Safety Stock Provision Amid Fluctuating Demand In The UK Automotive Industry

Abstract Purpose: The purpose of this research activity is to understand the challenges faced within the fast moving UK automotive industry. The research focusses on the operations of a first-tier supplier for a luxury car manufacturer. A major challenge identified was the practice of safety-stock provision, given the dynamic nature of customer demand. The paper aims to identify a robust method of safety stock provision amid fluctuating customer demand in order to maintain service levels and customer satisfaction. Research Approach: The research activity adopts a case study strategy. This approach is employed in order to capture a broad view of safety stock provision techniques in production planning from the review of literature articles. In addition, industry practice within the automotive sector would be investigated to conduct an empirical inquiry that investigates safety stock provision within its real-life context and the challenges associated with it in order to provide solutions. The research method includes primary data collection through questionnaire design and interview sessions as well as secondary method of reviewing of relevant academic and industrial publications. Findings and Originality: Original research was conducted by investigating the operations of a first-tier supplier for a luxury car manufacturer. The findings revealed that the customer demand was very dynamic which caused challenges for the supplier and posed the risk of stock outs. This posed additional pressure to the supplier to increase the resources, such as employee time and other resources in order to meet acceptable service level and deliver customer order. In order to address the challenge, the supplier needed to implement an effective process of capturing, processing and storing demand data and safety stock provision. Two different approaches of safety stock provision were identified and compared to each other in order to propose a robust technique for safety stock provision. This approach is applied to a case study within the supplier organisation and further validated by applying the technique to a number of products. Research Impact: This contributed to existing body of knowledge by identifying different approaches to safe stock provision and comparing them to propose the most robust approach for the automotive supplier. This approach is applied to different products in a real-life case study. Practical Impact: The research activity led to an improvement of a UK supplier organisation’s safety stock provision as well as production planning. This also helped the supplier to be able to deliver customer demand at the right service level. Keywords: safe stock, dynamic customer demand, automobile industry