Analysis and reduction of excess inventory at a heavy equipment manufacturing facility

Abstract

The research presented in this thesis explores two hypotheses focused on excess inventory at a heavy equipment manufacturing facility. The scope of the thesis includes inventory in the form of raw materials, purchased components, and work in process parts found at the facility and in the off-site storage warehouse. The first hypothesis proposes that excess inventory at the facility has several key root causes, and that their elimination drastically reduces the accumulation rate of excess inventory. The second hypothesis proposes that a basic material review process could be effective in identifying and reducing excess inventory at the facility in a six-month timeframe. The hypotheses were tested over a six-month period at a Caterpillar Global Mining facility. The first hypothesis was not confirmed. More than twenty root causes of excess inventory accumulation were identified and no evidence was discovered that would suggest that certain root causes are dominant. The second hypothesis was supported by the findings at the facility. The organization was able to formulate a basic material review process, apply the process to the facility's inventory, and reduce excess inventory by roughly 35% over a three-month time span.