Bewilderment, fear, and sometimes repulsion are reactions you may receive when you suggest backflushing materials in a production reporting system.  I recall a reaction I received when informing the new director of operations at a manufacturing plant on the details of shop-floor reporting being used which included backflushing.  The reaction can best be described as one you would expect from someone experiencing his first visit to a proctologist.  These reactions are usually due to confusion as to what exactly backflushing is, how it works, and when to use it.

So what is backflushing?  If you ask someone involved with engineering or maintenance they'll likely describe it as reversing the flow of materials (generally liquids) to flush contaminants from some type of filtering device.  Water treatment plants are a good example where water is filtered through sand to remove impurities; periodically they will reverse the flow through the sand to force the contaminants to the surface where they can be removed.  If you try to make a correlation between this process and the process for backflushing materials in inventory management you will find that there are absolutely no similarities, hence the confusion.  Backflushing is simply an inappropriate and misleading term used to describe a method for issuing materials to production orders at the point that production of a specific operation is completed. 

To make things clearer, for a portion of this article I will refer to backflushing as postproduction issuing.  I will also use the term preproduction issuing to describe the method(s) for issuing material most people are familiar with.  It's important to discuss the similarities in the programs used to execute postproduction issuing and preproduction issuing to demonstrate that the two methods are essentially small variations of a single process.

The standard flow.

When you create a production order you will usually enter some very basic information such as item number, requested quantity, and requested date (in most MRP systems this information is automatically entered when you convert a planned order).  This information (known as the production order header) is then used to create the materials list (also called parts list or pick list) and the routing for this specific production order.  The materials list is created by multiplying the quantity required from the order header by the quantity per of each component on the bill of materials which results in a detailed materials list showing each component, the quantity per, and the total quantity required to produce the requested quantity of the finished item.

When it comes time to start production there are several methods used to accumulate the materials required for production.  One method is to simply use the materials list and pick all of the materials and transport them to the production area.  You then use a program designed to issue the components to a specific production order.  This program will generally require you to enter the production order number to bring up the materials list.  You can then accept the entire materials list as a single transaction and the program will issue the quantity on each detail line to the production order reducing on-hand balances by that quantity.  If the materials list did not specify the locations the materials were to be picked from, you would have to enter that detail information before completing the transaction.  The program will probably also have an option to increase or decrease the entire materials list at the header level by changing the quantity required of the finished item; all detail lines will then recalculate based on this quantity.  You would also have options to change quantities on individual detail lines or only issue individual detail lines.

If this is starting to sound like I'm talking about your specific software it's because this is very standard functionality and most programmers will refrain from getting too creative in these areas.  While this is the most common method for accumulating the required materials and issuing them there are quite a few variations.  You may have some materials that are stocked at the machine; these are referred to as point-of-use materials.  You may have the person that picked the materials also go ahead and issue the point-of-use materials even though they haven't actually picked them or you may have the operator issue these during production.  You may also have situations where the amount of materials required to complete the entire production order is too large to stage at the machine all at once and smaller quantities are picked and issued as production requires.  In this type of issuing you may use the previously described program, selecting individual lines and specifying quantity picked on each trip, or you may use a separate program where you enter the component item number, the quantity, and the production order number to directly issue individual transactions to the specific production order.  This type of transaction program and process will likely be highly prone to errors unless used with an automatic data collection system such as those using bar codes.  

Backflushing

In postproduction issuing (backflushing) you are not issuing the materials until production is posted (reported) against the operation. The materials may be accumulated through whatever means are most efficient for your operation.  Once the operation is completed, the operator will use a program to post the production against the operation.  The operator will generally enter the production order number, operation, quantity good, scrap quantity, and labor and machine information.  The production reporting program will then bring up the issuing program (essentially the same program as in the preproduction issuing) using the sum of the good and scrap quantity to recalculate the materials required.  You generally then issue all the materials as one transaction just as you would have in the preproduction issue.  You would also have options to change individual item quantities and add individual scrap quantities to detail lines.  Another option commonly used in postproduction issuing is to have the issuing program work in the background without the operator ever seeing it (blind backflushing). 

Now you can see that the difference between preproduction issuing and postproduction issuing is essentially just the timing of the transactions and a little transaction automation.  So where is it advantageous to use backflushing?

• In operations where scrap is common in the finished item and you continue to produce until you have a good quantity equal to the ordered quantity, you will find postproduction issuing will simplify the issuing process since you won't know how many you will run until you have completed production.

• When you use point-of-use materials, postproduction issuing simplifies the issuing process and makes it easier to perform counts on the point-of-use materials.  If you were to preproduction issue these materials you would need to rectify the system counts with any orders that had quantities issued but not yet consumed, however, if you postproduction issue you should have a system-to-actual-count match after each production posting.

• In very long production runs (days or weeks) where preproduction posting takes the materials out of the on-hand inventory balance days or weeks before they are being used and puts the dollar value into a WIP account.  Anyone that has tried to rectify WIP accounts will tell you that the less you have in the WIP account and the quicker things come out of the WIP account the better off you are.  It's far easier to track inventory than WIP.  You also may have situations where you don't have enough of the raw materials for the entire production run, however, more will be arriving during the run (JIT/kanban); preproduction posting would force inventory of the raw materials negative.  It's important to note that I am assuming that if you are doing long production runs that you are posting quantities produced periodically (each shift or each day) rather than waiting until the entire run is complete.

• When you are using bulk materials such as bar stock, roll stock, sheet goods, and dry goods or liquids in bulk containers, where the exact quantity cannot be picked.  For example, if you need 1000 linear feet of material that comes in bulk rolls of 300 linear feet, preproduction issuing of 1000 even though the material handler delivered 1200 causes a confusing inventory situation, and issuing the entire 1200 would require you to reverse issue 200 when you return the remainder.

