Synchronizing the Supply Chain with Manufacturing Cells for Improved Scheduling Control and Inventory Reduction
Automotive Leather Supplier $600mm Sales Revenue
A
division of a $600mm
manufacturer supplies cut parts to automotive 1st tier suppliers who
subsequently sew the pieces and assemble the seats, door panels, and
dashboards. Many customers use a "pull" system, requiring the inventory
be available for shipment as of a specific date regardless of whether
or not they intend to have the full amount shipped that day.
As a result of an increase in the internal supply line brought about by
a proliferation of facilities, and fluctuations in customer schedules,
the company experienced dramatic growth in inventory. The company also
experienced wild master scheduling fluctuations, and incurred excessive
premium freight charges all in an effort to try to meet customer
requirements.
In order to better control scheduling and inventory management, the
company purchased and implemented a new ERP system. The company then
battled data input, training, and data accuracy issues that, in the
short term, exacerbated its scheduling and inventory management woes.
Data accuracy of the bills of material was estimated at 70-75%.
Facing critical control issues, the company set out to regain control
of scheduling and inventory levels. The goal was to develop new
processes, policies, and procedures to achieve world class status in
scheduling and inventory control.
During our rationalization of the supply chain, we observed that the
finishing plant was cluttered with too many hides. We discovered that
the there were too many SKU's to manage manually, yet shop floor
scheduling was actually performed on a manual basis using "cheat
sheets." The SKU inventories were totally out of sync with a 5 day
target. 83% of SKUs's were over stocked, and 17% of SKU's were
understocked.
We concluded that the inability to easily synchronize tanning,
finishing and cutting with actual shipping demand created an excessive
inventory of hides. We also concluded that MRP was not compatible with
the quick response scheduling requirements of blues through cutting.
Quick response scheduling required separation of planning from
execution.
We also concluded that time to produce hides from start to finish was
excessive, characterized by long queue and stage times.
We recommended a synchronization of the supply chain reduce throughput time and substantially lower inventory levels.
We also recommended the development of manufacturing cells to with concurrent set-ups and changeovers to dramatically reduce throughput time and substantially lower inventory levels.
We also recommended the development of a GT Generator that will provide the synchronous scheduling required to support the new factory.
The results were as follows: