In Progress: Cost Reduction and Efficiency Enhancement – Comprehensive Inventory Improvement Initiative for Nidec KDS Elevator Motors

Inventory, sometimes translated as "storage" or "reserve", refers to resources temporarily idle to meet the needs of an enterprise's future business activities. Resources in terms of personnel, finances, materials, and information all involve inventory issues. It also includes products held for sale during production and operation activities, as well as semi-finished products, raw materials, finished goods, and auxiliary materials prepared for production and sales. A reasonable amount of safety stock is conducive to the normal production and operation of an enterprise, endowing its production and sales with significant adaptability and flexibility. However, excessive inventory will inevitably occupy a large amount of working capital, tie up corporate funds, increase the enterprise's warehousing costs, and be detrimental to its efficient operation.

The primary goal of cost reduction is to reduce unreasonable inventory. As is well-known, inventory is the root of all evils. Then, how to reduce unnecessary inventory? How to effectively balance the contradictions among inventory, cost, and delivery? Especially in the current market environment characterized by fast pace, intense internal competition, and fierce market rivalry, maintaining the enterprise's competitiveness has become crucial. Shortening delivery time has also become one of the key tools for enterprises to gain a competitive advantage. By shortening delivery time, enterprises can provide products to customers more quickly, thereby meeting customer needs, helping customers enhance their competitiveness, and strengthening customer stickiness. To achieve fast delivery, necessary inventory is indispensable. To address these issues, Nidec KDS Elevator Motors has launched a series of inventory improvement activities.

01 Well-organized SIOP Meetings

As the saying goes, "To do a good job, one must first sharpen one's tools." Nidec KDS Elevator Motors starts from the source. All departments take sales as the leading driver and are guided by fully supporting customer success. Therefore, the accuracy of source data is of great importance. At the end of each month, Nidec KDS Elevator Motors organizes cross-departmental joint meetings, using the Sales, Inventory, and Operations Planning (SIOP) to analyze and forecast the sales plan for the next 3-6 months. Based on the historical actual shipment volume of customers and combined with the future product sales strategy, the team collaborates to improve the forecast accuracy. Meanwhile, the Operations Department of Nidec KDS Elevator Motors holds monthly order review and bulk material procurement meetings to ensure the orderly operation of procurement, production, and sales. It keeps a close eye on the changing needs of customers, dynamically drives the production plan, ensures the balance between supply and demand, and comprehensively shortens the delivery time. This not only meets the delivery schedule but also effectively controls the inventory at a reasonable level, helping the enterprise improve cash flow.

02 Perfect PFEP Basic Data

While doing a good job in SIOP, Nidec KDS Elevator Motors uses the Plan for Every Part (PFEP) to analyze each finished product, semi-finished product, and raw material. It formulates different production and procurement strategies for each material, scientifically arranges production schedules and issues procurement orders, laying a solid foundation for the subsequent arrangement of raw material delivery and the formulation of product production plans.

03 Strong Support from Digital and Intelligent IT Technology

Nidec KDS Elevator Motors leverages the powerful data functions of systems such as ERP (Enterprise Resource Planning), WMS (Warehouse Management System), MES (Manufacturing Execution System), and APS (Advanced Planning and Scheduling). These systems monitor the changing trend of inventory in real-time and set detailed benchmarks according to different product series, component series, production lines, responsible departments, and responsible persons, intuitively reflecting the inventory changes on a daily, weekly, and monthly basis. During the order execution stage, with the help of advanced IT technologies such as MES and APS, and the application of secondary confirmation of material delivery plans, precise control over the delivery of raw materials is achieved. This ensures that the delivered materials are those needed in the near term and the produced goods are for immediate sales, improving the inventory turnover rate in all aspects and achieving the goal of cost reduction and efficiency enhancement.

04 VSM Improvement, Digital and Intelligent Lean Manufacturing to Shorten Delivery Time

Value Stream Mapping (VSM) serves as the main tool for tapping potential and driving improvement. The operation team introduces VSM improvement, establishes an overall continuous flow pull production system, and comprehensively eliminates and minimizes waste. The transformation of the one-piece flow processing line accelerates the circulation of components, shortens the production cycle, and reduces the work-in-progress (WIP) on-site. The large-scale investment in numerical control equipment comprehensively improves production quality, enhances production efficiency, and optimizes production capacity. The strong operation system supports the effective implementation of cost reduction and efficiency enhancement.

05 On-site Warehouse Inspections and Standardized Reports to Quickly Identify Improvement Points

Weekly inventory meetings are held with a standardized report format and a risk material warning report to identify solutions. At the same time, inventory inflow and outflow trend analysis is conducted based on material categories, and improvements are made for materials with abnormal inflows and outflows. A material tracking system is established to trace the source of existing inventory. All departments collaborate to handle related issues and improve the control over the status of materials. On-site observation is the foundation of continuous improvement. Weekly warehouse inspection activities are organized, and a list of problems identified on-site is created for key and continuous tracking. The PDCA (Plan-Do-Check-Act) cycle is applied for improvement, with a commitment to excellence to ensure no material is overlooked and no dead end is left unaddressed, thus identifying and making up for gaps. The inventory status of the production site and warehouse is understood in real-time to promote one-piece flow production on-site and be alert to inventory that may become obsolete.

Through the systematic and all-round tracking and improvement of inventory before, during, and after the process, Nidec KDS Elevator Motors has continuously increased the inventory turnover rate, with the annual inventory value decreasing by 15%. While the inventory continues to improve, the product delivery time has also been continuously shortened, achieving a win-win situation for both inventory and delivery. The reduction in inventory has eliminated many unnecessary wastes, and the high inventory turnover has also stabilized product quality, winning the trust and praise of customers. We will continue to improve and optimize to adapt to the rapid changes in the market, produce more and higher-quality products for customers more quickly, and enhance the competitiveness of Nidec KDS Elevator Motors and its customers! The journey is long and arduous. There is no end in the path of inventory improvement. We are always on the way and making continuous progress!