Study of the role of Strategically Managed Inventory (SMI) in the Caterpillar supply chain
Author(s)Rowan, Brandon (Brandon Christopher)
Study of the role of SMI in the Caterpillar supply chain
Leaders for Global Operations Program.
Daniel Whitney and Stephen Graves.
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Strategic Managed Inventory (SMI) is an inventory replenishment process deployed by Caterpillar that blends elements of Vendor Managed Inventory (VMI) and Collaborative Planning, Forecasting, and Replenishment (CPFR). The SMI process calls for Caterpillar's suppliers to control the material replenishment process and hold inventory in strategic locations. SMI is designed such that Caterpillar and the supplier collaborate on replenishment plans and forecasts to ensure that material moves efficiently through the supply chain. The process is aimed at increasing supply chain flexibility, responsiveness and performance. This paper examines the current deployment of the SMI process in Caterpillar's supply chain in an effort to determine how the company can go about better leveraging this capability. It proposes potential frameworks for the identification of future SMI opportunities and part suitability. It also looks at the drivers behind SMI in cost evaluation. While there are some challenges identified with the process by the study, the study concludes that the SMI process does lead to benefits for Caterpillar and its suppliers. It suggests that these benefits could be better leveraged by growing the capability slowly using the most proficient suppliers, establishing oversight for the SMI process, increasing supplier vetting, and crafting a way to gain visibility into current SMI usage.
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Mechanical Engineering; in conjunction with the Leaders for Global Operations Program at MIT, 2012.Cataloged from PDF version of thesis.Includes bibliographical references (p. 75-78).
DepartmentLeaders for Global Operations Program at MIT; Massachusetts Institute of Technology. Department of Mechanical Engineering; Sloan School of Management
Massachusetts Institute of Technology
Sloan School of Management., Mechanical Engineering., Leaders for Global Operations Program.