Reducing Waste by Inventory Management: A case study of an automotive parts manufacturing company

The purpose of this research is to study inventory issues and reduce inventory costs by improving inventory management performance using the 3 GEN theory. The cause-and-effect diagram was applied to analyze the root cause of the problem. It was found that there was a large amount of inactive inventory and purchasing beyond necessity. From the study and data collection before the improvement, there were 4,854,149 pieces of inactive materials. The goal was to reduce inactive materials by 10%. The solution involved reducing deadstock by redesigning products, selling them to a recycling company, and disposing of the rest. After implementing these changes, the amount of deadstock was reduced by 25%, from 4,854,149 pieces to 3,632,438 pieces. Additionally, material purchases were reduced by postponing shipments to next month and recalculating orders. Before the adjustments, the purchasing volume was 21,860,000 pieces, and after the adjustments, it was reduced by 58%, to 9,121,899 pieces. Inventory storage also decreased due to the reduction in deadstock and purchasing. As a result, total inventory decreased. Before the adjustments, the total inventory was 41,775,972 pieces. After the adjustments, recorded on March 31, 2024, the remaining inventory was 36,733,751 pieces, reflecting a 10% reduction.