Supply Chain and Inventory Analysis Case Study
This is a brief Supply Chain and Inventory Analysis Case Study. A lot of detail has been omitted in the interest of brevity and clarity.
Supply Chain and Inventory Analysis Case Study in Manufacturing
A large manufacturing plant was frequently short on certain items of spare parts inventory. The rush orders cost the company thousands each month including airfreight. Without the needed parts, there were times when the lines were shut down – revenue was being lost due to the missing parts.
The plant knew they had problems but blamed it all on their supply chain. They felt that the department of was disorganized, late in ordering items for needed delivery times, unaware of the actual lead times, etc.
A look at their data showed that adherence to the production schedule was under 50%. This lack of consistency threw the whole supply chain into a reactive mode.
Lead times of key components were completely missing from the ERP system. Of course, there were other issues, but these main ones accounted for a large part of the spare part shorts issue.
Behind those problems was another deeper cause – low plant reliability causing all the instability in production runs!
We worked with the company to improve adherence to the production schedule as well as with the procurement team to contact suppliers so that we could find out and input the lead times. These actions dropped inventory shortages, rush orders, freight charges, increased production uptime, and made a significant impact on the balance sheet.
Spares problems are often an indicator of problems in maintenance. In this case maintenance planning wasn’t really planning – it was scheduling. The also had an ineffective PM program that led to breakdowns and the excessive operational variability.
