A team of students comprising of Talati Utsav A, Pathak Arnav S, Vaishay Jasmit F and Bhatiya Paurash K from Ahmedabad Institute of Technology have scouted and solved a very pertinent industrial problem. At the manufacturing plant of a major global heavy auto manufacturer they came across a very typical challenges that the company was facing due to localized procurement of auto parts. Further analysis of the problem lead the team to discover a range of other problems that were impeding efficient operations. The problem resulted in cost escalations for the company.

Primarily the company had its R&D operations in United States. The company has a practice of bringing new designs and upgradations to existing models at a regular interval. All of these upgradations, new designs and technology is introduced by the US based R&D department. Often when the new technology is adopted for local production, the adoption is not optimum, as there is no effort for the adaptation of design/technology for local production.. The specifications sheet of models are used as it is.
Local procurement of auto parts is a major practise of global MNCs to keep the cost of local production low. For both due to logistics and the availability of cheaper local  components , companies often work hard to procure locally. This often has quality issues. The same practice is also followed at this plant. Many different models at auto MNC use many same components. Therefore the components that the new models share with other models are easy to replace, even though they do create quality issues. for e.g. The orifice used at the compressor jet which when imported from U.S has a engineering life of 15 years while that used from the local ancillary industries have a unsteady life of average 2-3 years.
The student also observed that these parts are stored in a large inventory area manned by only two individuals. The team also observed that the stocks are not tagged properly according to which  components  will go into production of which model. the stocks are also generally a mix of different vintage and manufacturers.  The lack of tagging of  components  according to each model makes it difficult to estimate which  components went into which models. The inventory area stocks a large number of local parts which also go into the production of new introduced models. And the lack of ability to track the parts according to models coupled with the problem of inferior local parts, makes quality control very difficult for new/upgraded models. This reduces the ability to control quality and assess the defects back to the manufactures or the component source (by date or manufacturer).
Further the lack of tagging also makes inventory planning more difficult. The company generally have production schedules according to model type. Thus based upon the production volumes and the used component list. It should be easy to forecast inventory shortage and hence procure efficiently. But again the lack of tagging and break up of inventory stock list by models fails impedes efficient procurement.
Additionally due to lack of tagging increases the dependency of the unit upon the two individuals who currently operate the inventory racks. with proper tagging available it will make it easy for other personnel to access and operate the inventory racks.
Thus the team has proposed the company to develop and implement a system of tagging of components with vintage/manufacturer and according to model type.
Advertisements