Lesson 4 of 5
Assessing defects by supply and inventory value impact
10 min
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A misaligned label on the production order print and an MRP run that creates no proposals for the rotor are both defects. Only one can stop the line. Plan-to-produce defects need a rating scheme that the planner, the plant manager and Dan all accept, so the sign-off discussion is about facts rather than volume.
Three lenses
| Lens | Question | Contoso example |
|---|---|---|
| Supply impact | Can the plant build and ship what customers ordered, on time? | No rotor requisitions: in two weeks ASSY-10 stops for lack of rotors |
| Inventory value impact | Are stock quantities or values, WIP or variances wrong, and by how much? | Goods receipt values alternators at $156 in Detroit instead of $150 |
| Control impact | Is a control bypassed: approvals, inspections, authorizations? | Usage decision possible without the quality role |
Rate every plan-to-produce defect through three lenses.
Quantify the impact
"MRP is wrong" gives the triage meeting nothing to decide on. "MRP creates no purchase requisitions for CMC-RTR-200 in plant 1710; at 2,000 alternators a month, rotor stock of 600 covers only six to seven working days (about 92 a day)" does. For value defects, state the amount per document and per month: a $6 overvaluation on 2,000 alternators a month misstates finished goods by $12,000 a month and creates matching variances.
| Severity | Definition for plan-to-produce | Example |
|---|---|---|
| Critical | Stops planning, production or goods receipt, or misstates inventory materially, with no workaround | Orders cannot be released in plant 1710 |
| High | Supply at risk, control failure, or wrong values with only a costly workaround | No proposals for a critical component; usage decision without authorization |
| Medium | Wrong behavior with a practical workaround and limited value | Rework order needs a manual component addition |
| Low | Cosmetic or convenience issue | Order print shows the work center description truncated |
Contoso's plan-to-produce severity definitions (adapted from the program's defect standard).
Must it be fixed before sign-off?
- Is it Critical?Yes → fix and retest before sign-off · No → next question
- Is it High?Yes → fix before sign-off, unless the process owner and Dan accept a documented workaround with an owner and end date · No → next question
- Does the workaround add daily manual effort in the plant?Yes → plan the fix for hypercare; size the effort · No → schedule in the backlog
- Does it affect period-end values?Yes → Dan decides with finance controls · No → plant manager decides
Conversion defects deserve a special question: was this broken in ECC too? A defect that reproduces in EP1 is not a conversion regression, but it may still block sign-off if the process owner would not accept it now. Record the answer in the defect, because it changes who fixes it and how quickly.
Triage runs daily during the cycle. Priya chairs it with the production planner, the supervisor, the quality engineer, Dan for value defects and Kenji when custom code is involved. Each defect leaves the meeting with a severity, an owner, a target date and a decision on whether the end-to-end chain can continue on a workaround. Re-rate a defect when new facts appear, for example when a planning defect turns out to affect all materials with a fixed lot size, not just one.
What would you do?
A defect shows that the end-of-line test operation at TEST-10 can be confirmed with zero yield and no scrap, leaving 12 alternators unaccounted for. No value is wrong yet in the test client. How should it be rated?
| Defect | Supply lens | Value lens | Severity |
|---|---|---|---|
| MRP Live creates no requisitions for CMC-RTR-200 | Line stops in about a week | None yet | Critical |
| Variance on order 1000233 settled to the wrong account | None | P&L classification wrong; Dan must reclassify | High |
| Confirmation with zero yield and no scrap accepted at TEST-10 | None immediately | Stock and WIP can drift undetected | High |
| Order print shows a truncated operation text | None | None | Low |
Four plan-to-produce defects rated through the supply and value lenses.
- Rate defects by supply impact, inventory value impact and control impact.
- Quantify: days of supply at risk, dollars per document and per month.
- Critical and High defects block sign-off unless a documented workaround is accepted.
- Ask whether the defect existed in ECC; it changes ownership, not necessarily severity.
Check your understanding · not graded
Lesson check
1. MRP creates no proposals for a critical component. Which rating fits best?
2. Which statement quantifies an inventory value defect usefully?
3. A control can be bypassed but no value is wrong yet. How is it treated?
4. Why record whether a defect also exists in ECC?