Wheeled Coach, the world’s largest manufacturer of ambulances, builds thousands of different and constantly changing configurations of its products. The custom nature of its
business means lots of options and special designs—and a potential scheduling and
inventory nightmare. Wheeled Coach addressed such problems and succeeded in solving a
lot of them, with an MRP system. As with most MRP installations, however, solving one set
of problems uncovers a new set. One of the new issues that had to be addressed by plant
manager Lynn Whalen was newly discovered excess inventory. Managers discovered a
substantial amount of inventory that was not called for in any finished products. Excess
inventory was evident because of the new level of inventory accuracy required by the MRP
system. The other reason was a new series of inventory reports generated by the IBM
MAPICS MRP system purchased by Wheeled Coach. One of those reports indicates where
items are used and is known as the “Where Used” report. Interestingly, many inventory items
were not called out on bills of material (BOMs) for any current products. In some cases, the
reason some parts were in the stockroom remained a mystery. The discovery of this excess
inventory led to renewed efforts to ensure that the BOMs were accurate. With substantial
work, BOM accuracy increased and the number of engineering change notices (ECNs)
decreased. Similarly, purchase-order accuracy, with regard to both part numbers and
quantities ordered, was improved. Additionally, receiving department and stockroom
accuracy went up, all helping to maintain schedule, costs, and ultimately, shipping dates and
quality. Eventually, Lynn Whalen concluded that the residual amounts of excess inventory
were the result, at least in part, of rapid changes in ambulance design and technology.
Another source was customer changes made after specifications had been determined and
materials ordered. This latter excess occurs because, even though Wheeled Coach’s own
throughput time is only 17 days, many of the items that it purchases require much longer
lead times.
Discussion Questions:
1. Why is accurate inventory such an important issue at Wheeled Coach?
2. Why does Wheeled Coach have excess inventory, and what kind of a plan would you
suggest for dealing with it? 3. Be specific in your suggestions for reducing inventory and how to implement them