Supply Responsiveness - what does it mean to you....
If I asked you to respond to a question - does it mean NOW, today, this week or this month??
Defining what you mean by responsivness could be:
Normal Lead Time
Order processing time + Manufacturing Production Lead Time + Manufacturing Time + Curing or Tesing Time + Transportation Time (potentially including port or border time) + Receiving Time + Quality Inspection = Total Order Time
You can also plot out what it means for "expedited or emergency vs normal lead time"...
Understanding and investigating each of these components will help you understand what's involved today as well as what is possible on the supply side or your receiving time...we can investigate some of these things in more depth:
Order processing time - how long does it take YOU and your supplier to input an order - I love this discussion, especially when you are requesting your supplier to be more "responsive" yet you only place an order once per week/month - sometimes responsiveness needs to happen on both sides :)
Manufacturing Production Lead Time vs. Manufacturing Time - this is very confusing for some suppliers - as I want to talk about how much time it takes to "make" the product without including their "production scheduling time". Both are very important discussion points, but I need them to be separate for some really good reasons that can be discussed (it may involve the role of safety stock in your supply chain and who it is there to protect).
Is there a testing, curing or quality time needed? Yes, a most important question to understand especially if you are expediting materials that may become damaged due to a push before they are ready to ship (test results or physical condition - this will drive a discussion on liability).
Transportation Time - this needs to include how much lead time needed for the carrier to position equipment as well as the legal number of hours a driver can travel in a day to create the total lead time requirement.
As reminded from my friends in Cairo (Thanks Walaa) international border crossings have their own unique time impact - understanding norms for a port/border, impact of paperwork on the transition from one country to the next, and a plan if the materials are held in customs will impact not only your time boundaries, but also your inventory strategy.
Receiving Time - this is a tricky question for some manufacturers - while you may run 24/7 - is your receiving staff available 24/7 or less than that - can the transportation company drop and hook at your facility - this will also impact your supply lead time...
Do you have any quality holds for your inbound materials? This can significantly impact your lead time and responsiveness if you have quality release time...
There are many ways to use electronic systems to reduce these leadtimes and improve "responsiveness" like:
Replacing email/fax orders with electronic portals
Understanding your planning organizations order cycle - my rule of thumb is if you use materials daily, you should be ordering them daily - you need to follow your consumption pattern with replenishment.
Including the transportation in the electronic interchanges
Using tools like electronic Certificate of Anaylsis for quality impacts
These calculations can all be reviewed and improvements identified -
First, though you have to understand what makes up your leadtime in the current state ... safety stock and it's use can also be a great way to reduce time, but again - you must undernstand the cost/value of each decision.
Wednesday, April 22, 2015
Monday, April 13, 2015
SUPPLIER ACCOUNTABILITY, CAPABILITY and RESPONSIVENESS
Aren’t these quite the “buzz words” today….besides being a
mouthful of words….what can it mean?
1.
What do you need and when – seems simple enough,
right?
2.
Does your supplier understand your expectations,
have you talked about it?
3.
Ask the supplier – can they, would they, does it
cost more or less?
4.
Is your strategy aligned with your planning
needs (finished goods and materials), purchasing and inventory control?
5.
Feedback – do you give and receive feedback
regularly and share with other organizations (and in an open and honest fashion
– what could bemore scary than telling your client they are killing your
production schedule)?
6.
Educate others in your company on materials –
receivers, warehouse, quality, planning, purchases, leadership
7.
Create an action plan to close the gaps on both
you and your suppliers needs
Let’s explore these concepts in some detail:
1.
Sounds so
simple – what do you need? My experience
is every group has a different answer and rarely do they all get together to
discuss the concept…
a.
Finished goods wants everything and anything to
satisfy the customer order, no matter what the pain or cost
i.
What is an acceptable forecast variation or lead
time from your supplier’s perspective
ii.
What is your customer fill rate expectations –
does your safety stock program allow for the space to satisfy the variation of
needs
1.
What % of variation is right 1.3; 1.5 or do you
expect the supplier to meet any variation
2.
Do you know what your standard deviation is, do
you know highest and lowest and why
iii.
What can you afford – yes there are different
prices for different services (like a USPS letter versus Fed Ex)
iv.
What is the inventory goal – can it accommodate
the above?
2.
Does the
supplier understand your internal restrictions?
a.
Space constraint
b.
Unloading times (Monday-Friday only 8-4)
c.
Goals – inventory reduction/cost
savings/responsiveness goals
d.
E-Commerce goals – going to ERP orders versus
email or portal
e.
What happens if their materials don’t arrive on
time or as specified
3.
Does your supplier know? Shocking concept, I know, but I’ve so many of
these “ah-ha” moments with a supplier
a.
Do you meet with your top group of important
suppliers – spend, complexity, importance to your product – and YES – New to
service your company
b.
Does the supplier have the right input from
their home office – manufacturing, customer service, transportation to agree to
your needs
c.
Are there price differences for the type of
service you require (short lead time, expedited services, emergency production)
4.
Do you
have internal alignment meetings with your own groups that have a vested
interest in materials?
a.
Does Purchases understand what kind of
responsiveness you need or quality so that they can negotiate it for you?
b.
Do you understand the transportation and
warehouse strategy – how much can you bring in when?
c.
Do your material planners understand the
“requirements” of the supplier (feedstock or inventory) – do they know when to
call and ask versus just drop an order?
d.
Is there an inventory reduction strategy – if
so, can it impact customer service on the finished product or manufacturing
side?
5.
Feedback – do you regularly give and receive
feedback from your top suppliers? I
always tell people, you cannot meet with every supplier, but here is how I
would pick:
a.
Large spend or complex supply chain
b.
Relationship or Reliability issues – I always
started with the most hated supplier – it will be magical what you find out and
how you can quickly become the hero when you work this supply chain.
c.
New to your company – think about starting as a
new employee – just learning the terminology… new suppliers experience the same
bewilderment – make new suppliers a flawless start up – teach them the right
way the first time!
6.
Educate others in your company on materials
a.
Have regular educational sessions or invite planning,
purchases and R&D to your meetings to meet and begin to understand supplier
structure and potential partners to help solve issues
7.
Create an action plan to close the gaps on both
you and your suppliers needs
a.
Document every item that isn’t up to par with
every participant
i.
As you clear these items with actions, your
service and satisfaction escalate
b.
Continue these meetings and actions until you
get the results you design and want
Just start with these steps – where there is smoke and fire
– there is money and inventory to be saved!!!
Kindra Murphy
Inbound Materials Expert
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