Pulling a job shop into supply chain management

Abstract

The Instron Corporation in Canton, MA, manufactures material testing systems. These systems are used to evaluate the tensile strength of metals, plastics, composites, textiles, and other materials by holding a test sample at each end with a mechanical "grip," pulling in opposite directions, and measuring the applied forces. This thesis describes the efforts of a project improvement team chartered to dramatically reduce inventory for a variety of mechanical grips without increasing cycle time or component fabrication costs. The author developed optimization techniques, queuing theory models, and simulation tools to guide the improvement efforts. The project team achieved a thirty-percent reduction in grip inventory in six months by consolidating redundant supply chains, changing from a make-to-stock to a make-to-order process, and changing from material resource planning to pull production. The inventory reduction increased the inventory turns from less than two to over four turns per year. Strategic inventory placement models suggested the problem could be split into two separate approaches: (1) managing the capacity of the job shop to meet the increased demand from supply chain consolidation; and (2) developing a control system for component and raw material inventories. The analysis of the capacity of the grip assembly job shop uses optimization techniques to specify the assembly lot sizes for the various grips and queuing theory to estimate the reserve capacity required to maintain cycle times under probabilistic demand. Simulations of the job shop assembly process validate the analysis and resource management plan. The continuous review control system specifies reorder points and order quantities for the hundreds of detail components and raw materials. The team's efforts are expected to reduce inventory by a similar amount in the coming months as excessive stocks are consumed. Recommendations for further reductions include improved component outsourcing, disposition of slow-moving inventory, and optimization of safety stock levels. Implementation of these recommendations will lead to inventory reductions of similar magnitude.