Original Date: 09/14/1998
Revision Date: 01/18/2007

Prior to 1996, Raytheon Missile Systems Company (RMSC) used a traditional inventory management system which relied on central stores for all incoming material. Here, items were received, unpacked, inventoried, stored along with other factory parts orders, and kitted on demand for a particular assembly/subassembly. To maintain efficiency in these stores, kits were batch/lot-processed according to weekly or monthly factory production requirements. Drawbacks to this system included inaccurate inventory counts; inability to handle the quick turnaround needs of agile manufacturing; higher product costs caused by unnecessary handling; and numerous delays when shipping the product.

In February 1996, RMSC began using a point-of-use inventory management system for its Phalanx and RAM Launcher programs, which mirrors the IPT concept used throughout the agile factory. The material storage areas are placed adjacent to the production floor, and color-coded to identify the corresponding team and assemblies. Parts for the factory floor can be pulled within hours, and replacement parts can be issued within minutes. This approach prevents work stoppages on the production floor, and promotes kitting for one instead of weekly or monthly production requirements. RMSC also instituted a Supplier Managed Inventory program for line stock (or common stock) materials. These materials are delivered directly to the production floor on an as-needed basis by the common stock supplier. Since implementing these changes in its inventory management system, RMSC reduced total kit cycle time from 14 days to less than one hour; decreased replacement part cycle time from five/seven days to less than one hour; increased inventory accuracy to 99%; and minimized kit part shortages.

Next, RMSC undertook a Parts Presentation program to enhance the efficiency of its agile factory, complement its inventory management system, and further reduce cycle time and costs. A team of production assemblers and support personnel studied how material was delivered to the assembly floor, and analyzed the line stock requirements for each cell. As a result, custom-part bins were developed and installed at all workbenches in every cell. These bins contain only the line stock needed at a particular work location. The team also recommended using kit sizes of one to minimize work in progress (WIP) on the production floor. RMSC designed a visual parts presentation vehicle (PPV) with part specific slots for each and every line flow assembly. By glancing at a PPV, the assembler can quickly determine which kit items are missing.

Since implementing the Parts Presentation program, RMSC significantly reduced WIP on the production floor. In addition, the company reclaimed approximately 25% of its production floor space; eliminated production floor inventories; decreased average assembly cycle time by 50%; and minimized the misplacement of parts and hardware.

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