Developing a Supply Chain Strategy as a Small to Medium-Sized Manufacturer (Part 2)

In part one of this blog, we discussed time management techniques for your team to get out of firefighting mode. If you missed that blog, you could find it here. In this part, we will discuss some sustaining management practices that will help you monitor and continue to improve your departments efficiency, here are a few things that you should be tracking:

KPI’s:

• Make sure you are tracking supplier on-time delivery performance. If you have a quality manager, find out if they’re tracking parts per million or PPM and see if you can add delivery performance to the PPM to the supplier report.
• Discuss with accounting the inventory method they would like to see utilized for inventory tracking.
• Do you have a standard cost system? You should be tracking purchase price, variance or PPV. If you do not have a standard cost system, discuss with accounting, the best method for tracking costs and improving costs.

Projects:

• Meet with your purchasing and planning personnel to discuss the ERP performance with respect to messages for orders, pull ins, push outs, and cancellation messages. Identify opportunities for improvement and implement a project to clean things up: check lead-time settings, both for supplier and internal operations, lot sizes, and any specialized parameters that may impact demand, such as safety stocks and days’ supply. This project will continue to improve your department’s efficiencies.
• Continue to review the list you created in part one for project opportunities and especially keeping cost reduction high on your list of projects.

Your KPI’s are now as follows:

1. Supplier on-time
2. Supplier PPM
3. Inventory metric approved by accounting.
4. Cost method approved by accounting.
5. Special projects:
   1. ERP clean-up and management
   2. Cost reduction projects

Now it’s time to create the dashboard for your KPI’s and organize a monthly meeting to review and check all this information. Set up a dashboard and give access to those that need to review it. Consider keeping this within the department for a month or two to work out any bugs that might exist. Once you are comfortable with the data, provide access to others in management that will want to track your progress.

Create an agenda for a monthly meeting with your department to review the dashboard and the status of the special projects. Add to the agenda items such as current issues, time management issues, training that is needed, and opportunities for improvement. Of course, add a section for action items, person assigned, and the date of expected completion.

At this point, your monthly objectives are set, and you can begin to think of that list you created in terms of longer timelines. You will want to consider what opportunities exist to create closer relationships with your suppliers. Are there opportunities for a Strategic Sourcing Agreement (SSA) and engaging those bigger suppliers monthly. Consider contacting IMEC for training and further support in negotiating with indices on your raw material and ongoing strategic opportunities that can be developed.

Congratulations! Your department is now under control and headed in a positive direction!

Contact Jeanne Perron, Technical Specialist at IMEC!