TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
Wearing Parts refers to the loss of material due to a breakdown in quality control at the point of sale. Common examples of Wearing Parts are material lost due to poor quality control, faulty materials, broken equipment or delayed delivery, parts that are stolen during transit, parts that malfunction or are unusable, and parts that are returned as defective. In a broader sense, Wearing Parts can also refer to material that is excess to requirements, but is not being used to meet customer requirements.
In a hypothetical production process for a car manufacturing company, one of the required production items would be the brake elements. If there was a mistake with the weight or size of a part required to hold the brake pads in place, a customer would most likely request that this part be re-ordered. The problem faced by the company would be the loss of a substantial amount of cash through inventory loss caused by defective, or non-performing, brake parts.
It is impossible to avoid having to inventory defective and non-performing products. Inventory management is a continual process of reducing inventory levels and increasing production to maintain current and increasing profit margins. It requires continuous monitoring and updating of both quality control and inventory tracking of all assets. The ultimate aim of inventory management is to minimize system downtime through timely identification and correction of problems and defects, both of which lead to customer dissatisfaction and loss of sales and revenue.
