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Inventory control of finished goods for the aftermarket.

Eminoğlu, Sercan (2017) MIOM01
Production Management
Abstract
Background
TitanX Engine Cooling is a global supplier of powertrain cooling solutions to commercial vehicles, both for OEMs and the independent aftermarket. The company with annual sales of over 1.6 billion SEK (US$ 192 million) has some 800 employees worldwide. TitanX is headquartered in Gothenburg, Sweden and has manufacturing sites in Sweden, USA, Brazil, China and Mexico.
Its manufacturing facilities are designed and operated with a strong and continuous application of lean manufacturing principles, and they perceive themselves as a very flexible supplier. The production sites have a high level of vertical integration, including the manufacturing of key critical components to ensure the highest quality results. The production... (More)
Background
TitanX Engine Cooling is a global supplier of powertrain cooling solutions to commercial vehicles, both for OEMs and the independent aftermarket. The company with annual sales of over 1.6 billion SEK (US$ 192 million) has some 800 employees worldwide. TitanX is headquartered in Gothenburg, Sweden and has manufacturing sites in Sweden, USA, Brazil, China and Mexico.
Its manufacturing facilities are designed and operated with a strong and continuous application of lean manufacturing principles, and they perceive themselves as a very flexible supplier. The production sites have a high level of vertical integration, including the manufacturing of key critical components to ensure the highest quality results. The production operations are continuously adjusted to meet variations in customer demand. The vision is to be the number one global supplier of powertrain cooling solutions to the commercial vehicle industry.
The facility in Sölvesborg consists of three zones; a raw material warehouse, a shop floor, and a finished goods warehouse. TitanX generally keeps high inventory levels of raw material and finished goods. An important reason for this is the marketing strategy to increase the current market share above 30% of the independent aftermarket for truck engine cooling systems. Therefore, high customer service levels and high efficiency are key performance measures that drive high capacity and stock levels.
Purpose
The purpose of the degree project is to analyze the finished goods inventory for independent aftermarket products to provide both more accurate forecasting methods and a scientific approach for controlling these inventories by finding the reorder points for a given service level and considering trade-offs between the production lead times and the safety stock needed for those.
Methods
Liebermann & Hillier (2001) described all the major phases of a typical operations research (OR) modeling approach used to conduct the research in this project.
Quality assurance was done by a process of validation and verification based on Banks, Carson II, Nelson, and Nicol, (2005)
Data collection was done using semi-structured interviews, direct observation, literature review and data provided by the company.
By using those, a new forecasting model and inventory control tool have been developed and the results have been compared to the older model provided by the company to observe the level of improvement obtained.
Conclusions
New forecasting model improves upon the results of the previous one by 21,2% in terms of forecasting accuracy for a specific available sample.
The implemented inventory control tool is a new advancement that the company previously did not possess and remarkably diminishes the required safety stock levels by 59% which accounts for 279.783,5 €/year.
Finally, the tools provided will save planning time and will allow for the comparison of different scenarios. (Less)
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author
Eminoğlu, Sercan
supervisor
organization
course
MIOM01
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Aftermarket products, forecasting, operations research, intermittent demand patterns, inventory control.
other publication id
17/5574
language
English
id
8919494
date added to LUP
2017-06-28 13:17:37
date last changed
2017-06-28 13:17:37
@misc{8919494,
  abstract     = {Background
TitanX Engine Cooling is a global supplier of powertrain cooling solutions to commercial vehicles, both for OEMs and the independent aftermarket. The company with annual sales of over 1.6 billion SEK (US$ 192 million) has some 800 employees worldwide. TitanX is headquartered in Gothenburg, Sweden and has manufacturing sites in Sweden, USA, Brazil, China and Mexico.
Its manufacturing facilities are designed and operated with a strong and continuous application of lean manufacturing principles, and they perceive themselves as a very flexible supplier. The production sites have a high level of vertical integration, including the manufacturing of key critical components to ensure the highest quality results. The production operations are continuously adjusted to meet variations in customer demand. The vision is to be the number one global supplier of powertrain cooling solutions to the commercial vehicle industry.
The facility in Sölvesborg consists of three zones; a raw material warehouse, a shop floor, and a finished goods warehouse. TitanX generally keeps high inventory levels of raw material and finished goods. An important reason for this is the marketing strategy to increase the current market share above 30% of the independent aftermarket for truck engine cooling systems. Therefore, high customer service levels and high efficiency are key performance measures that drive high capacity and stock levels.
Purpose
The purpose of the degree project is to analyze the finished goods inventory for independent aftermarket products to provide both more accurate forecasting methods and a scientific approach for controlling these inventories by finding the reorder points for a given service level and considering trade-offs between the production lead times and the safety stock needed for those.
Methods
Liebermann & Hillier (2001) described all the major phases of a typical operations research (OR) modeling approach used to conduct the research in this project.
Quality assurance was done by a process of validation and verification based on Banks, Carson II, Nelson, and Nicol, (2005)
Data collection was done using semi-structured interviews, direct observation, literature review and data provided by the company.
By using those, a new forecasting model and inventory control tool have been developed and the results have been compared to the older model provided by the company to observe the level of improvement obtained.
Conclusions
New forecasting model improves upon the results of the previous one by 21,2% in terms of forecasting accuracy for a specific available sample.
The implemented inventory control tool is a new advancement that the company previously did not possess and remarkably diminishes the required safety stock levels by 59% which accounts for 279.783,5 €/year.
Finally, the tools provided will save planning time and will allow for the comparison of different scenarios.},
  author       = {Eminoğlu, Sercan},
  keyword      = {Aftermarket products,forecasting,operations research,intermittent demand patterns,inventory control.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Inventory control of finished goods for the aftermarket.},
  year         = {2017},
}