Build-To-Demand (BTD) is a production strategy that John Deere Horicon Works has adopted to meet the seasonal customer requirements.  In order to achieve this, the supply base must be able to handle the demands placed on them.  For that reason, Supplier Development from John Deere Commercial & Consumer Equipment Division has put together a plan and procedure to determine the appropriate production and inventory schedule that is required from each supplier based on their current production capacity and Manufacturing Cycle Time.

Inventory Graphs

Background:

As part of the Build-To-Demand (BTD) initiative, John Deere will be providing the supplier as well as Supply Management a tool to gauge the necessary inventory levels at the supplier based on the information that is gathered at the supplier (MCT and Relative Capacity).

Purpose:

The purpose of this webpage is to provide the supplier and John Deere Supply Management a tool to gauge the level of inventory each supplier needs to support the cyclical production schedule John Deere is proposing for the BTD initiative.

Theory:

The inventory engine is based on a stochastic model that accounts for the delay in production time and John Deere's flexible ordering policy (2 weeks firm; +/- 20% up to 4 weeks).  The inventory engine will give the minimum amount of inventory and level of production required for each month to meet the demand schedule.

Procedure:

The inventory engine will require 15 data points to complete its computations.

· Demand data for each month of the year (12)    [percent of annual demand]
· Manufacturing Cycle Time (1)                           [month(s)]
· Relative Capacity (1)                                        [percent of annual demand]
· Estimated Annual Usage (1)      [units]

According to the data collection that is established for the BTD project, all the parts fall into four different categories 1) High Volume; High Complexity, 2) High Volume; Low Complexity, 3) Low Volume; High Complexity, 4) Low Volume; Low Complexity.  Each category will have a corresponding Manufacturing Cycle Time and Relative Capacity.

Results and Output:

After entering the above data into the webpage, the inventory engine will automatically calculate and plot the inventory level and production level that is required for a give demand curve for a product.   The supplier and the Supply Management personnel will be responsible for weighing the cost for holding inventory and make an appropriate decision.

Output: Inventory Graph:

The output of the inventory engine will be in two formats.  The first format is a graph depicting the monthly demand, production level, and inventory level.  The second format is the actual numbers that are used to plot the graph.

The production graph represents the recommended production level of a part in order to meet the necessary inventory levels which are required to meet the peak demand.  The basic premise of the inventory engine is to build up the least amount of inventory during the "off season" to compensate for the inventory consumption during the "peak season".  If the factory has enough capacity, no inventory buildup is required.  However, if the factory is already highly utilized, some inventory buildup may be required to accommodate the spike in production during the "peak season".

This information can then be entered into the buildtodemand.com website and the engine will automatically save and graph the results.  A demonstration of the engine can be accessed by using the following demo account:

          URL: http://www.buildtodemand.com/ 
          Login: demo 
          Password: demo 

Click here for an example (Under Construction)