Newage Manufacturing

NewAge Manufacturing (NewAge) is a manufacturing organization. The level of customer service it provides its customers has deteriorated to where customers are threatening to send their business to the competition.

NewAge is currently turning its inventory 2.6 times / year. 20% of the total inventory investment has been classified as obsolete. With the removal of this obsolete inventory, the inventory turns would improve to 3.1 times per year. Its major suppliers are located within a 100 km radius, with the majority within a 20 minute drive.

NewAge uses a Re-Order Point method to purchase and plan all inventory requirements. The company has a Materials Requirement Planning program but it is hesitant to use it as the staff is not comfortable with the data integrity. The overall inventory investment is high and the materials team is being challenged to have the dollar investment of this inventory reduced quickly. The materials team finds itself in a quandary as the root cause for not satisfying customer requirements is a shortage of inventory.

The engineering and sales teams at NewAge have a habit of requesting plant employees to process unplanned customer requirements. The materials team is often not aware of these requests as they are often by-passed by the engineering and sales staff that proceeds directly to the plant employees.

There always appears to be 'fires' to put out, as very seldom is a customer order processed from the desk of the inside sales person directly to the materials team. Suppliers are continuously increasing their prices to NewAge as well as charging premiums for urgent last minute requests. The suppliers have regularly requested a forecast from NewAge, but the forecast has either not been provided or has been drastically incorrect.