Defective Inventory -- Now What???

It isn't practical to do 100% inspection on every item, so what happens when a defect is discovered after an item has been stocked? An example might go something like this:

A purchase order for 100 widgets is received and stocked. The following week, 10 of the widgets are picked as components of a manufacturing order. When the assembly person goes to install the widgets they find that some of them don't work correctly.

Many companies, especially in the electronics industry, have developed procedures using inventory adjustments with special codes and/or locations to remove and quarantine the items in question. When a decision is made about what to do with the items, additional inventory adjustments transactions are made to record the disposition.

The Move Inventory to MRB (IMRB) program eliminates the need for special procedures and the various adjustments that were previously necessary. A single transaction removes the 90 questionable widgets from stock and associates them with an MRB tag. Once reviewed, Rejected Material Disposition (MRB) is used to record the disposition. The items can be used as is, returned to the vendor or scrapped. During the disposition process, a PO and line number or a manufacturing order number can be specified for tracking.