Comparison table of component-management strategies

Strategy 1: Decoupled management

For which types of products?

This strategy is not an arbitrary choice, but a necessity imposed by the very nature of certain products. It enables economies of scale and the securing of raw materials. It applies specifically to products whose manufacture depends on components with the following characteristics:

• Non-perishable raw materials

• Low unit cost / lightly processed products / high volumes

• Long supply times

• Raw materials and/or components under supply pressure

Typical examples of industries concerned:

• Manufacturers of basic parts

  
  
  

Why does this strategy impose itself for these products?

For these types of products, decoupling inventory management from scheduling is not a choice, but a direct consequence of supply constraints.

Since we are dealing with non-perishable raw materials, with a low unit cost, lightly processed products, high volumes, and long supply times, as well as raw materials and/or components under supply pressure, we must anticipate our supplies before doing our scheduling.

When the time to obtain a critical component greatly exceeds the usual scheduling horizon (often 6 to 12 weeks), it becomes impossible to synchronize the two processes in real time.

How does this strategy work in practice?

In this context, component management and scheduling evolve as two complementary but distinct processes:

1. Forecast-based supply:
   
   
   
   

   • Purchasing decisions are made over long horizons (12-24 months)

   • Stock levels are determined by forecast demand and not by immediate work orders

   • Substantial safety stocks are maintained for critical components

   • The inventory-management software works mainly through coverage stocks

1. Scheduling constrained by availability:
   
   
   
   

   • Planning is carried out only on the work orders whose raw material (RM) is or will be available

   • Production priorities are defined by other factors (customer due dates, resource optimization)

   • The scheduling horizon remains intrinsically shorter than the supply lead time

A concrete example: manufacturing aerospace parts

A manufacturer of aerospace fasteners such as LISI Aerospace perfectly illustrates this strategy imposed by the nature of its products. The company produces millions of metal fasteners (bolts, screws, specialized nuts) from aluminum, titanium, and special-steel bars. These raw materials have supply lead times that can reach 8 to 12 months for certain specific alloys.

The process is organized as follows:

• Raw-material supplies are managed by a forecasting system working over an 18-month horizon

• Stocks of metal bars often represent 6 to 9 months of consumption, guaranteeing permanent availability

• Framework contracts with special-metal suppliers ensure regular deliveries over a long period

• Daily scheduling only takes into account the materials already available in stock

• Production priorities are determined mainly by customer due dates and the optimization of tool changes

This decoupled strategy is the only viable one for this type of production, where the inventory carrying cost remains relatively low compared to the risks of stockouts and the costs of equipment downtime in the event of material unavailability.

Strategy 2: The "Full kit" approach

For which types of products?

This strategy is intrinsically linked to types of products with the following characteristics:

• Complex products comprising many components

• A sequential assembly process where interruption is very costly

• A mix of components with moderate supply lead times (a few weeks to a few months)

• Complex production flows

Typical examples of industries concerned:

• Luxury

• Aerospace suppliers

Why does this strategy impose itself for these products?

For these types of products, the "Full kit" strategy is not an arbitrary choice, but the direct consequence of the complexity of the assembly and the prohibitive costs of an interruption during production. When a product requires a precise assembly sequence, the absence of a single item can block the entire chain.

This approach is particularly suited to contexts where demand visibility is moderate and where the cost of storing components represents an acceptable trade-off against the risks of production interruption.

How does this strategy work in practice?

The "Full kit" strategy establishes a strong link between inventory management and scheduling, with one fundamental principle: the manufacture of a product is started only when all its components are available.

1. Exhaustive availability check:
   
   
   
   

   • For each planned work order, automatic checking of the availability of all the components in the bill of materials

   • Generation of alerts for incomplete work orders

   • Prioritization of supply needs according to the blocked work orders

1. Kit preparation and securing:
   
   
   
   

   • Physical or logical grouping of the components needed for each work order

   • Validation of the complete kit as a prerequisite to release

   • Protection of the allocated components against their use by other work orders

This approach is fundamentally determined by the nature of the product and its assembly process, not by an organizational choice.

A concrete example: manufacturing luxury watches

A Swiss luxury watch manufacturer perfectly illustrates this strategy dictated by the nature of its product. Each high-end watch requires the assembly of 200 to 600 distinct components, some of them extremely specific and precious: mechanical movements, dials in rare materials, cases in precious metals, and pieces meticulously decorated by hand.

By the very nature of their activity, watch manufacturers work as follows:

• The inventory-management and scheduling software automatically checks the availability of all the necessary components

• A dedicated workshop prepares complete "kits" for each watch, gathering all the elements needed for its assembly

• These kits are checked and validated by a quality controller before being handed to the watchmakers

• No assembly is started until all the components are available and validated

This way of operating has enabled the manufacturers to maintain reliable production lead times despite the extreme complexity of their products, while guaranteeing absolutely impeccable quality. The stock level remains moderate, typically representing 4 to 6 months of production, a necessary trade-off given the supply lead times of certain specific components, which can reach several months.

