Raw Material Purchasing Lead Time Reduction for Reducing Inventory Carrying Cost
DOI: 10.14416/j.ind.tech.2021.03.001
Keywords:
Purchasing lead time, Inventory, ECRS, Microsoft power BIAbstract
The case study company was impacted by often late receive raw materials, especially imported raw materials that has long and high variability purchasing lead time. The company had decided to increase safety stock level to prevent a raw material shortage, which caused high raw material holding cost and storage area. After researched, found the most variable part is the company's internal approval process. The approval process affected 82.4% late behind the standard procedure. The main reason is complicated working steps, lack of information sharing and linkage between departments. Therefore, ECRS and management information systems; i.e. Microsoft power BI program were applied to simplify working activities and share important information for reducing purchasing lead time. As a result, the purchasing lead time of raw materials was decreased by 7.04 days from the original lead time of 95.35 days, the raw materials storage area was decreased by 34.8 m2 from 136 m2, and carrying cost was decreased by 3.4 million baht from 11.5 million baht.
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References
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