Improvement of inventory management in a stamping manufacturer using lean techniques

Abstract

One of the major challenges faced by small and medium enterprise (SME) industry is in managing inventories. Inaccuracies in inventory create various problems such as loss of productivity, unwanted items manufactured, difficulty customer needs, the accumulation of costly physical inventories and others. Majority of SMEs are doing inventory management based on the experience and intuition of the entrepreneurs. However, most of them have limited knowledge of production technique in resolving non-value-added activities in the production operation. This research aims to establish a framework on lean implementation in SMEs in enhancing inventory management. A stamping manufacturer company in automotive industry was selected as a case study. This is a mixed method case study. Observations of the production process time and inventory level were done to establish the value stream mapping (VSM). This study adopted lean tools for enhancing inventory management, and the implementation of lean tools begins when non-value added area detected. The project Risk Failure Mode Effect and Analysis (RFMEA) had been adopted for the selection of lean technique risk assessment for inventory improvement and current production floor environment. In addition, a five-point Likert scale survey was conducted with 85 staff in the operation team to identify the barriers affecting lean implementation and causes of non-value added. The findings showed the implementation of lean techniques such as supermarket storage racking concept for work-in-progress inventory, Kanban pull system for finished goods inventory, and “Kaizen” activities for process setting had improved the inventory to sales ratio and reduction in non-value-added activities. This study has established a framework for lean implementation for SMEs in managing effective inventory management. This framework is useful for SME entrepreneurs and managers to assess the inventory production against customers’ demands. Future studies should consider products in other industries.