Optimizing working capital during the new product development ramp-up process

In the corporate world, companies invest a lot of money into R&D work and try to release new products into markets before competitors. During that process there is increased risk of tying money into old and new model’s spare part inventories. The main objective of this thesis work is to develop guideline which as a result decreases inventory value in the target company. Decreased inventory value means an increase on the working capital side. This thesis work is a study of factors affecting inventory values and working capital. The goal is to define key points of the production ramp-up and ramp-down processes and develop a guideline which combines all the results together. For this study a case study is selected as the research method. A state of the art review, analysis of the current state and case examples were the bases of the study. Analysis of those results yields a guideline process for the target company. This thesis offers the target company a way to make its own processes more efficient. In this thesis, work was not focused on optimizing every single item’s inventory value, but the total value will be optimized through the guideline process. In order to get results from the guideline process, it has to be internalized in the company’s workers who are executing these processes. Future research can develop more ramp-up and ramp-down processes in order to make guideline more precise. That leads to the point where the guideline can be standardised at a company level, which is needed to get good results on the corporate level. Also in order to get a good result efficiently, the guideline should be managed by one manager