Inventory reduction: an analysis on finished goods inventory focused on “Released To Warehouse” lead-­‐ time

Abstract

This Master’s thesis is a part of the SKF cost savings-­‐program Finished Product Stock Optimization, and more specifically to reduce the level of finished products with the status “Released to Warehouse”. Through a pre-­‐study of the targeted warehouses in Tongeren, Schweinfurt and Gothenburg, the biggest improvement potential was found in the inbound flow in Gothenburg. Through this, the focus-­‐area became the warehouse in Gothenburg, while Tongeren and Schweinfurt acted as inspiration on how warehouse operations should be designed, and became subjects for a benchmark study. The inbound flow in Gothenburg was analyzed by applying the two concepts “Process design” and “Capacity matching”, which had a direct impact on the RTW lead-­‐time. Four internal factors for warehouse performance were used to dissect the inbound flow in detail and to investigate how the warehouse operations correlated with the two concepts “Process design” and “Capacity matching”. The empirical data indicated that the processes in the inbound flow experienced high variations in performance as a result from continuously being neglected in favor of the outbound flow. This was confirmed in the analysis, where three factors having a direct negative impact on the RTW lead-­‐time was found: the lack of information-­‐transparency about arriving trucks, the coordination between processes within the warehouse and how the standards for how to handle goods in the buffer were designed. In order to improve, management must start to measure the inbound flow and increase information transparency between personnel. The information is available, but the right people are not informed, which impedes coordination and planning, leading to poor performance.