Manufacturing Strategy for Window Fabricators 11 - Supply chain

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Suppliers are the key to effective manufacturing so why is it that they are treated as the enemy? Good supplier relationships need good customers as well as good suppliers.

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The supply chain

The conventional view of Just-In-Time was that it was simply asking suppliers to deliver smaller lots more often. Many companies did this and failed to gain any real benefit. Not a great surprise. They missed a real opportunity to improve the supply chain and develop a partnership with suppliers. Improving the supply chain means having a minimum number of totally reliable suppliers and then working with them on:

Supplier development is about achieving these cost reductions and simultaneously improving reliability and response time. This requires supplier development and their eventual integration into the rapid production environment.

Supply chain development
The traditional supply chain has distinct barriers between the suppliers and the customers, this leads to adversarial conditions. The integrated supply chain has overlapping at the customer / supplier interface and co-operation for mutual gain. This gives a reduction in the length of the supply chain and quicker reaction to customer demands.

Purchasing has traditionally been wary about supply chain integration because of concerns such as:

Supplier relations

Approaches to supplier relationships can either be co-operative or competitive. The co-operative approach is best if the supplier has significant technical resources that can contribute to new product development and can lower costs as a result of stability or economies of scale. For most fabricators this is the relationship with the systems supplier. The systems supplier has resources that the fabricator can use to improve their business. The competitive approach is appropriate when there are many suppliers of totally equivalent products or when important raw materials are in danger of having supply interrupted. Even in these cases the co-operative approach can prove better in terms of additional co-operation from the supplier with regard to delivery and quality.

The benefits

Developing supplier relationships and integrating suppliers into the company processes can save real money and improve operational effectiveness at the same time. Improving the supply chain needs time and effort but the rewards are worth it. Some of these are:

Purchasing

Supplier Quality

Goods Inwards

Stores

Communication

Supplier development and integration can reduce the costs of purchased materials significantly through simple and direct actions but only if the adversarial relationship is replaced with one of mutual benefit.

Qualifying suppliers

The key to managing the supply chain is finding the right suppliers to integrate with and procedures are needed to select and evaluate suppliers. The formal evaluation must not be simply on ‘first time cost’ but also include quality, reliability, technology and stability.

Suppliers need to be qualified on the basis of the following information:

  Improving the relationship

Actions to improve the supplier relationship are:

  Building supplier relationships

  1. Building supplier relationships is not a quick fix. It demands time and costs money but reduces costs in the long-term.
  2. Inform them and communicate with them.
  3. Obtain commitment to an open process of working.
  4. Get them to open up their organisation by asking questions and being open with them.
  5. Visit them and have them visit you - not just the purchasing staff but all the way down to the shop floor.
  6. Create a mutual understanding of the benefits of cooperation and working together.
  7. Negotiate and agree formal supply long-term agreements.
  8. Use 'just-in-time' to work with them not as a weapon.
  9. Teach them what you have learnt.

Not simply purchasing

Improving the supply chain changes the way purchasing works. Instead of chasing materials and processing repetitive orders purchasing can work on the real core functions of negotiating agreements, working with suppliers to improve operations and ensuring value for money purchasing.

'Manufacturing Strategy' Series.

The 'Manufacturing Strategy' series is designed to give window fabricators a set of ideas for managing production. The series is being published in Fenestra on a monthly basis and published here after the Fenestra publication. The series is:

Part 1: The Essential Part 
Part 2: The Systems
 
Part 3: Just-in-Time

Part 4: Optimised Production Technology

Part 5: Work Cells

Part 6: Machines
Part 7: Machines (2)

Part 8: Scheduling

Part 9: Waste (Methods)

Part 10: Waste (Materials)

Part 11: Supply Chain

Part 12: Measurement
Part 13: Things to do NOW!
Part 14: The Cost of Quality

Part 15: The Hidden costs of inventory

Part 16: Environmental management

Part 17: Continuous Improvement

Last edited: 11/03/10

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