How much is enough? Too much or too little can be big problems.
In the automotive supplier world the principals of Just in Time require specific attention to what quantities of parts are shipped to various plants on a weekly, daily, or even hourly basis. If too many parts are shipped, the receiving plant will be forced to store inventory for future car builds [a bad thing]. If not enough parts are shipped, the receiving plant may have a shortage of parts for immediate production work [a VERY, VERY bad thing].
At first glance, hitting the target shipments would seem to be no problem. With additional investigation you see that the balance of shipments and consumption is a fragile framework, further complicated by automotive-only terms: CUMs, Release Management, KANBAN, and other terms that are the day to day life of a supplier. Not only are these terms and quantities unique for each customer’s order, but they can also vary based on destinations. Add to the fact that the inbound transmission of the demands…. Commonly delivered via EDI… can be stable or move up or down based on anticipated sales, plant closings, or other global and local issues. Further add the implications of getting the raw materials in the plant for the fabrication date early enough to hit the ship targets, especially when some items might have long lead times.
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by AIM Computer Solutions