A major tier one automotive supplier was faced with the challenge of reducing their finish goods inventory by 50%. The benefits would be less non-value added warehouse space needed, less cash tied up in inventory and having inventory become obsolete due to model year changes. The supplier currently held about 60 days worth of finish goods inventory and wanted to shrink it to 30 days. The challenge would be whether manufacturing could produce to order instead of a forecast and whether finished goods could travel from the manufacturing plants to a central warehouse and then to the customer within the order window.

It was decided to create current and future state value stream maps of the customer demand, inventory control, scheduling and warehousing operations to get a visual and better understanding of where obstacles might be located and their impact on inventory and timing. The maps would provide a “big picture” look at the entire system and how the different parts relate to one another. Another important aspect was to show the relationship of information flows to material flows. After the current state value stream maps were created, the obstacles in scheduling and manufacturing to order were visible to management. Future state value stream maps were created to streamline the product flow and define the steps necessary to shrink finished goods inventory by 50%.