Improving the Supplier PCR
A promise not reliable shows organizational problems on the Supplier side with 2 mains root causes:
- the Supplier promises based on a quantity already in stock but it is not able to ship on time (lack of ressources to prepare the shipment, inventory discrepancie, damage on the material during the shipment...). It means that its shipping operations are not under control;
- the Supplier promises a quantity not produced yet and it is not able to produce it and deliver on time (machine breakdown, quality issue, capacity issue, component shortage...). It means that its short term production operations are not under control.
If the Supplier shows production operations not under control, the first step is to request a promise based on actual inventory.
Making shipping operations reliable
Missing a Promise when the Supplier is promising based on inventory is generaly difficult to understand but the root causes are generaly the same.
1. The Promise is done based on ERP data:
- request a Promise based on physical count;
- request an action plan to improve inventory accuracy.
2. Material is in stock but the time to prepare it for shipment is too short:
- check if the person in charge of the Promise is the right one (i.e. knowing the shipping constraints);
- check if the fax used to send the Promise is located at the right place (sometime it is too far from the person in charge of the Promise so its is always late);
- ask the Supplier to review his shipping organization/process (ressources planning, flow analysis);
- increase the time between Promise and Shipment;
3. Material is in stock but sometimes damaged before to be shipped:
- request an audit of the storage conditions: is the material already damaged in the warehouse? is the storage equipment damage the material (racks with nail, roughness...)?;
- request an audit of the handling equipment used for this material (forlks length not compliant with pallets...);
- request a check of the compliance between packaging and handling operation (carboard too thin...).
In all cases you are going to help the Supplier to improve its shipping process.
Making production operations more reliable
The target of this chapter is not to describe all the tools to improve Operations. You can of course help your supplier to audit its operations and formalize an action plan to improve but you have to highlight to your Supplier that till its operations are not under control, Promises have to be done based on inventory.
Changing to a Promise based on production schedule has to be done progressively based on PCR results and completion of specific actions. It has to be rigorously monitored during your VRO monthly review with the Supplier: you cannot be taken in hostage!
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