Improving the Availability of Perishable Components in an Industrial Supply Chain

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Helsinki University of Technology | Diplomityö
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Date

2008

Department

Informaatio- ja luonnontieteiden tiedekunta

Major/Subject

Teollisuustalous

Mcode

TU-22

Degree programme

Language

en

Pages

vii + 91 + liitt. (+3)

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Abstract

In industrial supply chains, component shortages can cause significant losses and harm customers on several supply chain stages. An intuitive solution to hedge against this risk is to increase inventory levels. Such a solution is not necessarily desirable in a world where the ability to move quickly is crucial. Besides, the applicability of this solution can be limited by the nature of the items considered. The objective of this thesis was to improve the availability of perishable components in an industrial supply chain or to find ways to provide equivalent availability levels at lower cost. This involves building a robust supply chain. The study was conducted as a case study on behalf of a leading tyre manufacturing company. To find an answer to the focal problem, the supply process was searched for typical weaknesses based on concepts from inventory management theory, lean thinking, demand dynamics as well as risk management theory. An in-depth review of the current supply process was conducted: each step of the process and the relevant supporting sub-processes were described and evaluated building on literature; delivery reliability and planned order reliability were assessed based on history data to evaluate the overall performance of the supply process. The output is a review of the main weaknesses and strengths in the case company's current operations. As a result of this analysis, improvement opportunities were presented to the case company. This investigation of case company operations also produced several basic guidelines that can be used to improve availability of perishable components in an industrial supply chain. These guidelines include implementing effective inventory control, defining an appropriate supply buffering policy based on second sourcing and adequately sized inventory buffers as well as implementing systematic risk management approaches and improving flexibility. Continuous efforts aimed at improving processes to reduce uncertainty and thus the need for buffering mechanisms are identified as a key to achieve availability targets while improving inventory rotation. In particular there is a lot to be said for taking steps towards JIT. Lastly, building a climate of trust between supply chain partners is a key to a highly effective supply chain. Information transparency, clear communication practises, aligned performance metrics as well as tools allowing real time information sharing can contribute to that.

Description

Supervisor

Tanskanen, Kari

Thesis advisor

Cussac, David

Keywords

supply management, inventory management, inventory rotation

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-2020120554481

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[dipl] Teknillinen korkeakoulu / TKK