Development of technical standards and optimization of working capital

Manufacturing Planning and control The purpose of this study is to identify and evaluate the main impacts of technical standards, for the production and inventory management has, over the automotive industry and in particular on logistics and working capital. In order to address this problem, both documentary research and an analytical approach was used, to first understand the problem and eventually provide a quantitative analysis on selected and limited aspects. The literature research is addressed to understand the impacts of work in progress (WIP) and safety stock on working capital of Production Company. In today’s manufacturing environment, different parts, manufactured in-house and bought from suppliers, are often assembled together into a finished product. Competition has made it very important for companies to deliver a customized product on a promised date. However, when inventory items are missing at the time of production, lead times for products become uncertain and this makes it difficult to fulfil a customer order on due date. It is thus important to explore the causes of missing items at the time of production in order to solve such a problem. For that purpose, companies are developing certain standards to meet customer demands and to work without any interruption. These standards serve to identify the required safety stock level for production and to reduce the cost and time. Furthermore, to increase the working capital and profitability of a manufacturing company, it is important to evaluate the losses during production process. To understand this problem, inventory management is considered the best tool. By looking at the missing item and their root causes, we can eliminate those problems and in return increase the profitability.