A manufacturer of automotive and truck suspension products
Problem
A manufacturer of automotive and truck suspension products had a base of more than 75 individual suppliers, purchasing more than 700 individual component parts from them. The customer sourced, purchased, and managed all these parts, then shipped approximately 75% of them to an outside contractor who performed kitting services. The finished kits were then shipped back to the customer’s warehouse, where they were stocked until production. This approach led to multiple purchasing personnel being needed to manage these components. It also resulted in inventory being held at multiple locations at a dollar value in excess of $1.3 million on average.
Solution
Challenger collaborated with this customer to create a multifaceted solution: 1) Challenger took over the sourcing, purchasing, quality and warehousing functions for all class C components; 2) We worked with the customer’s engineering department to reduce the total number of components through part consolidation and communization of certain components; 3) Challenger set up five in-house kitting lines to perform the kitting functions., eliminating the need to hold inventory at multiple and reducing the safety stock typically held by the customer; 4) The customer was then able to buy finished kits for most of its requirements, reducing the number of component parts which had to be maintained in its systems; 5) Challenger and the customer developed a Kan-Ban for finished kits, replenishing the production cells as needed while further reducing the customers inventory and associated carrying cost.
Results
This customer’s class C component inventory reduced from $1.3 million to less than $900,000 on average.
They no longer needed to manage relationships with 75 suppliers.
Kitting functions were consolidated in-house, eliminating duplicate inventory.
The customer was able to reduce total component part numbers they managed from 700 to approximately 550.