SBIR-STTR Award

This Small Business Innovation Research (SBIR) Phase I project addresses the impact of product variety on parts inventories. The goal is to help the manufacturers of configurable products; these are products that have many different configurations, or variants, or build combinations. These variants arise because the product has a large number of features/options or the customer is given choices over options. The manufacturers of such products have a difficult time forecasting the requirements for the parts they will need to build the end items that they deliver to their customers. This effort is designed to show that current methods and first order take rates are inadequate for parts planning, and to show that much better parts forecasts can be based upon configuration-level demand forecasts. Manufacturing in the United States is shifting from mass production toward mass customization. Mass production of identical objects can be done more cheaply overseas. But higher value manufacturing that produces customized products can be kept in the United States. One of the major problems associated with high variety manufacturing is parts planning. Poor parts forecasting leads to large inventories of unneeded parts, production-interrupting shortages of needed parts, and hence higher product cost. Better parts forecasting tools could improve the profitability of American manufacturers

This SBIR Phase II project will develop a new methodology for parts forecasting for discrete manufacturing. Emcien is developing a software suite to enable a product manager to better manage a configurable manufactured product. This suite includes a method for forecasting the demand for a configurable product at the full configuration level of detail. This means forecasting unique configurations, each with an expected volume. The method depends on extracting customer buying patterns from the sales history for the product. The mathematical algorithms for extracting and representing these patterns, and forecasting using these patterns are the main contributions of the research. The set of parts needed to build a configurable product generally depends on combinations of options, so it is not possible to plan parts requirements from an aggregate forecast. By using a configuration level forecast, it is possible to expand each unique configuration into component parts, and then use the associated volumes to produce a complete parts forecast. American manufacturers are specializing in complex, configurable, high-end products, as mass produced commodity products move offshore. Allowing customers to customize a product results in significant numbers of alternative product configurations. This variety increases costs in many ways. One important way is the increased difficulty of planning parts requirements. The current practice of basing parts planning on a few popular variants leads to excess inventory of some parts and shortages of others. Excess inventory incurs both holding and obsolescence costs. Shortages can interrupt production and cause both lost sales and quality problems. Emcien has developed a methodology that, among many other benefits, can improve the accuracy of parts planning