Strategy 3: The Lean approach

For which types of products?

This strategy naturally corresponds to products with the following characteristics:

• Assembly industry with convergent flows (1 finished product from 1,000 components)

• Strong constraints on use-by dates (DLC) and best-before dates (DDM)

• Relatively short supply lead times (days to a few weeks)

• Moderate to high storage costs due to the perishability, diversity, or value of the components

• Generally low demand visibility

Typical examples of industries concerned:

• Automakers

• Food

Why does this strategy impose itself for these products?

For these categories of products, the Lean approach driven by stock levels imposes itself naturally because of several factors inherent to their nature:

• Low demand visibility makes accurate forecasts difficult

• Short supply times allow for greater responsiveness

• The limited-shelf-life constraints of certain components

• The high inventory carrying cost represents a major economic issue

This strategy aims to maintain optimized (lower) stock levels while guaranteeing the availability of the components needed for production.

How does this strategy work in practice?

In the Lean approach, supply orders are not based on forecasts of future sales, but respond directly to firm orders or already-planned needs. This method rests on the fundamental principle of "pull" rather than "push."

The system works according to several key principles:

1. Kanban system: Setting up a visual system to trigger supplies based on actual consumption. When a container of parts is used, a signal is automatically sent to the supplier to replenish it.

2. Just-in-Time (JIT): Components are delivered only when they are needed, in the exact quantities required, thereby drastically reducing stock levels. Deliveries are synchronized with the production pace.

3. Milk-run: Organizing regular collection rounds from several suppliers, making it possible to optimize transport while ensuring frequent supplies in small quantities.

4. Electronic Data Interchange (EDI): Electronic transmission of needs in real time between the manufacturer and its suppliers, guaranteeing maximum responsiveness.

This approach rests on a close relationship with suppliers, who must be able to respond quickly to demand fluctuations while maintaining impeccable quality.

A concrete example: automotive production in just-in-time flow

The Stellantis group (born from the merger of PSA and FCA) perfectly illustrates this Lean approach in its industrial organization. In its assembly plants, each vehicle is produced in response to a specific customer order, with an optimized manufacturing lead time.

The system works as follows:

• Customer orders are sequenced on the assembly line according to a complex algorithm that takes into account the technical constraints and the available resources.

• Tier-1 suppliers are integrated into a shared information system and receive a firm 6-day schedule as well as a 6-month forecast, regularly updated.

• For critical or bulky components (seats, dashboards, etc.), the manufacturer practices "Synchronous Supply," where the supplier is informed in real time of the exact sequence of vehicles on the line and must deliver the components in the same order, with a lead time of only 2 to 4 hours.

• Parts are delivered directly lineside, without passing through an intermediate warehouse, thanks to optimized "milk-runs."

• Very small buffer zones are provided to absorb only the micro-variations of production, but not to build up a significant safety stock.

This organization allows Stellantis to maintain a stock level representing less than 3 days of production for the majority of components, thereby reducing the working-capital requirement while guaranteeing the flexibility needed to adapt to market variations. The savings achieved through this approach amount to hundreds of millions of euros annually, while also improving the freshness of the product delivered to the end customer.

Conclusion: Recognizing the strategy imposed by your products

Synchronization between scheduling and component management is a major issue for any manufacturing company. However, it is essential to understand that the optimal strategy is not an arbitrary choice, but is largely determined by the very nature of your products.

To identify the strategy that naturally imposes itself in your context, objectively analyze:

• The typical supply lead times of your critical components

• The complexity of your bills of materials and assembly processes

• The degree of standardization and commonality among your products

• The characteristics of your demand (predictability, variability)

This analysis will allow you to recognize which of the three strategies intrinsically corresponds to your situation:

1. Decoupled management for products with critical, long-lead-time components

2. The "Full kit" approach for complex products with sequential assembly

3. The Lean approach for standardized products or product families

Before implementing an integrated solution between scheduling and inventory management, two preliminary steps prove essential:

1. Clearly identify your product type and the corresponding strategy:

   • Objectively analyze the fundamental characteristics of your products

   • Recognize the strategy that naturally imposes itself in your context

   • Avoid adopting an approach unsuited to the nature of your production

   
   
   

2. Define decision-making responsibilities accordingly:

   • Align your organization with the strategy imposed by your products

   • Clarify the roles between supply and scheduling

   • Establish collaboration processes suited to your context

Whatever the strategy imposed by the nature of your products, implementing an inventory-management software integrated with your scheduling solution constitutes a strategic investment. This integration, adapted to your specific context, will allow you to simultaneously optimize your production performance and your working-capital requirement.

In an increasingly complex and volatile industrial environment, understanding that the optimal strategy is determined by the very nature of your products constitutes the first step toward durable operational excellence.