The article is based on the authors’ practical experience gained in a large manufacturing enterprise carrying out unit production for individual orders. The company’s products have complex material structures, ranging from 500 to over 1,000 assemblies and generic parts per product.
The assembly company offers highly customized products due to customer needs, where production preparation processes are of key importance. An increase in the degree of customization is associated with shifting the decoupling point, where the main stock is created in the logistics system, towards raw materials and sub-assemblies.
The course of ABC/XYZ analysis in an assembly company
Due to the significant number of changes in the enterprise during the research, conducting the analysis was not a routine task (Figure 1). The biggest obstacle hindering the analysis was the lack of an implemented ERP-class system from which the data needed for the analysis could be retrieved. Instead of one system, there were three incompatible ones with an inconsistent index base.
Due to the company not having an ERP-class system, information on material prices was incomplete. Consequently, obtaining current prices of goods necessary to conduct the ABC analysis proved time-consuming. Additionally, about 35% of transactions were concluded in currencies other than PLN, and they had to be converted to PLN before starting the analysis.
A derivative of the lack of a uniform index base was the problem with aggregating material outflows from all available IT systems. This made it difficult to calculate the consumption variability indicators needed to classify goods into group X, Y, or Z. The demand variability for individual materials was divided into 16 months, and then the standard deviation of consumption and the average monthly consumption in this period were calculated. Items characterized by consumption variability from 0 to 25% were classified into group X, those from 25.1% to 60% into group Y, and indices with consumption variability above 60% into group Z.
Another obstacle in conducting the analysis was the lack of information in the IT system about warehouse turnover with one supplier, who mainly supplied fasteners used for product manufacturing. This limitation could not be eliminated, which is why the presented analysis does not include a group of over 1,000 assortment items. The missing items were analyzed in the supplier’s system, and it was found that most of them would be classified into group C. Nevertheless, due to the very large group of analyzed assortment items, the lack of the above indices did not distort the results.
The article comes from the “Logistyka” magazine 1/2010.