As the pace of business continues to quicken and your end customers expect continuous improvement, making sure your supply chain allows you to meet your product delivery commitments is a key performance indicator that separates successful companies from those who can’t keep up. In today’s business world, outstanding quality, cost and delivery are a market expectation that must be met. Period.
While we’re all aware that on-time delivery from suppliers certainly has value, it’s important to remember all the ways it can impact a company’s resources, and therefore, its bottom line.
1. Your Performance Is Being Graded
No matter the quality of your company’s product, your customers will not buy it if you can’t deliver it on time. Very few — if any — companies have the luxury of being late on final product deliveries while simultaneously being able to keep their customers satisfied and coming back for more over the long term. It’s essential for your suppliers to keep their end of the deal and deliver materials on time so you can keep your production process on track.
2. Minimize the Bull Whip Effect
The bull whip effect happens when consumer demand for a product changes, prompting companies in a supply chain to order more products to meet the demand. This is important for many reasons. At the heart of it, world-class supply chain leaders understand the value of establishing trust, communicating clearly, and that a foundation of outcome certainty is central to ensuring a lean and efficient supply chain. Working with reliable suppliers minimizes the impact of the bull whip effect on your production processes.
3. The Cost of Unpredictability
Without having the confidence that the necessary materials are going to be on-time, where they need to be and within specs, teams within your organization will end up making ad-hoc, low-information assumptions to compensate for systemic uncertainty caused by your supplier. This results in investing resources in contingency planning activities that do not create direct value for your end customer.
4. Management Distraction
When you’re fighting fires and responding to crises related to late supplier deliveries, you and your team aren’t working on productive endeavors to further your company’s or your customers’ long-term strategic goals. For today’s high-impact managers, time is the scarcest resource. Investment in steady supplier relationships that minimize firefighting is a high-leverage use of time.
5. On-Time Materials Delivery Is Simply Table Stakes
On the journey to building high productivity and creating valuable relationships with your suppliers, making sure they can consistently deliver materials on time is just the table stakes to get in the door. Conversations that you want your supply chain team to be having with your suppliers, whether about design-for-manufacturing (DFM), improved electronic data interchange (EDI), vendor-managed inventory (VMI) or other higher-level collaboration initiatives, can’t take place until trust is established between the supply chain actors, with each demonstrating their ability to deliver upon their commitments.
Improving Supplier Delivery Performance
Learning how to improve supplier delivery performance takes some trial and error, but there are three key things you can do to improve supplier on-time delivery with all types of suppliers:
- Establish a service level agreement: Service level agreements outline the terms on which you will do business with the supplier. This form of supplier relationship management indicates your intention to work with the supplier for the duration of the agreement.
- Listen to your suppliers: Find out what the supplier needs from you in order for them to meet your company’s needs. What information can they use to do a better job for you?
- Be consistent: It is easier for a supplier to provide consistent on-time delivery when you make consistent orders. One strategy is to order at regular, frequent intervals. Another is to try and level your needs so each order is generally the same.
Work With APX York Sheet Metal for On-Time Supply
When you need sheet metal, think APX York Sheet Metal. We get your parts to you fast with quick turnaround times on work done completely in-house. When you work with APX York Sheet Metal, you can rest assured the parts you need will be there when you need them. For more information on our services, call 717-767-2704 or request a quote today.
About the Author:
Andy Mulkerin (General Manager of APX York Sheet Metal) has 20 years of experience leading advanced technology development programs and overseeing global manufacturing operations. He has managed production/operations within the chemical processing, electronics, and commercial nuclear industries. He has worked on multi-billion-dollar investment and infrastructure deals, as well as spent more than a decade advising US companies on how to successfully navigate the Chinese energy market. Andy led initiatives setting up fabrication operations in China to produce equipment to the ASME NQA-1 and NNSA’s HAF604 specifications.
Andy has successfully driven technology transfer initiatives for dozens of Western energy companies including Babcock & Wilcox, Bechtel, Thermo Fisher Scientific, Energy Solutions and TerraPower. Andy is a recognized global leader in the field of US-China nuclear energy strategy and has been cited by the Wall Street Journal and the New York Times. Andy has collaborated on numerous initiatives with the US Department of Commerce and Department of Energy related to maximizing commercial opportunities for US companies in China. Additionally, Andy also was part of the core Blu-ray strategy team for Sony in Tokyo, Japan.
Andy has a BS in Chemical Engineering from Columbia University and an MBA from Harvard Business School.