A major tier 2 supplier approached G&P to assist with a parts supply issue that was resulting in consistently late deliveries and associated late payment and cash flow issues. Additionally, supplier payment terms couldn’t be supported and were stifling supply of raw materials and components to the tier 2 business.
G&P installed a supplier quality engineer with both a strong technical and business process background to undertake an audit of the arrears to the client’s agreed demand schedule. Component quality was found to be generally good however key personnel weren’t sufficiently skilled in capacity planning which, coupled with intermittent tier 3 deliveries, led to very significant shortfalls in supply and an unclear recovery plan. Additionally, this was exacerbated by an outdated ERP system.
Lead times were invariably inaccurate and caused the client’s customer issues and frustrations at its multiple plants in Europe, India and the US.
G&P assisted the client in first principles analysis of manufacturing cells with critical arrears, scrutinising squeeze points and parts processing to bring orders back on track to minimise the impact on downstream customer’s production. In addition, G&P looked at rapidly implemented, cost-effective methods of increasing current capacity, including weekend working practices and sourcing cost-effective pre-owned machinery.
From a business process perspective consideration was also given to payment procedures to ensure continued supply of raw materials and sub-components, and communications with suppliers and the end customer were improved to provide greater clarity, accuracy and reassurance.
The percentage of parts in arrears began to decline with an improvement of 40% by week 3 and a further 50% by week 12, with the result that the company retained its contract with its customer.
G&P’s supplier quality engineer has ensured that production, planning, logistics and finance teams communicate on a regular basis to maintain this progress. More positively, the company is now delivering long-term value rather than constantly reacting – production levels are now at the point of building up buffer stocks.
The confidence and trust in G&P’s abilities has led to further project discussions where G&P’s experience and expertise can deliver a positive difference.