Creating a supply chain that is effective isn’t always easy. It takes a bit of work to get everything running smoothly, but when it comes to having an effective production line, the supply chain can be crucial.
No customer likes waiting longer than they have to. We live in the age of superfast shipping, and people are used to things happening quickly. But this is not a consumer waiting for an Amazon package, we’re talking about the risk of your supply chain threatening your product’s effectiveness or even costing you sales. Imagine if you couldn’t get a batch of your product finished because your OEM sent products that were shoddy or took forever to get you the parts you needed.
So, how do we go about managing this? Forecasting the timings for each aspect of your chain is an art. Get it right, and you will reap the benefits. Our 7 top tips should help.
1. Use Substitute Components If Possible
This depends on the product that you are creating. It may not be possible to use substitute components. However, if you can, it can potentially give you much faster lead times.
By using substitute components that have already been produced and available to the market, you can significantly cut down production idle time especially when you are facing component shortage from specific suppliers. You can significantly reduce lead time by reducing the time waiting for components to arrive by having some flexibility on the components to be used.
This isn’t an option for everyone, but it is worth considering as a way to create a more effective supply chain, save money, and reduce lead times.
2. Work with Your OEM and Provide Forecasts
Reading into sales data is vital for all supply chains. It lets you keep things running smoothly and ensure that you don’t end up with a huge surplus, nor do you end up having shortage on the parts you need.
Using historical and forecast sales data to work with manufacturers allows them to be better prepared in component procurement, production resource allocation, and logistic planning. Essentially, manufacturers plan and produced more effectively and timely when they gain insight into the quantity and schedule you are looking to achieve.
3. Try to Consolidate Your Component & Material Suppliers
This is another step that isn’t always possible. If you are working with multiple suppliers, consolidating suppliers can be key to reducing lead times.
Managing your suppliers can be difficult, and coordinating orders requires a lot of communication and processes. If you can consolidate the parts or components you purchase for production, you should definitely consider that. By having the same supplier handing a more comprehensive list of the components, you can make communication more efficient which eventually leads to faster lead time since you spent less time doing paperwork and communication. If this isn’t possible you should at least try to make your communication as simple and streamlined as possible. That’s is where sales forecasts play an important role as we have mentioned in the previous tip.
Some companies wish to work with multiple suppliers for redundancy. This is totally understandable, especially when you do not have confidence in some of your suppliers’ abilities to deliver on time. However, slower lead time is usually the trade-off.
4. Incentivize Fast Delivery
If your manufacturer’s lead time is set at 3 months, but you hope to get it in 2, is there anything you can do to try and get this quicker? Incentivize! This doesn’t always work, as sometimes the timings are set in stone, however, many of the best OEMs are happy to accommodate your needs.
Why not try to strike a deal? You could offer a bonus if the order arrives ahead of the scheduled delivery date, or if they hit a certain target. This makes good business sense, and for a manufacturer, there is no real reason not to accept a deal like this, just so long as it doesn’t push other projects behind. Quick delivery of your components can be a way to get ahead of the competition and take a product to market quickly.
5. Understand (and Implement) Kitting
Kitting is a process whereby you group components together into batches. This creates a “kit” for use on the production line. If you are getting multiple components from the same supplier, you may even be able to get them to help you to kit your components before they arrive.
The benefit is that workers on a factory floor, producing your product, do not have to spend time counting out parts. They are all there ready in a kit, and production times can be much faster as a result.
6. Use an Integrated OEM
When a product is fully manufactured, it would still require testing, certifying, packaging, and shipping. You would definitely look for an OEM that has already gone through some vertical integration and have the capability to handle all operational and logistical tasks for you. Again, you get to save time on the idle time among these tasks.
There are OEMs out there has established strategic alliance with safety certification labs, air & sea freight companies, and they are capable of handling all postproduction works with very minimal involvement from third party, which obviously increases workload on communication and slows down lead time.
7. Communicate Effectively
If we were to leave you with just one tip to reduce your lead times, it would be communication. By communicating with your supplier through every step, from planning to ordering, all the way through to delivery and re-ordering, you can ensure that any issues are stamped out quickly.
Working closely with an OEM is always a good idea, and if you are going to provide them with repeat business then it is in their interests, too. You can even provide some KPIs to try and further incentivize the quick turnaround and reliable service you require. It falls on you and your employees, too. Providing clear instructions and prompt orders helps to reduce lead times.
Summary
Improving your supply chain lead times is something that most manufacturing businesses should aspire to. Some people think that there is not much you can do to reduce this time, and that it is predicated on other businesses. Actually, many OEMs are happy to work with you to make your production schedule quicker. This can allow your business to profit as a result. Taking your product to market quickly or ensuring that your stock levels don’t run low means a greater chance of profit.
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