Reducing Inventory Value by Advanced Purchasing

The purpose of this thesis was to analyze reasons for high inventory level of Rapala VMC Corp. Batam factory and to define corrective actions so that the inventory value could be decreased in control without endangering production. The first target was to significantly reduce the inventory value, and the secondary target was to define and develop purchasing processes and procedures to support the main target that could later on be used at other Rapala business units. The thesis was conducted using Action research methodology and qualitative methods to gather sufficient data for analysis. The main research method was a purchasing consultation workshop that took place on site Rapala VMC Corp. Batam factory in the beginning of February 2020, but it also included other preliminary preparations and reporting afterwards. During the workshop, the root causes for excessive inventory were identified. Also, a purchasing process development plan was created to mitigate the root causes for high inventory value including the targets and key point indicators for an active follow up. The development plan was split into different phases, and the first phase developments were implemented into practice by the factory management. The results were actively measured and communicated in weekly and monthly meetings. The development plan also included change management topics taking into account cultural differences as the business environment in Indonesia is completely different from Finland. As the outcome of the thesis, the targeted reduction of inventory value was reached and even exceeded. New purchasing procedures were also developed and implemented. The analysis methods and project framework could be used at other business units as planned