the SAP Product Lifecycle Management (PLM) course.

Another basis for classifying root causes of manufacturing problems is by focusing on the source of the problem. This classification may help to simplify root cause analysis if there are too many issues occurring simultaneously in one production stage or throughout the entire manufacturing process. Source-Based Classification

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