Large automotive manufacturers, including automakers and the manufacturers of principal automotive subsystems, make their products in large volumes. This means that the demands on their suppliers are fairly predictable over a long term, but subject to local peaks and valleys that result from variations in short-term demand and production schedules. As a consequence, the industry has found it expedient to develop vendor-managed inventory arrangements with many of the suppliers of commonly used parts and materials. In such a scheme, the principal manufacturer maintains only a few days or weeks inventory of the parts and keeps the supplier informed of the actual rate of consumption, and the supplier arranges to deliver parts and materials just in time to maintain the inventory level needed for immediate manufacture. This reduces the cost of space, time, personnel and equipment for maintaining the parts and materials inventory at the manufacturing facility. At the same time, it gives the supplier better information and better control over the replenishment process, which allows him to plan his production to a known customer demand.
NIST Interagency/Internal Report (NISTIR) - 7404
business process, inventory, manufacturing, ontology, production process