Inventory reduction : applying a pull ordering system to a distribution business

Abstract

This thesis is a description of an internship project at an aerospace parts distribution company. The goal of the project was to reduce inventory by applying a pull ordering system to the distributor's value chain. The thesis provides background on the theory of "push" vs. "pull" systems, and a discussion of how pull systems can reduce inventory while maintaining or improving service level. Typically, pull systems are applied to situations of relatively frequent and constant demand. Using a model developed for the internship company, we demonstrate that a two-bin kanban refill system can be applied to reduce inventory by 50-60%, even given a situation of volatile demand. We describe the pilot project (currently in progress) intended to prove out the kanban system's performance, including the team composition, implementation plan, and perceived barriers to implementation. In conclusion, we reflect on the project's results and present suggestions for future improvement.