The use of strategic inventory and packaging postponement to address daily demand variability and seasonal demand patterns in a demand flow environment

Abstract

This LFM thesis describes how Eastman Kodak Company (Kodak) used a strategic buffer of in process inventory and delayed final packaging of end-items to address two issues that surfaced after a recent implementation of a demand-driven process in their film finishing operation. By select placement of inventory and a judicious prebuild of spools upstream of the packaging operation, Kodak has reduced manufacturing costs, maximized their ability to respond to consumer demand patterns, and minimized end-item delivery concerns associated with both daily demand variability and seasonal demand patterns. This research work was conducted during a six and a half-month internship at the manufacturing site, Kodak Park in Rochester, New York. The internship was affiliated with the Massachusetts Institute of Technology's Leaders for Manufacturing program. This thesis describes the technical analysis and justification for the decision to pursue this manufacturing strategy at Kodak. The concepts of strategic inventory placement and packaging postponement ( delayed differentiation) are discussed in the context of this particular application and are generalized for other manufacturing processes. In the interest of protecting company confidentiality, the numbers presented in this thesis have all been disguised. The justifications for pursuing this particular strategy within Kodak as well as generic guidelines for when these strategies may be applicable are discussed in the context of this thesis.