Increase Awareness for Pull Replenishment Systems

The Assignment

The Continuous Improvement team at a major aluminum producer in North America investigated the potential for reducing work-in-progress inventory levels across the supply chain through the introduction of Lean manufacturing techniques. They determined that a pull system using a replenishment buffer to control the level and flow of materials into the plant would resolve the high levels of work-in-progress.

To analyze the extent of the reduction and establish the level of safety stocks, the team required an Ingot Replenishment Buffer Simulation that would help determine appropriate Ingot inventory levels to support its plant operations under a pull replenishment buffer system. In the simulation model, a number of factors affecting the replenishment quantities of raw material Ingots included:

  • Variability of supply,
  • Production lead times, and
  • Pattern of demand.

The Solution

Visual8 developed the Ingot Replenishment Buffer Simulation to demonstrate the flow of materials through the plant under the proposed pull system. The simulation helped establish the level of ingot inventory required to accommodate historical supply, process, and demand variances.

To establish the optimal ingot buffer levels and demonstrate the value of the system to Senior Management, the simulation model tracked individual ingots and aluminum coils through the process to finished goods. The simulation also included:

  • Supply of ingots and product demand,
  • Equipment availability,
  • Process times,
  • Reliability, and
  • Batching rules with routing options.

The Ingot Replenishment Buffer Simulation allowed users to control demand levels, product mix, and plant layout and operating characteristics through the simulation’s internal spreadsheets. The customizable input parameters included:

  • Supply patterns,
  • Process cycle times,
  • Demand profiles.

Key performance indicators and summary reports of the plant operations, inventory, and delivery service levels were provided in output spreadsheets for the users to view.

The Results

The Ingot Replenishment Buffer Simulation provided the Company with a tool to test and establish the level of ingot and finished goods inventory required to accommodate the variability of supply, production, and demand under a pull system. As such, the simulation showed the level of inventory reduction that could be supported without adversely affecting customer service levels.