Almost daily I read about supply chain challenges and the increasing complexities driven in part by demand volatility and unexpected supply disruptions. As much as we strive to improve forecast accuracy, nobody can predict the future and the events that will throw plans out of balance. Managing and responding to unexpected change rapidly and effectively is a competitive advantage. However, dealing with engineering changes seems to be harder than it should be. Why? Because it’s one of the few changes we know about in advance that requires an engineering change management process.
Engineering changes are implemented for different reasons – everything from product enhancements, cost savings and meeting regulatory standards. In any case, regardless of the priority of the change, someone in the organization knows the change is on its way. That someone is the Engineer. Unfortunately, since engineers rarely talk to supply chain planners, this seemingly easy type of change causes headaches for both groups. Engineers typically don’t ask if there’s material and capacity available to hit engineering change dates, so it turns into a surprise when those engineering change notice (ECN) dates are missed. Supply chain planners are managing a change that to them, goes under the radar and causes excess or shortage conditions. While touring an aircraft assembly facility, I asked a production manager what the key was for hitting delivery commitments. Without hesitation he blurted, “stopping the engineering changes.” With shortages comes missed deliveries, and in most industries – particularly the aerospace industry – that means big dollars in late delivery penalties.
Well, what if engineers and supply chain planners had meaningful conversations? By that I mean more than just sitting together at the company holiday party. What if the data associated with engineering changes was connected to all the other supply chain data? What if there were alerts identifying risk associated with new ECNs or schedule changes on existing ECNs? What if you could simulate multiple cutover dates simultaneously and see impact on excess, shortage conditions, cost and delivery, then collaborate to drive a consensus on the optimal cutover date?
Bringing engineering and supply chain together would drive significant benefits, including improved inventory utilization, reduced expediting, and minimum impact to schedules and more accurate commitments to ECN dates. If the engineering data is connected to supply chain data and processes, then those meaningful conversations can happen. Engineering and supply chain can work together to identify the operational impact of selecting particular effectivity dates for selected engineering changes to determine the effectivity timing that maximizes alignment with performance objectives. There is no easy button for managing engineering changes, but connecting engineering to your supply chain data and processes is the start to a more valuable relationship between two very different groups.
What has your company done to foster collaboration between engineering and supply chain? Let us know in the comments area below.