How can we get suppliers to deliver on time, reduce inventory levels and reduce material shortages? The material demand optimization capability of the APS system accurately refines material requirements to every day, and combined with an effective sharing platform, can help companies optimize their supply chains.
Supply chain optimization is a problem that every enterprise must face. In the entire supply chain, as long as there is a problem in one link, the problem will spread to the entire downstream enterprises. Almost every business will face the following problems:
- Why can’t the supplier deliver the goods accurately? Why do we need to make purchases every day?
- How to manage suppliers? How to count supplier delivery rates? How to rate suppliers?
- What inventory strategy should be adopted? How much safety stock is needed? How to determine the procurement cycle?
In order to avoid shortage of materials, a high inventory strategy is adopted. The result is that the warehouse cannot accommodate it, the inventory cost is high, the materials are not used up, the quality is reduced, and even dead materials are produced.
Adopting a low inventory strategy can easily lead to shortage of materials during production, leading to delivery delays and frequent workshop switching, which wastes man-hours.
These problems plague enterprises every day, so how can they be improved?
There are many reasons why suppliers delay delivery. Uncontrollable factors are beyond the scope of our discussion. Here we only discuss improvements that companies can make. From our observation and analysis of the current situation of many enterprises, we believe that we need to improve our work in the following aspects:
Planning-Management-Statistics
Step One: Plan
After the supplier receives the order, it takes a certain period of time to purchase materials, arrange production, and inspect delivery. This time is the procurement lead time. Suppliers, like us, cannot adapt to frequent delivery schedule changes. What we need to do is to plan accurately, carefully, and with few changes.
Accuracy: Purchased quantities and required delivery times cannot always change. When placing an order, the delivery date is roughly estimated, and the demand date is not strictly calculated. The manufacturer is often notified suddenly to change the delivery date, which will inevitably cause production chaos to the manufacturer.
Details: For commonly used materials, we may place material requirement orders for several months at a time, so that we can get better price discounts. However, we should give a more detailed demand plan. Manufacturers can arrange delivery in batches based on production cycle, transportation capacity, reasonable transportation batches, etc. Manufacturers can also arrange production evenly according to demand time.
How to make orders accurate and detailed? We must first have an accurate production plan and schedule the production plan to every day, so that we can have a detailed material demand plan. The unlimited production capacity plan in ERP currently cannot produce a daily production plan. We need the help of the APS system.
If the orders received are relatively large (for example, some customers will place long-term orders), we need to split them first and split the demand into weekly orders. In addition, some orders will be relatively large and may require continuous production for more than a week. When APS schedules production, the material requirements plan will be broken down into each day.
With detailed material requirements, suppliers produce according to demand and deliver goods in batches. This can reduce inventory and make it easier for suppliers to stock up.
Step 2: Management
On the basis of giving detailed demand time and quantity in the first step, it is also necessary to strengthen the management and control process. Asking the supplier to respond to the delivery date is a more feasible method.
We recommend that companies import supplier platforms so that suppliers can fill in delivery plans through the WEB. Some powerful companies will develop their own platforms. If you are not able to develop it yourself, you can also ask a professional software company to help develop it. The platform functions are not complicated, and development is not difficult. What is difficult is accurately calculating the material requirements plan, which requires the help of professional APS. If an enterprise imports PlanMateAPS, the manufacturer will provide a supporting supplier platform to help manage deliveries.
If the manufacturer’s delivery plan cannot meet the demand time, both parties must communicate in a timely manner. After receiving the delivery plan, the company must adjust the production plan according to the actual delivery time provided by the manufacturer, and communicate the new delivery date with its customers in advance so that the entire supply chain can pass on the information. The delivery plan of the order is in-transit inventory in APS. During the material collection analysis, APS needs to use this part of the data to calculate the material collection date of each order.
Enterprises can use delivery response as an item in rating manufacturers. Including delivery date response ratio, matching degree of response delivery date and demand time, etc. If the demand date meets the set lead time, but the delivery date replied by the manufacturer is always extended, the reasonableness of the lead time needs to be reviewed.
Some companies will stipulate that you must reply with a delivery date before delivering goods. If you do not reply, the goods will not be received. If it is not convenient for the manufacturer to log in to the system to reply to the delivery date, the person responsible for purchasing from the manufacturer can enter the delivery date after communicating by phone and email.
Step 3: Statistics
Only objective statistical data can be used to rate suppliers fairly. Statistics should be divided into two parts:
- Matching degree between promised delivery time and demand: All data is saved in the supplier platform and can be statistically analyzed every month/quarter/year. When making statistics, factors such as whether the demand date is reasonable need to be considered. For example, if the demand is too urgent, extension should also be considered reasonable.
- Matching degree between the actual delivery time and the promised delivery date: Compare the actual receipt date and quantity in the ERP with the promised delivery date to calculate the on-time delivery rate. If the supplier platform is imported, the actual receipt data of the warehouse can be sent to the platform for statistics. If not, you can export the report for manual statistics.
Combining the above statistical data, the supplier can be scored on the delivery achievement rate. Only by relying on data and objective evaluation can manufacturers pay enough attention to improve the punctuality of the supply chain. Of course, it is very difficult to do all the above work manually, so introducing a system is a better solution.