Despite major business-unit volume changes in 2027, VTC's weighted procurement model adapts levels dynamically — ensuring the right inventory is available at all times, without over-stocking discontinued programs.
573 part numbers across 6 material classes are managed through consumption-based forecasting. These are repetitive items with long lead times where MRP alone cannot provide sufficient purchase horizon.
Rather than using flat historical averages, we break consumption down by Business Unit and apply 2027 build plans — so the forecast automatically adapts to structural demand shifts before they happen.
Last 6 months of actual usage split by program (E2X, P1, MPU, Dry).
How much of this part is consumed per transformer built in each BU.
Multiply each BU rate by the official 2027 annual production forecast.
Sum all BU projections and divide by 12 to get the forward-looking monthly demand.
Apply lead time and safety stock to set the order trigger and inventory cap.
We collect actual part consumption from the last 6 months, separated by each Business Unit that consumed them.
Example: A radial spacer might show 152K units consumed by E2X and 7K by P1 — critical to separate before projecting.
For each BU, we calculate how much of this part is used per transformer produced:
This rate is independent of volume — it tells us the inherent design-level consumption for each program.
Each BU penetration rate is multiplied by the official 2027 annual production volume:
Discontinued programs (Dry) naturally drop to zero. Growing programs (MPU) scale up accordingly.
All BU projections are summed and converted to a monthly figure:
This replaces the flat historical average and reflects the actual expected 2027 monthly demand.
The weighted average feeds directly into MIN and MAX formulas:
Lead time expressed in weeks. SS uses a 90% service factor (k=1.28) with 25% LT variation assumption.
After every count, the inventory position (On-Hand + Open POs) is evaluated against the MIN and MAX thresholds.
More than two replenishment cycles of stock available
Healthy position — replenishment in transit as planned
Cannot cover demand through the replenishment window
Official 2027 production volumes by Business Unit. These figures replace the historical flat average as the demand driver for all weighted procurement levels.
Five real part numbers showing the financial impact of the weighted vs. flat-history approach. All figures extracted from actual consumption data.
Dry elimination removes ~325K units of historical base. MPU growth partially compensates (+2.29M annual). Net result: 31.8% lower levels — the weighted model correctly balances both forces.
99.7% of demand came from Dry (now discontinued). Only P1 trace demand remains (2.76 units/transformer × 572 units/yr = 1,579/yr). Maintaining traditional levels represents $97K+ exposure at MIN and up to $190K at MAX.
This radial spacer is exclusively E2X + P1. E2X weekly rate drops from 55 → 30 (−45.5%), directly proportional to the level reduction. With a 25-week lead time, the capital impact per cycle is significant.
At $3.67/unit, this Al Bus carries the highest financial weight. Hit by both Dry elimination and E2X decline — combined drop of 62%. The weighted model prevents $277K in excess inventory per cycle.
This PB Sheet is 99.9% MPU-dedicated (222.25 units/transformer). MPU grows +40% in 2027. The traditional flat model would have kept levels unchanged — risking a stockout on a 36-week lead time item. The weighted method correctly raises the trigger.