Apr
18
How the seven wastes apply to supply chain
Filed Under Blog | Comments Off on How the seven wastes apply to supply chain
The seven wastes are a well established tool often used in Lean Manufacturing which help identify areas within a business which can be improved.
The seven wastes are a lean tool and are aligned to the principles of value a within process. In lean, processes are configured so that they include only activities that add value to the item and ultimately to the customer – with everything else seen as waste.
There are two forms of waste – firstly there is necessary waste – whereby the activity does not add value to the end product but is necessary for the process to function – secondly there is waste which can be irradiated (which can improve either cost or lead time as a result)
The key thing to remember about the seven wastes is that they do not just apply to manufacturing in fact they are very much relevant to supply chain or any process for that matter.
What are the seven wastes and how do they apply to Supply Chain?
1 – Overproduction
Over production refers to making too many of something – more than is required to satisfy the end customer at that point in time.
2 – Waiting
Waiting is queue time – how often does one activity stop with the process owner having to wait to commence the next step – think of a pile of requisitions that a buyer might be reviewing – you will take your requisition but will have to wait until they have reviewed the ones ahead of you in the work queue.
3 – Transporting
Moving products from location to location does not add value – it requires the use of resources and results in cost and lead time increases. This can equally apply to documents being moved around a building during their process as it does relating to the physical shipment of goods and materials.
4 – Inappropriate processing
Doing more work than in necessary – for example – do you really need to go out to quote to 20 different suppliers or will just 2 suppliers do? What about the 10 different approval signatories required on a simple purchase order?
5 – Unnecessary inventory
Excess inventory can be a substantial costs to many organizations tying up valuable resources and creating wasteful extra processing.
6 – Excess motion
Lean attempts to simply processes by providing everything that the worker needs situated within or close by their workstation – consider the office worker where the printer is all the way over the other side of the office and time is wasted in walking to and from the device during the day.
7 – Defects
Lean aims to make the perfect product every time – defects are considered waste – this is easy to envisage in a manufacturing environment where an assembly line is churning out product but perhaps less so were services are provided. However many examples abound – consider a report that is produced with errors on it that has to be reworked.
Apr
18
Dealing with poor performing suppliers
Filed Under Blog | Comments Off on Dealing with poor performing suppliers
In most organizations there is a heavily reliance on bought in goods and materials – typically these are transformed through various processes into the finished product for the customer. Poor performing suppliers can have a significant impact. But how should you manage suppliers that don’t perform as expected.
What constitutes a poorly performing supplier?
The expectation that the buyer has with the supplier is that
a) Communication is straight forward and effective
b) Commitments in terms of delivery promises and product quality are met
c) Problems and issues are dealt with swiftly
Poor performing suppliers can wreak havoc in a business from halting assembly lines through to impacting customer satisfaction with common challenges such as poor delivery schedule adherence, poor quality.
Putting things right
The first step is to understand what the problem is – don’t be subjective and with robust analysis of the data determine the extent of the problem
For example where the supplier is deemed to be delivering late – it’s important that this can be proved beyond reasonable doubt – how many shipments were due in – how many arrived – what percentage failed and what was the impact of the failure on the buying business?
Route cause Analysis
The central theme of any improvement activity must be to understand the cause of the problem. In the case of a poorly performing supplier don’t be surprised if some of the blame doesn’t rest with the buying organization.
For example with regard to poor delivery performance
• are you buying within leadtime (i.e. leadtime is 6 weeks and you want it in 2)
• What is the demand signal from the buyer to the selling company
• Is there any ambiguity over the due date for the products
• Has there been any waiting time for the product to be booked into the system
Its not surprising that DSA (Delivery Shcedule Adherance) is often a cause for much debate between companies, you’ll often find that when the two bring their statistics to be compared that they’ll give different results.
Whatever the problem find out what’s driving it – and then understand what fixes need to be put in place to prevent a repeat occurance
Develop, Sustain or Exit?
With any supplier there is a choice not to use them anymore. Performance should be one of the contributory inputs into the supplier management program which will typically have three routes for suppliers
• Develop – develop the relationship between the business and possibly increase levels of orders
• Sustain – sustain current business level but do not award new products
• Exit – Exit the supplier and do not use
Clearly for poor performing suppliers where there is competition in the marketplace – exiting a supplier is a very powerful tool
During your improvement activity you should be clear with the supplier what the potential outcomes of the activity will be – this may facilitate the appropriate behaviour from the supplier!
Regular Supplier appraisal
The key to supplier performance is regular reviews, and the introduction of action plans where appropriate. However most organizations will have several hundred (if not more) suppliers so formal reviews with each supplier may not be practical so consideration of criticality and spend will usually determine which suppliers will be engaged.
This list can be reviewed based upon feedback from appropriate performance measures with suppliers being added or removed accordingly.