As an integration consultant, I have worked with a variety of manufacturers implementing supply chain planning and response management applications. What I have noticed is that at many of the manufacturers, not all, there are many past due purchase order (PO) schedules in their ERP system.
Obviously, when a PO schedule is past due, it cannot be determined when that scheduled supply will be available to support production. In many cases, revised delivery commitments from suppliers are maintained outside of the formal ERP system, such as Excel worksheets or supplier portals. A variety of reasons exist for not updating these past due PO schedules in the ERP system: too much time required for updating; suppliers need to be measured against the original schedules for metrics, to name a few. The paradox is that the cost and potential lost revenue of not being able to effectively plan or respond to demand and supply changes likely greatly exceeds the cost of managing the late PO schedules in the formal ERP system. However, given the fact that these past due PO schedules exist leads me to believe that implementing a process, or just the simple discipline, to update these to the actual expected delivery dates is just too difficult.
It seems that there are at least several options to fix the problem.
One option is to build an interface from the supplier portal if it exists, or if one does not already exist, implement a supplier portal with an interface to the formal ERP system to get the latest supplier delivery commitments. This option could be very costly and also take some considerable time to implement. Another option is to simply start maintaining the late PO schedules in the formal ERP system. This could be accomplished by instilling the discipline and the process within the organization to do this. Part of the process would have to include a reporting and tracking mechanism to alert buyers of past due PO schedules and also track the progress at working them down. Although there may be barriers to updating the formal PO schedules, this option could leverage a response management system that can send automated alerts to buyers or planners and track the progress at reducing past due PO schedules.
To me, the preferred option is to leverage a response management or supply chain management system and import the supplier commitments from wherever they exist, whether it be Excel worksheets, a supplier portal or some other application outside of the formal ERP system. This provides a capability to evaluate the current planning with realistic supplier delivery dates and to simulate changes to determine the best response to change. This last option also minimizes the manual effort of updating PO schedules.
Do you have past due PO schedules in your ERP system? If so, is there a compelling reason not to fix them?
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Tags: Advanced planning & scheduling (APS), Demand-supply balancing, Order Fulfillment, Response Management, Supply chain visibility, Supply management
Posted in Response Management, Supply chain management
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Why not work with suppliers to eliminate past dues?
Very good point! At first the reply/question of “Why not work with suppliers to eliminate past dues?” left me a little stymied. This is exactly the right thing to do, but until this root causes can be fixed and there are no late POs, I think that the actual committed delivery dates from suppliers on past due PO’s needs to be reflected in an environment or system to evaluate the best response to the late supply.
Also, even with significant effort, can we realistically expect that suppliers will never be late on a delivery?
I am quite happy that a such topic be raised !
As a business&integration SCM consultant I have managed the implementation of a B2B paltform for one of my customer in textile industry. As a key feature of the platform we asked for PO collaboration.
Most of customers ask for Invoicing, but PO collaboration can be very important, expecially in textile when you have some continuous replenishment (and not one shots).
The platform was able to provide a grid view to support batch collaboration for POs and this was wonderfull !
1. Updating PO in ERP for me makes no sense : in standard, you have to update line by line and this is too much consuming…more : people responsible for ERP update may not be the procurement team in front of the suppliers and so updating ERP is considered as a non task value
2. The grid view is available for the supplier…all suppliers in the same format…they key information and an approval is requested to the procurement before the automatic update of the ERP..this allows collaboration through back and force process
3. We put in place a back log analysis for each weekly supplier meeting and reports are available through the supplier portal
Regards
Patrick Bachet
Another useful tool is to share YOUR measurements (delivery, quality, price, etc.) of their performance with your suppliers, ideally through a portal.
Any good supplier will want to be viewed favorably by its customers, and will take proactive measures to improve performance if they see it is sub-par.
I would respectfully disagree with Patrick’s comment that “updating the PO in ERP … makes no sense.” Refusing to run your ERP with anything but the most up-to-date informaiton is asking for trouble. Granted, a good ERP should allow for meaningful performance measurement (an “Original Promise Date” as well as a “Current Promise Date,” for example, and whoever is responsible for the update to the ERP needs to understand its value to the whole process.
Add on
Thanks Dan for your feedback => I understand my point of view might be a little bit misleading 
When I am saying “updating ERP makes no sense” I mean “manually”… For me ERP must be up-to-date through automatic interfaces 
..in our platform/portal we manage original+current+contractual promise date and all of 3 are interfaces through our ERP after negociation is over 
I fully agree the “… YOUR measurements”…to allow comparison and so both parties have a common understanding of rules for measurement…
I typically hear about collaboration challenges with my customers on a day to day basis. I believe having a fully functional vendor portal that helps organizations collaborate and connect is a great start. Purchase orders seem to be a major issue, especially when confirming whether or not your vendor has in fact received or viewed the PO.
Sharing metrics and reporting within the portal will help clear any misconceptions of what is expected from your suppliers.
Also ensuring that you enable your suppliers to review their performance at their leisure helps.
What are the other types of document collaboration challenges you see in the market? RFQ’s? Forecasts?