Sponsor:

Lockheed Martin Aircraft & Logistics

Research Team:

Kevin Taaffe, Matthew K. Miller

Universities Involved:

Clemson University

Start Date:

09/01/09

End Date:

08/31/10

Summary:

The objectives of this project are to Identify accumulations of residual inventory, determine sources of / reasons for residual inventory accumulation, quantify the financial impact of residual inventory, and associated materials management costs, and Improve processes within which materials are managed to realize potential savings
Routine maintenance, repair, and overhaul (MRO) of aircraft includes mostly standard work, but often there are “Over and Above” work requests for unanticipated repairs
* These requests require a certain level of on-hand inventory in order to continue working on aircraft and minimize delays
* Each piece of inventory requires an inventory cost investment
Project objectives are to improve processes managing materials by
* Reducing total inventory investment without increasing stockout risk
* Increasing the visibility of supplier-related data (e.g. lead time) to reduce the need for additional buffer inventory
* Reclassifying work requests to encourage holding predictable inventory requirements
Residual inventory was contributed to 65% of total material management costs. Surprisingly, we did not observe much commonality between parts used on the 11 different aircraft under study, but looking at higher-level material groups and types does narrow down the scope of where residual material is coming from-this is an area worth further investigation. A ‘what-if’ analysis showed that if the quantity of residual material could be reduced by 50% to 99%, LM would realize a 33% to 67% savings on overall material management costs. Recommendations for achieving potential reductions in residual inventory include the following: improve visibility of true residual material within the company’s computer-based inventory system, releasing leftover material from its ties to a particular aircraft/project within a timely manner, and utilizing more traditional forecasting and MRP techniques to achieve further residual inventory and materials management savings.