Upstream Supply Chain Optimization Using an Integrated Approach of VMI and Kanban
Atewe, Lucky Okperegbulem (2025)
2025
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-202504227076
https://urn.fi/URN:NBN:fi:amk-202504227076
Tiivistelmä
Supply chain optimization is a key factor for operational excellence as companies explore better ways to reduce the cost of material handling and improve profitability. The case company is a manufacturing firm driven by operational excellence in delivering value to its customers. The case company is faced with the challenges of overstocking and excess capital tied up in inventory. This research aims to investigate the root cause of these inefficiencies from available data and propose an improvement.
Based on the review of literature and theories on supply chain management techniques, a quantitative and qualitative descriptive analysis was carried out on supplier lead times, inventory levels, demand, and steel price actions from available data of the existing practice to ascertain the root cause of excessive inventory. Microsoft Excel was used to visualize data and perform quantitative calculations. The findings centered on uncertainty in supplier lead times and demand variation of steel plate in tons as a major cause of inefficiencies such as high inventory level, low inventory turnover ratio, and significant capital tied up in inventory.
An integrated inventory management strategy was proposed to mitigate these challenges: a combination of VMI and a three-container Kanban. The impact of the quantitative benefits of the proposed improvement shows flexibility in stock management, a reduction in inventory capital tied up by 40%, and improved cash flow.
Based on the review of literature and theories on supply chain management techniques, a quantitative and qualitative descriptive analysis was carried out on supplier lead times, inventory levels, demand, and steel price actions from available data of the existing practice to ascertain the root cause of excessive inventory. Microsoft Excel was used to visualize data and perform quantitative calculations. The findings centered on uncertainty in supplier lead times and demand variation of steel plate in tons as a major cause of inefficiencies such as high inventory level, low inventory turnover ratio, and significant capital tied up in inventory.
An integrated inventory management strategy was proposed to mitigate these challenges: a combination of VMI and a three-container Kanban. The impact of the quantitative benefits of the proposed improvement shows flexibility in stock management, a reduction in inventory capital tied up by 40%, and improved cash flow.