Hitachi Astemo

Apr 2, 2022
Auto and Auto Ancillary,Case Study

Goal

Improve material availability to production lines, reduce inventory

Plan

Training for vendors, buffer management put in place, plant team, supply chain management team

Problems Identified

Sales loss at dealer level or OEM/OES

Lack of availability at warehouses

Loss of production/capacity

High Expediting Cost/Premium Freight

Shortages at the assemblies

High Expediting Cost/Premium Freight

High Stress level

Solutions Provided

Improved availability at the child part level

Going from Push/Forecast based to Pull

Decoupled the plant from market and suppliers from the plant

Buffer building at RM level, Assembly level and plant level to absorb demand and supply variation

Putting single priority system throughout the organisation

Improved coordination between planning and production

Results

Owing to the solutions provided, Hitachi Astemo could significantly improve its performance in mainly two aspects.

  1. The inventory was reduced by 5 days. This resulted in huge cost-saving, which in turn translates to an increase in company profits. If the inventory time is longer, a lot of additional costs get added, making the process inefficient, and cost-ineffective. By changing the approach of production from push-based to pull-based, they were able to control and deliver optimum productivity, without losses or excess costs involved.
  2. Many times a supply chain desired material is not available on time which creates unnecessary delays in production, delivery, and ultimately affects the profit margins of the companies. Hitachi Astemo could substantially improve on-time delivery of components thereby resulting in faster and more efficient operations.  By decoupling the plant from the market and suppliers from the plant, the company could ensure that components are delivered on-demand, and on time.

Along with these two major results, the overall performance parameters reflected growth and end to end system management approach helped in sustained positive profit levels.

Holistic Consulting led by Aditya Pandit is working with us on improving two very important business aspects i.e. material availability to various production lines and reduction in inventory. They have been really successful in achieving substantial progress on both fronts. Holistic conducted training for our vendors, they went to their shopfloor, coached them and got buy-in from them on buffer management following the ToC principle. They also worked with our plant team, supply chain management (SCM) team, buyers and related functions to mobilize support for resolving vendor issues. As a result of this very structured journey and hard work, our inventory is reduced by 5 days and also substantially improved on-time availability of components. We now have a good system to manage material with an end-to-end approach. Right from raw material to finished goods (F.G.) stocks at the warehouse. Thanks to the Holistic team and wishing them all the best!
 
Anil Khandekar

Business Unit head – ASIA – Brakes Business Unit
Hitachi Astemo