Backflush is the routine, perpetual accounting for costs such as inventory, labor, and outside processing which are assigned to the product upon completion. Put another way, costs are ‘flushed’ back and assigned to work at the end of the production process.
Backflush helps simplify accounting for cost elements by dodging labor variances and work-in-process excursions driven by factors such as process scrap, rework and other influences. It more accurately reflects true usage at completion versus time of initial release.
Backflushing can be fitting for just-in-time pull production applications where production cycles are short, bills of material are relatively simple and inventories generally low. Still, even with this profile it isn’t a financial accounting panacea as it requires rigorous system functionality, data accuracy, timely completion reporting, and correct yield capture and reporting.« Back to Glossary Index