Insights

Big complexity? Easier life, good results? Ordering, Planning. 10 short recommendations

May 20, 2019 | Tips

Intro

How to make results and easier life for the company when a big complexity of Materials and Products have to be managed?

Recommendations are for managing easier the complexity and having better results. We will not discuss here the tools. Different tools can be used or developed.

 

10 short recommendations – let’s start

1. Start from your Customers first and make a clear analytics by the orders and rules, as this drives further your organization – planning, materials, capacities, … Categorize your Customers and have a deep look how their orders behave. 

2. Categorize your Suppliers by their lead-times + flexibility. Make a ranking. Out of ranking decide with which Supplier you’ll go easier and without higher risks lowering inventories

3. Could you agree with your Suppliers to manage their stock of the parts at your location? With some of them – for sure. As first step – look for close distance suppliers for this task.

4. ABC/XYZ – for Materials and also your Parts towards to Customers. Now this is a well known approach, we would say. Right. A question – how we are using and what exactly ABC/XYZ means in your understanding and organization.

ABC stands for A- High runner, B- Middle runner, C- Low runner.

XYZ stands for X- stable, B- middle stable, Z- not stable at all.

One more question – ABC – by quantity? By value? By volume? Which one to use and for which purpose? Feel free to contact me for more details.

5. Out of categorization you’ll need to select a planning/ordering strategy (build to stock, build to order, kanban, supermarket, etc…). For different categories different strategy should be selected and followed. For instance for “Z” parts (not stable at all, order could come once in a year for example) of cause we are not building stock, but will make it when we have an order.

6. Transport scenarios – categorize and make an analytics. Decide on strategy for ordering depending on the results.

7. From which Supplier the transport is cheap because of the rout and distance? 

For which suppliers the lead-time are short and flexible?

For which parts make sense to make a lot of work with orders? Be careful, as we should look not only on the cost of the ordered material, but for the full cost – material, transport, storage, handling, lifetime, etc. In majority of the cases the (costs of transportation + material + customs) are enough. However, on each company the processes and products are different. Have a look to the whole process and parameters.

For parts, which make little impact to your stock profile (please do not forget – total cost have to be considered) please do not spend too much time. In the same time, have a control point for not allowing this become as obsolete.

8. Make simulations of different scenarios for materials and products and the outcomes of them. 

9. How to have optimal inventory and process? Continuous improvement. With step-by-step approach and changes. Change, have a look to the result, see the “rocks”. Step back if it can influence the Customer. Solve the rocks. Again reduce, change the process or approach. 

10. Have fun out of this activities. This makes the results better.

 

Bonus.

What is missing? 

  • Throughput time. This is also influencing you inventories and how you should manage them
  • Possible replacements by other materials (if one is missing, another one in some cases could be used – another width which could be adjusted, color,…). Such things should be known in advance, not when the part is missing and then to start search

 

Wish you a good start of the week

 

Viktor Mikla
Founder/CEO, 
Expert in Business Development and Business Processes