Demand management to plan an inventory system for spare parts delivery time reduction with cost control (case study sms siemag ag)
SMS Siemag AG is one of the providers of electrical & automation (EA) components for steel processing plants. In the market of EA components, SMS Siemag AG is facing competitions and it senses the need to increase its competitive advantages by delivering the company?s most valuable and most demanded components to its customer more quickly. This can be achieved by storing sufficient units of the components in the warehouse. SMS Siemag AG also needs to know the cost of storing those components in the warehouse for the company?s budgeting. This research aims to plan an inventory system to reduce the delivery time of EA components included in Rate-based/Kanban Pull and A categories from SMS Siemag AG to its customer and to analyse its impact towards inventory cost. Demand management approach is performed to accomplish these purposes. Demand segmentation analysis categorizes the components by their volume of orders, predictability, and sales valuations; demand forecasting produces forecasts for the upcoming year?s demand, SKU management with the (Q,r) model is performed to determine appropriate values of order quantity and reorder point, and sensitivity analysis is performed to determine the impact of different combinations of order quantity and reorder point towards cost and service level. In results, the delivery time of the company?s most valuable and demanded components can be reduced with proposed system, from the average of 9.8 weeks to 3 weeks. Meanwhile, non-valuable and/or low-volume components are suggested to not be stored in the warehouse.rnKeywords: Demand Management, Demand Segmentation, SKU Management, The (Q,r) Model.
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