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Inventory Control Blue Paper

Inventory Control Blue Paper

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Published by 4imprint
At Green Gear Cycling, makers of the Bike Friday foldable travel bike, each bike is
built to order. Inventory is small and the company doesn’t stock partial works-inprogress.
At Green Gear Cycling, makers of the Bike Friday foldable travel bike, each bike is
built to order. Inventory is small and the company doesn’t stock partial works-inprogress.

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Published by: 4imprint on Jun 15, 2010
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12/04/2010

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Inventory Controland On-DemandManufacturing
 
© 2009 4imprint, Inc. All rights reserved
Just Right, Just-In-Timeand Never Too Much
At Green Gear Cycling, makers of the Bike Friday foldable travel bike, each bike isbuilt to order. Inventory is small and the company doesn’t stock partial works-in-progress.From color to size, every bike is a custom project. As co-owner Alan Scholz says,“We’re a flow company.” Green Gear receives product daily and ships daily. “Every day we have stuff going in and stuff going out.”
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Bike Friday manufactures about 3,000 folding single, tandemand triple bikes per year at its facility in Eugene, Oregon.
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Whendemand ramps up, Green Gear ramps up with it, calling in officestaff or temporary help to pitch in on the production line.
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 From inception, the folks at Green Gear adopted just-in-timeproduction concepts. The philosophy behind just-in-time is not tosell products that have been produced, but to produce products to replenishthose that have been sold.Just-in-time (or JIT) proponents describe this as the difference between push andpull production systems. In JIT, customer orders trigger the production process—essentially pulling components and supplies down the line.Just-in-time is most commonly associated with inventory control systems as this“pull” philosophy has significant implications for raw materials and inventory. Therule, essentially, is don’t buy it (or build it) ‘til you need it.Within a just-in-time system, managers adopt the policy that it is best to have theright materials at the right time in the right place and in the right amount.Anything outside of this “just right” system is considered wasteful. The ideais that having parts or goods simply waiting on shelves is not the best use ofcompany resources. Inventory ties up cash as well as space that could be usedfor production. This inventory is also subject to theft, damage, or perhaps morecommonly—obsolescence.
1 “Bike Friday Factory Tour Video - Part 4.” The Gal From Down Under. 05 Mar. 2009<http://www.galfromdownunder.com/movies/WEB-bf-factory-tour-part4.mov >. 2 “Oregon Companies Keep Production Local.” Bicycle Retailer and Industry News. 05 Mar. 2009<http://www.bicycleretailer.com/news/newsDetail/2189.html >.3 Stevens, Tim. “Pedal Pushers.” Industry Week 17 July 2000.
 
© 2009 4imprint, Inc. All rights reserved
Once you eliminate the risks and carrying costs of inventory, yourorganization can become more flexible and responsive. Gone are thedays of stalling a product enhancement or pushing product on aclient while you wait for inventory to draw down.What’s more, JIT proponents argue that excess inventory hidesweaknesses in the production cycle and that reducing inventory forcesgreater quality control throughout the operation—with everything from fewerproduction mistakes to better customer service.As one of the leaders at Toyota—the company generally credited with developing just-in-time—once said, waste is “anything other than the minimum amount ofequipment, materials, parts, space, and worker’s time, which are absolutely essentialto add value to the product.”
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Under this definition, waste includes overproduction,waiting, transport, inventory, unnecessary motion, and product defects.The JIT philosophy is that inventory should not act as a mechanism foraccommodating inefficiencies in other areas of the system. By optimizing the supplychain, inventory (i.e. waste) is reduced.Multiple opportunities for waste exist throughout the supply chain. A JIT initiativeendeavors to eliminate as many inconsistencies as possible including:
•RawMaterials:e.g.variablequality,unreliabledeliveryManufacturing:e.g.unpredictableproduction,set-up
 times, staff productivity
•Distribution:e.g.inconsistentproductrequirements
Just-in-time principles are closely aligned with lean manufacturing.Lean systems seek to reduce operational inefficiencies and wastethrough a total system of continuous improvements. Just-in-time isone of multiple tools in a lean initiative.
Always better
At Green Gear, customization goes far beyond color choices. Customers submit theirheight, weight, inseam measurements, age, and preferred riding position with everyorder. The company builds bikes to accommodate everyone including children, littlepeople, and the very tall.Standard delivery time is four weeks, although the company can accommodate lastminute orders—for a premium.
4 Hyer, Nancy Lea. Reorganizing the factory competing through cellular manufacturing. Portland,Or: Productivity P, 2002.

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