Abstract: The automotive market does not show a great variability of the demand for a certain model of car over a period of a year; at the same time the car manufacturer minimizes the effects of a reduced demand by offering a large number of optionals. The production system of a car manufacturer is almost inflexible, for the quantities and the daily production for a given model are usually stable. For an automotive components supplier the variations on the mix are actually variations on production volumes. A logistics department, when solving this production problem, looks mainly for a feasible solution – the stock and production capacities are checked. The global cost evaluation is roughly made while planning; two main things are controlled: the man-power allocation and the stock cost. A modification of the planning solutions based on the real total production cost for the company is unfeasible because a total cost-based methodology and tool are not available. Another problem that Magneti Marelli faces is that the finished product for the car manufacturer is more and more often a complete functional ‘system’. This requires a planning which involves different plants from different production divisions inside the company. A full integration inside the company and with the external suppliers is necessary to increase the service to the customer, minimizing the costs. The increasing of the level of service to the customer implies lead-time reduction and cost minimisation. Where many sub-suppliers must be interfaced, the lead-time reduction can be obtained with a stock as large as the flexibility of the customer demands. However, this strategy cannot satisfy the second objective, which is the reduction of costs. These constraints bring the car component supplier to look for an integrated production system where he and his supplier act like a single company.
