Reducing inventory and order delivery time in an internal extended value chain

Abstract

The extended value stream for the ABB Power Technologies Medium Voltage Business Area consists of numerous factories situated across various different countries. Most of these facilities were originally acquired by ABB to provide an established presence in local markets. In an effort to consolidate and align the Business Area's materials resources and reduce internal competition between similar factories, PTMV assigned specific products to specific factories on a regional basis. As a result, factories that use to have broad control of their entire manufacturing process from raw material to finished products are now either internal suppliers or internal customers of other ABB factories. The Business Area must now develop internal processes across these factories that focus on achieving timely delivery balanced with low inventory. In order to do so, it is essential for the Business Area to inspire individual factories with different cultures and languages to cooperate and work for a common goal. 'This thesis describes how Value Stream Mapping can be used to analyze current order processes in individual factories and across multiple factories in a single value chain.

(cont.) Value Stream Mapping reveals the areas where non-value added time is the greatest in the overall order delivery process. Using this information, recommendations are formulated to reduce materials 'work-in-progress (WIP), and subsequently, system lead-time. This internship looked at the inventory management control of key components between two factories in the internal value chain. The impact of inventory cost due to inventory location, transportation, and production decisions is investigated and documented. Additionally, this thesis studies the strategic, cultural, and political challenges that ABB faces as it attempts to implement operational change management in a new organizational structure.