Examples: 

For a simplified example of an operation where postproduction issuing would make sense I'll create a fictitious company that makes prepackaged food products for vending machines.  This company called The Taste Like Cardboard Snack Company has set up a production work cell for their sandwich assembly that makes several combinations of sandwiches on white or wheat bread, with ham, turkey, or beef, American or Swiss cheese, and mustard or mayonnaise.  This gives you about a hundred separate finished combinations and they will generally run about 30 production orders per shift. The final step in the assembly is to run the sandwich through an automated heat-seal packaging machine which, despite their best efforts, manages to trash about one percent of the sandwiches run through it. Since they are a make-to-order manufacturer with no tolerances allowed they must produce the exact number of good sandwiches as ordered.

Since they are dealing with very few components (only nine) to make up all of these combinations it would make sense to treat these components as point-of-use materials especially since they are stored in bulk form.  Trying to pick and segregate exact quantities of mustard, mayonnaise, meat, cheese, and bread for each production order would be inefficient (and probably messy).  Due to the scrap problem you really don't know how many sandwiches you will need to make to get the correct quantity, so preproduction issuing would force you to go back and enter additional transactions for the scrap materials. While it may be possible to use digital scales for the meat and cheese, flow meters for the mayonnaise and mustard, and a counter for the bread to try to automatically capture exact quantities used per production order, it just isn't a cost-effective option and having the production operators manually track actual usage will likely prove to be an accuracy nightmare.  The best option here is to use blind postproduction posting.  All the operator needs to do is enter the good quantity and the scrap quantity and let the system calculate the rest.

A real-world example of postproduction posting I had recently encountered was for a manufacturer of paperboard packaging materials.  One of the families of products produced were round lids that consisted of a custom printed insert, rim base material, rim label material, and adhesive.  The inserts were stocked on pallets of anywhere from 20,000 to 200,000 depending on size, the rim base material and rim label material were on bulk rolls, and the adhesive came in bulk containers.  The forming of the lids was a single operation on a single machine. This forming operation was highly prone to scrap and they were a make-to-order operation that required a specific good quantity be produced.  Production runs could go from several hours to several days and would be grouped so that multiple orders using the same rim base material and rim label material were run consecutively.

All of the raw materials are stored in random location storage in the warehouse.  Material handlers would deliver rim base material, rim label material, adhesive, and inserts as needed to keep the machine running.  Material handlers would enter location transfer transactions to move the materials from the storage locations to a specific machine location set up for the lid forming machine.  When the production operator finished an order or when the shift ended, the operator would post quantity good and quantity scrapped, the backflush program would then calculate material requirements and issue them from the machine location.

By using machine locations for the backflushing we essentially isolated the storage locations from the production reporting system and were able to maintain cycle counting in the storage areas.  By the way, did I mention that this was a 24/7 operation?  This also gave the benefit of very quickly catching production reporting errors just by monitoring the inventory at the machine locations.

Tips on implementing postproduction issuing (backflushing).

• Backflushing is performed by operation, in the bill of material you will have to link the component to the specific operation and set the backflushing flag.  You may also have to set backflushing flags on the specific operation in the routing, the program used for production posting, and at the machine/cost center level.  The details of each system may vary so read the documentation for your specific software.

• You may also find backflush flags on the item master; if so, this is likely used only as a default in setting up bills of material.  Changing this to backflush will probably not change any existing bills previously created.

• Changing an item on a bill of material to backflush will likely not change the item on the materials lists on any existing production orders previously created.  You will probably have to change these manually or delete and recreate the orders.

• Backflushing is generally not a global setting, which means you can chose specific bills of materials to backflush and even specific items within a bill of material.  For example, you could backflush only point-of-use items and perform preproduction issuing on other items within the same production order.

• Bill of materials often have options for entering scrap percentages.  Note that this scrap information is usually only used for materials planning purposes and will probably not have any effect on the backflush quantities, however, you should test to see how your system handles this.

• I highly recommend setting up machine locations and backflushing from these locations rather than backflushing from specific storage locations (this is often set up at the machine/cost center level, however, it may be set up on the item master, bill of material, or routing).  Items stored in specific locations should be transferred to the machine location when picked for production.

• You may need to set up some alternative picking documents.  Creating a report that consolidates all materials required at a specific operation for all production orders expected to be ran during that shift gives you the efficiency of batch picking.  Point-of-use items can be treated similar to the way you would replenish forward picking locations in a distribution operation.

• If you are using lot tracking of components you may not be able to perform blind backflushing, you will probably need to enter lot information in the detail of the issuing program.

• Need I mention that accurate bill of materials and routings are critical.

• Thoroughly test your system.  Verify the effects on inventory accounts, on hand balances, allocations, and locations.

I have only discussed backflushing materials, however, some systems may also allow you to backflush labor.  Backflushing labor is simply using the quantity produced information and the standard labor, machine, and set up hours in the routing to calculate labor and machine time to apply against the production order.

Backflushing is not an ideology; it's not something you should be for or against.  It's simply a method for issuing materials that works well when applied correctly and works poorly when applied incorrectly.  Operations not using point-of-use materials, bulk materials, or those where production scrap does not force an increase in run quantities will find no benefit to backflushing.  Contract manufacturers and engineer-to-order manufacturers may find system setup too extensive or bill of material accuracy inadequate to support backflushing.  Operations that have or can easily put in place automated data collection systems to accurately issue exact quantities to production orders will also have little need to consider backflushing.