The Effects of an Increased Traceability on Lead Times : A case study on a material replenishment system at a Swedish industrial tools manufacturer

Abstract: This study investigates the relationship between an increased traceability and shortened lead times in the internal material replenishment system at a large Swedish industrial tools manufacturer. Traceability and its effects on uncertainty in the supply chain has been widely researched in academia, but there is a gap regarding how traceability affects lead times. The research investigates which factors drive the lead times in the material replenishment to lean assembly lines and determines how these factors relate to traceability. A case study was conducted in one of the case company’s factories. The study consists of both quantitative and qualitative data. The quantitative data was derived from the case company’s ERP-system while the qualitative data consists of interviews and empirically collected data. The results of the study show that waiting time is the primary driver of lead times in the current state of the factory. No indication that internal material replenishment lead times decrease as a result of an increased traceability was found. However, there are aspects with an increased traceability that indirectly facilitates reduction of lead times by making it easier to make well-informed decisions due to the increased availability of real-time data. Traceability is found to not contribute any value to the end customer on its own. However, it can play an important role in a company’s supply chain. Further, potential advantages with a high traceability were observed when implementing advanced protocols such as JIT and other lean principles. The study should be seen as a starting point to further studies into the relationship between increasing traceability and reduced internal lead times. For managers and companies, the study identifies a potential procedure to use for deter- mining which factors drive replenishment lead times to lean assembly lines. Furthermore, the study shows that companies can have great use for traceability when trying to remove waste from its processes.