What is an Orphaned Part and How Do They Hide from You?

An orphaned part is a raw material/component that you USED TO USE to make a finished good…. but then you decided either to no longer make that finished good or to use a different component in place of the old one.

You diligently updated your Bill of Materials (BoM) for the finished good but the inventory management system provided you with no indication that you were now sitting on stock of an orphaned part.

Any stock remaining of the old part is “stuck” and you will need to decide whether to sell the part for someone else to use, to scrap it or to recycle it. When it is stuck, valuable cash flow is tied up in that inventory that you cannot release. [Cash flow issues are the number 1 cause of business failure for small- and medium-sized businesses.]

How do orphaned parts hide from you?

When you carry a lot of parts, it’s impossible to keep your eye on all of them. Most inventory systems that I’ve experienced do not produce a report of orphaned parts, nor do they flag a part as discontinued or obsolete when it is removed from all BoMs.

There are reasons why inventory systems aren’t programmed to do this, but the impact to your business is that it is often a tedious task to investigate just how much of your inventory has been orphaned and just how much of your precious cash flow is “stuck.”

In a recent inventory project, the owner of the company was shocked when I uncovered that 25% of his inventory consisted of orphaned parts, discontinued parts and discontinued finished goods.

How much do you know about your orphans?