How do you prioritize inventory allocation when facing production delays in automotive manufacturing?

Looking just into the supply chain is one way but, are the delays caused by supply chain or from internal issues like low OEE, shop floor training, ...? Deep diving is need to rightly understand the route cause.

Inventory control is a measure of production, whatever is critical or simple. Considering the JIT, It should be followed unbreakable. System deviation is a bight task

Here are the key points for prioritizing inventory allocation during production delays in automotive manufacturing: - Focus on high-margin vehicles - Prioritize customer orders - Consider market demand - Balance product mix - Factor in supply chain constraints When facing production delays, allocate inventory to high-profit models first. Fulfill existing customer orders before dealer stock. Prioritize vehicles with strong market demand for quick sales. Maintain a diverse product offering, even in limited quantities. Consider parts availability to avoid further delays. This approach maximizes revenue, maintains customer satisfaction, minimizes inventory costs, preserves product diversity, and works within supply chain limitations.

Effectively prioritizing inventory allocation is crucial to minimize the impact on operations and customer satisfaction, when facing production delays in the automotive industry. Below are some key strategies. 1/ Identify Critical Components 2/ Assess Demand Patterns 3/ Prioritize Customer Orders 4/ Optimize Production Scheduling 5/ Enhance Supplier Collaboration 6/ Implement Inventory Tracking and Visibility 7/ Consider Temporary Workarounds By implementing these strategies, automotive manufacturers can effectively prioritize inventory allocation, minimize the impact of production delays, and maintain customer satisfaction.

Although there are multiple factors to consider addressing, correct and prevent the situations, two critical first steps to take as I listed them below are: 1. Criticality of Components: Identify which components are critical for production and prioritize their allocation first. Critical components are those that are necessary for the assembly of vehicles and without which production cannot proceed. 2. Customer Orders and Commitments: Fulfilling customer orders should be a priority to maintain customer satisfaction and meet contractual obligations. Allocate inventory to fulfill orders that are due soon or are of high priority customers.

When delays occur, it might be necessary to adjust JIT practices Temporarily increase buffer stocks for parts that are critical and have long lead Time to provide cushion to absorb impact of delays Diversify supplier base of having multiple suppliers for critical components can reduce dependency on a single source and improve resilience Collaborative partnership with key suppliers to ensure they understand critical needs, can lead to more flexible and responsive supply chain

For the JIT, we need to secure RM always available. Need to develop local sources and make sure RM is available for production. But some RM is critical with long leadtime, instead of keep stock for FG, we need keep stock for Rm

One thing I found useful is first making some buffer stock in work in progress parts to add needed time and cushion for the stocks until the production line coming to normal conditions.

Effective communication with suppliers is crucial, especially during production delays, to minimize disruptions and ensure smooth operations. Here's a structured approach to maintaining strong communication and collaboration with suppliers during such challenging times: Immediate Notification Revised Production Schedule Collaborative Planning Negotiation and Flexibility Regular Updates Build Strong Relationships Continuous Improvement By maintaining effective communication and collaboration with suppliers during production delays, you can enhance resilience, minimize disruptions, and ultimately ensure that you meet your production goals and customer commitments effectively.

Sabemos que no acordo comercial, em algumas autopeças é obrigatório o mínino de estoque de segurança nos fornecedores, isso auxilia nas variações e demandas intermitentes do mercado automobilismo. Porém, poucas empresas são fidedignas à essa cláusula e cabe ao responsável da carteira estreitar sempre a comunicação com seus parceiros para minimizar os impactos na cadeia.

Demand forecasts and tracking the FA is highly crucial. Forecast is the starting point of supply chain. While we know it is never accurate but the job is to reduce the forecast error as much as possible. If our actuals are deviating a lot from the planned demand, surely the variations will be felt by supply planning, procurement, raw material planners and deployers. The S&OP meeting needs to be objective oriented and result driven. Good forecast is utmost important to drive a smooth supply chain

Demand forecasting is essential for businesses as it helps predict future customer demand, enabling effective planning of production schedules, inventory levels, and resource allocation. However, achieving accuracy in forecasts can be challenging due to factors like seasonal variations, changing market trends, and unexpected disruptions such as economic changes or external crises. Businesses typically use methods such as historical data analysis, market research, and expert judgment to make forecasts. By accurately anticipating demand, businesses can optimize their operations, reduce costs, and ensure they meet customer needs efficiently.

This point is importance. The Fcst accurate is better to support for all allocation. From there, we can define which item should be keep stock.

In my experience, it's challenging to manage the forecasting even with known demand, in situation we do not have visibility of stock holding at the channel level, especially consumable products. And this requires sales to actively engaged the customers to gather such information to share with demand planners.

Forecasting is irrelevant in a constrained system. Realized sales should always take priority over unrealized sales. Inventory allocation in an unconstrained system should be based on throughput value over forecast. Higher throughput value equals higher cash flow.

Workflow analysis can be done as below 1. Currently state mapping - document detailed map of current process, identify critical paths, map out the flow of inventory 2. Bottleneck identification and analysis- measure throughput time at each stage and identify stages with longer than expected or interrupted, evaluate capacity at each stage, conduct root cause analysis to understand bottleneck or disruptions 3. Resource Reallocation - inventory rebalancing, labor and equipment adjustment, temporary workforce arrangement like overtime or additional shift 4. Process Optimization- parallel processing or alternative sequencing, apply lean principles, adopt agile methodologies 5. Enhanced communication and real time monitoring

Workflow can be managed in a variety of ways. - Flexible resources: Move the resources to the workload. - Reduced batch sizes: Smaller batches equals faster flow. - Outsourcing: Short-term spikes in supply from outsourcing can free up internal capacity and reduce labor cost.

Como Gestor de Almoxarifados, por um bom tempo tive problemas com os meus clientes internos no que tange a comunicação sobre expectativas de demandas futuras. As vezes o fato do RH não comunicar que naquele determinado período haveria uma grande contratação de pessoas, fazia com que meu estoque houvesse uma grande ruptura. E para com os fornecedores não é diferente. Importante destacar as expectativas para que o atendimento seja 100%. Todo fornecedor quer vender mais e melhor para o seu cliente, porém não há frustração pior do que não conseguir atender um cliente por falta de alinhamento.

When prioritizing inventory during production delays, it's essential to integrate robust risk management strategies to mitigate potential disruptions. Here's how you can effectively manage risks related to inventory allocation: Identify Critical Components Assess the Risk of Shortages Prioritize High-Risk Items Establish Safety Stock Levels Supplier Relationships and Contingency Plans Monitor and Adjust Inventory Level Cross-Functional Collaboration By integrating these practices into your inventory prioritization strategy, you can effectively minimize the impact of production delays on your operations and enhance overall supply chain resilience.