Visual replenishment methods in the manufacturing industry and suggestion for a decision tool

Abstract: In almost all supply chains, materials need to be stored or buffered, implying that manufacturing companies need effective replenishment methods. However, this is challenging, since companies must balance inventory costs and customer service in complex and different situations. Therefore, it is important to choose replenishment methods carefully. One well-known and widespread method is Material Requirements Planning (MRP). But the method has problems, such as regarding volume flexibility. There are other methods, but the literature lacks case studies and detailed descriptions and analysis of them, especially for visually oriented methods. Therefore, it is important to explore different methods for materials supply.The purpose of this study is to analyze the application of visually oriented replenishment methods in manufacturing industry and further to design a tentative decision tool for selecting methods. The research aims to provide some answers to three key questions.The first research question concerns general factors that are important for evaluating how effective replenishment methods are. From the literature review, different factors emerged such as product characteristics (fit in the Kraljic matrix, volume issues, size, etc.); information, trust, and geographical proximity between supplier and customer; and different logistics goals (delivery service elements, tied-up capital, use of resources, inventory accuracy). It is also import to include the basic principles methods are related to. The factors were summarized in an analysis model, which is structured with three main areas (planning environment/conditions, basic principles, and effects). The model is used to analyze four case studies.The  second research  question focuses  on  the  characteristics for  visually orientedreplenishment methods. Examples of characteristics are: easy to understand and operate, offers uncomplicated flows, substantially applicable for noncritical and leverage parts with high yearly requirement and fairly even consumption, provides potential for  reduced  errors  in  stores/flows, potential for  providing high  delivery service and low levels of tied-up capital and resource utilization.The third research question focuses on what a tentative decision tool for selecting replenishment methods might look like, based on the factors that emerged from the other research questions and studies by others. In order to achieve an efficient materials supply, companies need to consider these factors when selecting replenishment methods. The decision tool consists of different steps, considering aspects of the planning environment/conditions in relation to the product and the supplier. The importance of the companies’ goals/motives for materials supply must also be assessed. The output from the decision tool is appropriate replenishment methods.