Finding an extra 15% for an automotive manufacturer
Automotive inventory can be challenging to optimize since just-in-time logistics has long been a favoured principle, especially for the OEM’s. However, nVentic demonstrated how even a best-in-class operation still had double-digit improvement potential.
Context
Our client was a major OEM manufacturer in the automotive industry. Globally, the company demonstrated average performance when benchmarked with its peers for DIO. However, nVentic was invited to look at their flagship site, where they believed performance to be best in class. Having already been through several projects to improve inventory management, the client still struggled with inventory performance visibility and asked nVentic to run a proof of concept project.
Approach
nVentic immediately understood why inventory visibility was poor. The 6 million transactions per year were deleted from the ERP systems and warehoused on a frequent basis. We therefore had to deal with multiple instances of missing or conflicting data right from the start. Rather than wait until all data was available, we focused on what was immediately to hand and carried out our standard Inventory Evaluation on that basis.
Results
Despite the client’s expectation that we would find little or no improvement potential, nVentic identified an overall opportunity to reduce inventory by 15%. Around 5% was identified in finished goods and 20% in raw materials. The client commented that the transparency we gave them in a week was something they had failed to achieve for many years. We also made some key recommendations in master data management. Automotive inventory may be lean compared to other industries, but that doesn’t mean it is as close to optimal as possible.
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