Reducing risk exposure and financing cost by increasing delivery lead time
A Damen Shipyards case study
W.L.A. Siegmann (TU Delft - Mechanical Engineering)
M. B. Duinkerken – Mentor (TU Delft - Transport Engineering and Logistics)
R.R. Negenborn – Graduation committee member (TU Delft - Transport Engineering and Logistics)
J. F.J. Pruijn – Graduation committee member (TU Delft - Ship Design, Production and Operations)
More Info
expand_more
Other than for strictly personal use, it is not permitted to download, forward or distribute the text or part of it, without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license such as Creative Commons.
Abstract
With fluctuating market demands, the tugboat industry confronts the challenge of adapting its supply chain to meet customer customisation needs while managing low order predictability. This study examines the shift from a Make-to-Stock (MTS) to three alternative production configurations based on the Assemble-to-Order (ATO) and Make-to-Order (MTO) configuration, focusing on the tugboat industry’s need for flexibility in response to market changes and customer-specific requirements.
The core issue addressed is the trade-off between investment risk and customer satisfaction, as the proposed configurations increase delivery lead times. To quantify the costs associated with adapting delivery lead times, a Bill of Materials and Operations (BOMO) is utilised, combining the Bill of Materials (BOM) with the production sequence (Bill of Operations, BOO).
A mathematical algorithm is developed to calculate the financial effects of the configurations based on BOMO data. The model involves a three-step process: importing part data, merging BOM, BOO, supplier, and transport data into a BOMO dataset, and performing value analysis on the BOMO data to quantify risk exposure and financing costs over time.
The study’s findings indicate that while increasing delivery lead times, the MTO configuration significantly reduces the risk exposure and financing costs. The BOMO is a strategic tool for analysing material costs and delivery lead times, providing insights into the financial implications of different production strategies. The research concludes that the MTO configuration is viable for Damen’s tugboat production, balancing risk exposure, financing costs, and delivery lead times.