Thursday, May 9, 2013

Inventory Management and Just In Time Delivery

Back in March I was wondering about the order fulfillment process for the Reaper Kickstarter but I was mainly discussing how to organize the packing and shipping process assuming all the products were on hand.  Reaper has admitted that they started shipping with only some of the product on hand since they expected the shipping process to take some time and the remainder of the products to arrive while they were working on still shipping the last batch to allow a seamless and optimal delivery of product to the customers.

But they ran into the problem that the next batch of product did not arrive on time and their shipping operation was delayed due to it.  Apparently they have many Vampire Sets lying around such that if you are nearby you can pick yours up but essentially none of the miniatures that were only available as optional add ons.  So clearly as a Just In Time type model their choices of model production order and volumes were not optimal to provide the most uniform and expedient shipping to all the customers.

If some of those not currently shippable Vampire Boxes instead covered the whole line of the optional minis, they could still be shipping.  Say the mini production was 2/3rds vampire boxes and 1/3rd optional only minis.  Now we can split that up into 3 orders, 2 Vampire and 1 Optional.  If we get a vampire shipment first we can ship those out, Optional Second we are stuck waiting for the last batch of vampires to ship out the second patch so the disparity between delivery is very high.  If we get the optional first then we start shipping when the 1st group of vampires arrives, and continue until with the last set.  The initial shipping is later but the disparity is lower.

If you could parse the production more into 1/6ths instead of 1/3rds you could essentially get 1/4 of the vampires and half the optionals in the first shipment and start right away with long to pack orders first, and then finish off at the end with fast to ship pure vampire sets.  Starting with the vampires only first is essentially picking the low hanging fruit.  The biggest customers with the largest orders are going to get started packing last as they will require components probably in the very last shipment so the time from the last shipment coming in and going out will be longer than if that last shipment was pure vampires which essential come off the truck, get an Mr. Bones Added(stupid logistical arrangement), labeled and shipped out.

Now splitting up production runs can influence costs and production time as molds need to be changed and such.  Production time seems to have been a problem here so a different ordering may have been worse but from just a stock inventory management viewpoint having thousands of vampire boxes in storage that need other stuff to ship to customers (who know they are just sitting there) is not an optimal condition.  I know that Reaper is doing their best and that I do not have all the information that they used to organize their production.  This is more just me thinking about the business issues as I find them interesting things to understand.  Who knows maybe one day you or I will be in management at a small business and have to worry about such things.


  1. Looking at some comments on other blogs and forums the problem appears to comes down to scale of production - the Vampire by itself is easy enough to fulfill as the factory used handles large volume orders easily and prioritises based on scale of run, whereas the overall volume of add on units is much lower, and assorted - so there may be great demand for a run of one add on and lesser for another - so they are produced at varying rates as Reaper wouldn't want to be sitting on a 1001 extra of add on B which had a low take up and less likely to shift post kickstarter in large volumes. Lower volume runs receive lower priorty and get bumped more easily at the factory end when larger order runs come in.

    Or at least thats what the internets is telling me is occurring using China as the factory - hence why Reaper has bought there own machinery to manage the small volume runs.

  2. If you are afraid that those items will drag then you should probably get the started first as it does not help you to have thousands of extra vampires set waiting. Their first major shipment was in End of Febuary, Then late March, now mid May, and they did not make it sound like it was the final shipment so with similar slippage you are essentially into July.

  3. Totally in agreeance. If you got into something like this, then planning your schedule should have been front of mind, not maxing beyond capacity to meet demand in a realistic timeframe.