An analysis of how a Car Shop Repair can minimize shortages while reducing inventory stock on hand by $383,000.

1. Analyzing Top 10 Critical Parts Car Shop Repair
Kaizen Analysis
Mar 24‐25, 2010
Car Shop Repair & Store
Current Status
Opportunities
Solutions
Summary

2. Top 10 parts shortage list
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Identified by Car shop team in Kaizen event # 1, updated by Jim, Car
Supervisor, and Lyn, Store Supervisor in Kaizen event # 8.
# Material Material Description
1 023AXXXX PIN,KNUCKLE,E,F,H COUPLERS
2 023BXXXX KNUCKLE,E COUPLER,E50AE,E50HTE,E50BE
3 023CXXXX ADAPTER,RB,HARDENED,6X11
4 023DXXXX ADAPTER,RB,HARDENED,6-1/2X12
5 023EXXXX BRAKE SHOE,COMP,CAR,1-1/2",STD V472
6 023FXXXX BRAKE SHOE,COMP,CAR,2",STD V474
7 050AXXXX WHEELSET,6-1/2X12,RB,CJ36
8 050BXXXX WHEELSET,6X11,RB,J33
9 050CXXXX WHEELSET,7X12,RB,B-38
10 025AXXXX HOSE ASSY,T/LINE,DUAL LOCK,LOW TEMP

3. 3
Counting info
All 10 parts are considered “A” parts, a weekly counting
is required;
A time study done on March 25, 2010 shows that a
material handler spend 11 minutes to physically count
them (no SAP transactions were done);
A total of 44 minutes will be required in a month and
572 minutes in a year (52 weeks) to count these 10 part
numbers;

4. Additional information
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Material Material Description Price
12 months
usage 12 month value
Monthly
usage
Monthly
value
Safety
Stock
023AXXXX PIN,KNUCKLE,E,F,H COUPLERS $11.60 2,250 $26,100 187.5 $2,175 251
023BXXXX
KNUCKLE,E
COUPLER,E50AE,E50HTE,E50BE $161.24 96 $15,479 8.0 $1,290 8
023CXXXX ADAPTER,RB,HARDENED,6X11 $10.01 100 $1,001 8.3 $83 13
023DXXXX ADAPTER,RB,HARDENED,6-1/2X12 $14.74 1,169 $17,232 97.4 $1,436 80
023EXXXX
BRAKE SHOE,COMP,CAR,1-1/2",STD
V472 $7.02 30,240 $212,256 2520.0 $17,688 1600
023FXXXX
BRAKE SHOE,COMP,CAR,2",STD
V474 $7.73 38,676 $298,826 3223.0 $24,902 4070
050AXXXX WHEELSET,6-1/2X12,RB,CJ36 $1,475.06 3,455 $5,096,342 287.9 $424,695 261
050BXXXX WHEELSET,6X11,RB,J33 $1,597.90 3,504 $5,599,033 292.0 $466,586 265
050CXXXX WHEELSET,7X12,RB,B-38 $1,980.83 518 $1,026,069 43.2 $85,506 38
025AXXXX
HOSE ASSY,T/LINE,DUAL LOCK,LOW
TEMP $20.70 1,090 $22,558 90.8 $1,880 74

5. 20% of parts is 87% of inventory value
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For a 30 day lot size:
Inventory value of all 10 parts is $933,441
Inventory value for 050AXXXX and 050BXXXX is $808,431

6. Increasing Inventory Turnover for the 2 Wheel sets
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Actual Safety Stock is 261 for 050AXXXX and
estimated 265 for 050BXXXX This means 4 weeks of
inventory.
By reducing inventory by 50% and doubling frequency
of orders, the supplier will roughly need the same
time to produce them and car shop repair needs to
stock half of the inventory ($404,217 instead of
$808,434).

7. 7
Increase inventory stocks for 5 parts
Parts 023AXXXX, 023CXXXX, 023DXXXX, 023EXXXX, and
025FXXXX are 0.75% of total inventory value of the 10 parts
analyzed here.
Inventory of these parts can be increase from 1 month worth of
inventory to 4 months worth of inventory and they can be
classified as “C” parts, and can be counted quarterly.

8. 8
Actual Vs. Future State
Actual Future
Material Material Description Price
Safety
Stock Value
Counts in
a year
Safety
Stock Value
Counts in
a year
023252700 PIN,KNUCKLE,E,F,H COUPLERS $11.60 251 $2,912 52 1004 $11,646 4
023252007
KNUCKLE,E
COUPLER,E50AE,E50HTE,E50BE $161.24 8 $1,290 52 32 $5,160 4
023177105 ADAPTER,RB,HARDENED,6X11 $10.01 13 $130 52 52 $521 4
023177154 ADAPTER,RB,HARDENED,6-1/2X12 $14.74 80 $1,179 52 320 $4,717 4
023535799
BRAKE SHOE,COMP,CAR,1-1/2",STD
V472 $7.02 1600 $11,232 52 1600 $11,232 52
023535815 BRAKE SHOE,COMP,CAR,2",STD V474 $7.73 4070 $31,461 52 4070 $31,461 52
050010272 WHEELSET,6-1/2X12,RB,CJ36 $1,475.06 261 $384,991 52 131 $193,233 52
050010314 WHEELSET,6X11,RB,J33 $1,597.90 265 $423,444 52 132 $210,923 52
050032201 WHEELSET,7X12,RB,B-38 $1,980.83 38 $75,272 52 38 $75,272 52
025891002
HOSE ASSY,T/LINE,DUAL LOCK,LOW
TEMP $20.70 74 $1,532 52 296 $6,127 4
Totals: $933,441 520 $550,291 280
Benefits:
Reduce value of inventory by $383,151 and number of counts by 47%;
For 50% of parts, reduce time spend by the buyer on reordering them by 75%

9. Additional comments
PN 050CXXXX can be added to PN 050AXXXX and PN
050BXXXX, being done by same supplier and safety stock
having a current value of $75,272. Those 3 parts are 94.67%
value of top 10 critical parts for Car Shop Repair.
Supplier can continue to work on current lot sizes; he just
has to ship them different quantities.
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10. About Lucian Arsene
12 Years Experience in Production
Management
8 Years leading/facilitating Lean
Projects
3 Years Consultant in Process
Improvement
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11. About Lucian Arsene
Improving productivity by 56% while reducing manpower needed by 40%, in a matter of
days;
Doubling inventory turnover in less than three months, reducing material inventory from
$3 million to $1.6 million,
Squeezing the manufacturing lead time by 70%, from 4‐6 weeks to 3 to 10 days, improving
on‐time delivery from 40% to over 95%,
Improving stock accuracy from low 60% to 98%;
Reducing late deliveries from 321 days to 5 days in two months, and minimizing weekends
overtime from 40% of the workforce to less than 5%,
Reducing machining setups from an average of 265 minutes to 70 minutes,
Redesigning shop floor from functional departments into manufacturing cells, reducing lot
sizes and grouping work orders as families of products;
Eliminating major disruption in flow due to quality rejects by implementing one‐piece
flow;
Give a new opportunity to sales and marketing to increase company’s market share by
segmenting the market and creating different offers, services, options for different
products.
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12. Contact Me
Contact:
Email: larsene@extramilegroup.com
Phone: 604‐552‐3864
Profile: ca.linkedin.com/in/lucianarsene
Website: www.extramilegroup.com
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