Managing your procurements expediting process
Filed Under Blog
We all know what its like – the cry goes up “we need that part yesterday – get onto the supplier and make it happen!”. Urgent and/or critical parts chasing can be one of the most stressful experiences that procurement departments deal with.
The expediting process will usually try to achieve one of two things
1/ Bring forward the delivery of a part
2/ Ensure the supplier meets the agreed delivery schedule
But why expedite in the first place? Expediting is usually symptomatic of other problems within the organization and chasing deliveries can happen for a number of reasons for example
1/ The part has missed its contracted delivery date and is now late for the manufacturing team/customer
2/ Damage has been caused to existing stock and replacements are urgently required for production
3/ A customer order has been placed within lead time (i.e. shorter time than it actually takes to make the product) and parts are required to support this revised build time.
4/ The supplier being used has previous issues around delivery schedule adherence and regular checks need to be made to ensure deliveries remain timely.
Getting it right first time
Whilst this article is not aimed at solving the problems that cause expediting it should be noted that if expediting is carried out frequently companies should investigate the route cause and aim to reduce the need for the process to be carried out.
Expediting is a common task
The purchase order management process is a common task for many companies and relates to ensuring that the order is raised against the correct requirement that is received and processed by the supplier that delivery schedules are agreed and that the parts arrive when expected and are of correct quality.
Who actually expedites varies from company to company – for many it may be the buyer who originally placed the order – in others it may be an administrative function – in others expediting is divorced completely from the procurement team and becomes a planning function. It’s important to make the lines of communication with the supplier clear. The last thing you want is for lots of people to be chasing the same supplier for the same part – this is a quick recipe to sour any relationship!
Bringing in parts
There are a variety of techniques that can be used when expediting – simply confirming the due date is typically insufficient – finding the root cause that stands between you and your required date whilst understanding the recovery plan is essential – also consider a suitable escalation process to involve senior decision makers (you’d be surprised how many organizations are prepared to go that extra step when challenged by a company director!).
Techniques that can be used include
1/ Re-prioritizing the suppliers manufacturing plan
This really is a “he who shouts loudest gets the part” but by first communicating to your supplier and asking for a certain delivery date and then regularly touching base to see if it’s still achievable are sometimes all that’s required.
2/ Incentivising the supplier
Often techniques such as premium working (e.g. late shift, weekend work) can be utilized to reduce lead time – this may incur additional cost but will typically yield your part earlier.
3/ Assisting the supplier in shortening their supply chain – your supplier may be waiting on parts or tools – depending on both the size of the organization (in comparison to yours) and the strength of your relationship with them – you may be able to assist the supplier in reducing bottlenecks to get your part earlier
4/ Alternative supply
Whist maybe a last ditch effort – you may be able to acquire improved delivery terms through selecting a different supplier – note you will almost definitely need to continue your existing order (unless you are able to cancel it) but if the part is that urgent and you can find stock elsewhere then this is one method of securing your materials.
Communication
As with most business processes – communication is key – clearly articulating at an early stage to your supplier when you want your part is more likely to result in delivery than leaving things until the last minute and then piling on the pressure.
Summary
At the end of the day – expediting is usually a necessary evil – as a process it doesn’t really add value and in fact points towards inefficiencies in the supply chain attempting to mitigate them – however its unlikely that you will be able to negate the need to chase suppliers for parts completely from your organization so understanding the process and employing the correct techniques is as important as understanding the root cause of the problem that caused the delay in the first place.
Master Production Scheduling (or MPS as it’s often referred to) is a manufacturing planning tool that is used to capture a number of variables from different elements of the organization (customer demand, capacity, inventory levels, material flows, etc) and then describe which parts the organization will manufacture and at what frequency.
MPS is a fairly standard tool within manufacturing companies its usually administered through the operations/planning function and controlled by a team headed by a Master Production Scheduler. It’s typically administered through the MRP system. The MPS process stops the business being led by the “he who shouts loudest gets their parts syndrome” and delivers a manufacturing plan that not only targets meeting the needs of the customer but also the broader capabilities of the manufacturing organization.
Five key benefits of Master Production Scheduling
1/ Can help to smooth the demand signal
Most customer demand signals will contain peaks and troughs of demand – this profile can result in planning problems and inefficiency for manufacturers. A significant benefit of MPS is that since it decouples the customer demand from what is manufactured – batch sizes can be tuned to optimize the production process. Where demand is particularly spiky (ie. Peeks and troughs of demand) this can be of enormous assistance producing a steady drum beat of manufacture (taking advantage of batch sizes and minimal setup times) which can then ripple through the supply chain.
2/ Protects lead time and helps book future deliveries
A common complaint for many organizations is that demand is loaded within lead time – i.e. if a part takes 100 days to manufacture it’s no good taking a customer demand for delivery in 50 days where there is no stock – you are struggling before you’ve even started the manufacturing process. This can create panic amongst the staff – throwing existing priorities into disarray. Whilst there are a variety of methods that can be used to stop this – MPS can be a very effective method as it is the production schedule that drives the manufacturing not the customer demand. This enables the organization to protect its lead time but also assists planning in looking at when future customer requirement is best supported by manufacturing output.
3/ Acts as a single communication tool to the business
A major benefit to any organization that adopts MPS is that it acts as a single communication tool for the business regarding its manufacturing plans. The MPS schedule is typically available via the MRP system however whatever the method it’s imperative that its communicated in an easily understandable form that can be used throughout the organization.
4/ Helps the Supply chain prioritize requirement
Having a fixed schedule enables the supply chain team – in particular the procurement function to communicate priorities and requirements effectively. One of the key problems many manufacturing organizations face where they are led by changing customer requirement is where the supply chain gets reprioritized depending on the “problem of the week”. Its no surprise that suppliers work best to regular smoothed demand – where that demand in unstable it can often lead to missed deliveries (of what was planned) let alone the detrimental affect to relationships with suppliers that struggle to keep up with what’s really required.
5/ Helps stabilize production
Master production schedules are best reviewed as part of a formal business process which includes the relevant stakeholders and often requires senior sign off before it is either loaded into the MRP system or is passed to production for action. It’s common the production schedule to be outputted from a formal SIOP review.
Typically master production schedules do not allow “planning in arrears” so where failures have happened and product has not been manufactured as planned – these items are re-planned to a relevant point in the future.
Another common attribute of a master production schedule is that there is usually a fixed planning window whereby plans do not get changed. For example the first 6 weeks of the plan maybe termed fixed. This enables production to concentrate on what’s ahead of them without worrying about reprioritizations. Additions may be added to this fixed period but usually such amendments are tightly controlled.
Whilst, as with any business process, there are challenges associated with deploying a master production schedule there are some enormous and tangible benefits. Manufacturing plants can get themselves into chaos by not administering the manufacturing demand signal appropriately and this can have huge affects on the supply chain – driving reprioritizations, excess inventory and causing untold grief to the relationships to key suppliers. Used correctly MPS can right many of these problems generating a stable and considered plan to drive the business.