Improving the efficiency and effectiveness of production by materials management
by Harri Ronnholm, Josu Takala
International Journal of Technology Management (IJTM), Vol. 16, No. 1/2/3, 1998

Abstract: The primary objective of this study is to develop a new model for materials management in a case company. The new model improves on-time-deliveries by preventing the lack of material in production and improving the delivery promptness of suppliers. The secondary objectives of the model are to decrease inventories and time spent on the operative purchasing. The first section reviews the importance of logistics in purchasing and subcontracting, and reviews different methods for controlling material flow. The theory of the push system, mainly MRP II (Manufacturing Resource Planning) is compared with the Japanese pull system. Finally, the importance of forecasting and different classification methods of material are described. The second section presents the case company and the main problems of its purchasing process. The task of the study is also specified. The causes of material shortages, material and information flow, inbound logistics, time used by the purchasers, ability of the stock to serve the production, fluctuation of demand and on-time-deliveries of the suppliers are examined to describe the old procurement process and to find the main problems in it. To get rid off these problems, a new model based on the combination of the pull and push systems is developed. The pull is implemented by using a Kanban system and assigning the responsibility of material call-offs from purchasers to shop floor teams. The functionality of the model is verified by a pilot project with a selected supplier. The third section describes the new operational model and the practical changes and solutions done within the study. This includes placing of material, different ordering methods for various materials, sending of forecasts and receiving of material. The criteria for items to be controlled by pull - the Kanban items - are also presented. Benefits gained by kits and clusters in the future are also described. In the fourth section, the benefits gained by the new model are evaluated. Personnel satisfaction, quickened information flow, decreased inventories and number of material shortages, deepened supplier cooperation (better quality, lower prices, improved on time delivery) and improved delivery promptness of the case company are all means to improve customer satisfaction. Generalisation possibilities of the model are also examined.

Online publication date: Fri, 04-Jul-2003

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