http://blog.kinaxis.com/2010/03/can-you-reduce-inventory-by-rescheduling-late-demand/ Tue, 07 Feb 2012 20:48:00 +0000 http://wordpress.org/?v=2.9.1 hourly 1 http://blog.kinaxis.com/2010/03/can-you-reduce-inventory-by-rescheduling-late-demand/comment-page-1/#comment-6440 Shiraz Ahmed Thu, 18 Mar 2010 07:23:36 +0000 http://blog.kinaxis.com/?p=2983#comment-6440 This is a very serious issue we face, particularly in our part of the world i.e. South East Asia, as the suppliers have little or no literacy, and the businesses they are into is what they have learnt from their families or friends. In Pakistan, we are the sole manaufacturers of Shocks & Struts for the automotive industry. Our major customer is Toyota Pakistan and their production lines are operating on KANBAN system, therefore it is all the more critical for us to ensure uninterrupted supplies to feed their plant. We do provide our firm order for the month to our suppliers with two months forecast, they are bound to manufacture 50% of the first month forecast in the running month, and have these delivered to our plan by end of each month, this way we are assured of covering next fortnight of production. We do have a couple of monopolistc suppliers, with whom we cannot afford not having the material, therefore we maintain one months inventory, though it does have an impact on our inventory holding cost, but that we are willing to bare rather than having a production or sales loss. However, there are situations when part/s are not supplied which are part of the BOM (Bills Of Material) and production cannot be undertaken, in such situations we coordinate with our production department and reschedule that product to the next production slot when we are assured of having the material in our stores. Obviously, very strong follow up with the suppliers has to be maintained. We have also put a penalty on non supply i.e. 5 % of their invoice value, this factor obviously hurts them financially and they try to ensure meeting our PO requirement. This is a very serious issue we face, particularly in our part of the world i.e. South East Asia, as the suppliers have little or no literacy, and the businesses they are into is what they have learnt from their families or friends. In Pakistan, we are the sole manaufacturers of Shocks & Struts for the automotive industry. Our major customer is Toyota Pakistan and their production lines are operating on KANBAN system, therefore it is all the more critical for us to ensure uninterrupted supplies to feed their plant.
We do provide our firm order for the month to our suppliers with two months forecast, they are bound to manufacture 50% of the first month forecast in the running month, and have these delivered to our plan by end of each month, this way we are assured of covering next fortnight of production. We do have a couple of monopolistc suppliers, with whom we cannot afford not having the material, therefore we maintain one months inventory, though it does have an impact on our inventory holding cost, but that we are willing to bare rather than having a production or sales loss. However, there are situations when part/s are not supplied which are part of the BOM (Bills Of Material) and production cannot be undertaken, in such situations we coordinate with our production department and reschedule that product to the next production slot when we are assured of having the material in our stores. Obviously, very strong follow up with the suppliers has to be maintained. We have also put a penalty on non supply i.e. 5 % of their invoice value, this factor obviously hurts them financially and they try to ensure meeting our PO requirement.

]]> http://blog.kinaxis.com/2010/03/can-you-reduce-inventory-by-rescheduling-late-demand/comment-page-1/#comment-6429 Eric Reidenbach Wed, 17 Mar 2010 21:04:08 +0000 http://blog.kinaxis.com/?p=2983#comment-6429 Some really good points and this clearly describes situations that I have found to exist in numerous supply chains. I would add one more point - the impact that these issues have on value creation and delivery for the end user. I have seen a customer's order for a tractor come in but can't be delivered because an attachment hasn't arrived. He can see the tractor but can't take delivery of it until the attachment arrives and is attached. And, to add insult to injury, the dealer will ask him to fill out a questionnaire regarding how satisfied he is with the service. The dealer will get knocked but really has nothing to do with the problem. Coordinating the supply chain offers a solid way of enhancing the OEM's and delaer's value proposition and a good way to grow revenues and share. Some really good points and this clearly describes situations that I have found to exist in numerous supply chains. I would add one more point – the impact that these issues have on value creation and delivery for the end user. I have seen a customer’s order for a tractor come in but can’t be delivered because an attachment hasn’t arrived. He can see the tractor but can’t take delivery of it until the attachment arrives and is attached. And, to add insult to injury, the dealer will ask him to fill out a questionnaire regarding how satisfied he is with the service. The dealer will get knocked but really has nothing to do with the problem. Coordinating the supply chain offers a solid way of enhancing the OEM’s and delaer’s value proposition and a good way to grow revenues and share.

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