The Automotive industry – Inventory and issues of fleet. Theory of constraint
Throughput: There is limited inventory of a specific vehicle domestically and it is really cutting into potential sales and profitability
Inventory: Limited number of vehicles available in the US is hurting growth and our market share potential. The issue at hand correlates directly to inventory
Operating expense: Legal issues and logistic costs to bring more vehicles over from overseas. Potentially the opening of a domestic plant would be a huge operational cost.
Bottleneck: limited availability domestically is putting a real strain on our operating potential
5 step process 1.) Identifying the bottleneck: There has been a real problem with our distribution channels lately. We receive cars from overseas (Europe) where all our vehicles are made. The time it takes for the cars to get from Europe to our US ports can sometimes be up to a month or more! Lately we have seen a shortage in specific car types and this shortage have hurt our dealers sales due to the fact that we do not have the vehicles they want, so they go elsewhere. We need a better process around getting vehicles early whether it is a new forecasting method or opening a building warehouse domestically. 2.) Exploit Bottleneck: Our Company could create a forecasting tool which is used in other industries and companies alike that predicts sales volume month in advance hence making the distribution of cars from overseas more efficient. We can predict the number of vehicles we will need in advance, which would allow us not having to turn customers away because we do not have the inventory at the time. The other and easier solution would be to open a factory domestically to cut down on time. 3.) Subordinate everything: If the bottleneck is lack of vehicles for sale we can try and convince our factories overseas to