Proceedings of ICLT 2019
INVENTORY MANAGEMENT SYSTEM FOR A HIGH MIX, LOW VOLUME MANUFACTURING ENVIRONMENT
Phua Yi Ting; Tony Halim; Tan Yan Weng
Singapore University of Social Sciences, Singapore; Temasek Polytechnic, Singapore; Singapore University of Social Sciences, Singapore
International Conference on Logistics & Transport 2019, Hanoi, Vietnam, pp. 22-22
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Abstract
Purpose: In today’s dynamic market conditions, manufacturers are expected to become more flexible and responsive in meeting demand for customised product specifications and quality requirements. Product mix is becoming more complex and diverse, driving more companies to operate in a high-mix low-volume (HMLV) manufacturing environment. To meet targeted service levels and buffer against uncertainties, manufacturers may commit excessive financial resources into holding excess inventory. This research focus on a real-life HMLV scenario faced a local company that is a provider of defence communication solutions that are fully optimized for individual customers. It offers a wide range of services, where it not only designs its own products, but also manufactures build-to-print microwave modules and components used in dedicated special areas such as intelligence, defence and satellite systems. The environment it operates in is HMLV in nature, where the products assembled may vary in lot sizes, production processes and applications. It can transform assembly lines and change product requirements in a matter of hours, causing its planners to face numerous challenges when planning for the facility’s inventory. Design/methodology/approach: This study addresses problems such as excess inventory, stock outs and high inventory costs, by developing an optimal inventory management system for the company. Findings: A root cause analysis was conducted using a Fishbone diagram. We worked backwards to amass all major and minor causes of high inventory costs, then determine what type of inventory cost they were contributing to. The costs associating with maintaining inventory were determined to be overstocking costs, shortage costs, order costs and storage costs. This exercise was important in pinpointing which aspect we can or want to work on in the subsequent analyses. Also, we developed a classification tool called the ABC-HML analysis to classify our inventory into nine different g
Keywords
Inventory Management; High-Mix Low-Volume; Joint order quantity; ABC analysis
Citation
Phua Yi Ting; Tony Halim; Tan Yan Weng (2019). INVENTORY MANAGEMENT SYSTEM FOR A HIGH MIX, LOW VOLUME MANUFACTURING ENVIRONMENT. Proceedings of the International Conference on Logistics & Transport (ICLT 2019), Hanoi, Vietnam, pp. 22-22.