The company, which is the biggest auto parts manufacturer in Southeast Asia, has started

using Kanban, a just-in-time management technique developed by Toyota which attempts to

maintain minimum inventory.  The concept works by having a supplier or the warehouse to

deliver components to the production line when they are needed, so that there is no storage

in the production area.

          According to TSAI's general manager, Chatkaew Hart-Rawung, the Pull System of

Kanban helped reduce the company's warehouse cost to some degree.  But in practice, his company still needs to stock raw materials to ensure smooth production.

          "The inventory cost costs us about 500-600 million baht monthly.  If we can reduce

inventory cost to 30%, we can save more than 150 million baht," said Chatkaew.

"Initiate measure has been carried out. Our

aim is to cut storage of raw material time to

be within 10-day time, work in process within

3 days and finished products within 3 days,''

he added.

Pull cooperation from suppliers

          TSAI will draw close cooperation from suppliers.  The working process is customers

will quote the amount of the vehicles they plan

to produce in a year and the amount of

monthly amount in advance.  They will confirm on the numbers again when the time of

production is coming near, usually it's about 3 to 10 days.

          "When we get this information, we will work closely with the suppliers to settle the

amount of raw materials required and date of delivery,'' explained  Chatkaew.  "For imported

materials, order must be placed six months in advance.''

But since a minimum lot for the order is required, Chatkaew said TSAI has to stock raw

materials for at least three months to prevent abruption in production process.  Negotiation is

underway to cut down time and amount of inventory.

"Suppose a customer plans to build 10,000 units of cars, but ends up produce 5,000 units. 

 We've reserved the raw material.  But this doesn't cause much concern since the models of

the car are changed every four years and for motocycles, every two years.  We must recheck

with the customers when dates of certain models are running out so that we can adjust our

stock.

"But if the customers decide to stop producing that model before the deadline, talks must be

carried out on who will bear the responsibility of the inventory cost. Some stocks can be used

for other models,'' said Chatkaew.

Tap new technology to give another push

          TSAI has applied SAP to replace AS400 for its operation management in order to

boost manufacturing efficiency and reduce inventory costs further.  The system has not

worked yet since it needs time to equip the staffs with the understanding of the new system

and the program needs to be modified to fit the requirement.

"If SAP is properly run, the precision of inventory prediction should be reached by 95%. It is

expected to be perfected by next year,'' said Chatkaew.

TASI also puts robots to work in production line which can reduce human errors and

increase work by 30%.  "If we can fully utilize robot workers in the production, the work will

rise up to 90%,'' said Chatkaew.

Just-in-Time is another system employed by TSAI to maintain its competitive edge.  The

company uses dual delivery system. Customers like Toyota, Nissan, Isuzu, Hino, GM and

Mitsumishi will use their own Milk Run system to handle their own delivery while Thai

Summit Autoparts Industry will handle the rest.