Consumption-driven Inventory Control : A study of inventory management applied to machining tools

Sammanfattning: Within manufacturing industries, capital is tied up in machines, tools and inventory of unprocessed raw materials as well as finished goods and everything in between, also known as work in progress. Naturally, firms strive to minimize the capital employed in these items and thus facilitate a leaner operation. At the same time, it is important to maintain a stable and uninterrupted production. A prerequisite for maintaining a stable production is that the inputs of the production processes are available at all times. Machining tools need to always be available and easily accessible in order to minimize machine downtime in between batch orders, and if a machine breaks down, the necessary spare parts must be provided quickly. This study has been performed in order to investigate when it would be beneficial for a manufacturer of heavy vehicles to achieve a consumption-driven system for ordering machining tools. More specifically, it looks into the prerequisites and the potential benefits of such a system.This research has been done by conducting a case study at Scania Transmission Machining in Södertälje, Sweden, which is the department responsible for manufacturing conical gears and gear transmission components for Scania’s European production. The case study included a diagnosis of the current inventory control situation, which served the purpose of identifying weaknesses in the system and potential areas of improvement. Furthermore, simulations were conducted based on historical transaction data from the storage unit which supplies tools for the case company. This was done in order to investigate how a consumption-driven inventory control system may be set up in practice and to provide figures on potential monetary gains as well as other benefits.The findings from this study indicate that there are many incentives for Scania Transmission Machining to adopt and implement an inventory control system for machining tools which is based on the consumption. First off, the diagnosis of the current inventory control system revealed several weaknesses and inefficiencies in the system. Furthermore, simulating the inventory levels for a sample of tools showed improvements in terms of the number of days of shortage and in a lower average inventory level. Finally, the monetary savings have been estimated to amount to roughly 1 million SEK per year.