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Ford-Otosan Optimizes Its Stocks Using a Six-Sigma Framework

Faculty of Management, Sabanc University, Orhanl/Tuzla 34956, stanbul, Turkey
Tire Industrial Zone, BAT Manufacturing Plant, 35900 Tire/zmir, Turkey
Ford-Otosan Kocaeli Plant, Izmit–Gölcük Yolu 14.km, hsaniye Gölcük/Kocaeli, Turkey
Engineering Management Program, Marmara University, Göztepe, Kadköy 34722, stanbul, Turkey
denizel{at}sabanciuniv.edu
utkan_ekinci{at}bat.com
gozyurt{at}ford.com.tr
denizturhan{at}eng.marmara.edu.tr

Ford-Otosan, a producer of light and medium commercial vehicles, wanted to improve order-to-delivery times while reducing costs in the course of expanding its capacity. It started a six-sigma project to reduce finished-goods inventory while ensuring on-time shipping of orders. Finished-goods inventory consists of vehicles ready for shipment and those needing additional parts or testing. We developed an integer-programming model in a spreadsheet environment to reduce the number of vehicles awaiting shipment and a shop-floor control system to handle perturbations caused by vehicles that require additional work. Upon implementing these systems, we obtained and analyzed data from the new process and found major improvements, including savings of about $1.2 million in 2003 and $2.6 million in 2004.

Key Words: inventory–production; applications; manufacturing