Questions to Consider:
If you’re struggling with unpredictable delivery schedules, here are three critical questions to consider:
Are outdated just-in-time and just-in-case practices creating havoc for your on-time deliveries?
What are the hidden costs as a result of supply chain demand forecast fluctuations?
Is your MRP system up-to-date with suppliers’ shifting lead times?
Our client is a leader in technologically advanced and intelligent solutions for the global aerospace and defense industry. They were challenged to improve the accuracy of their supply chain demand forecast. The constant fluctuations caused the client’s team, and our team, to operate in a reactive mode more often than we both wanted. Caught in a reactionary mode, both teams focused on transactional requirements and ended up with a component build schedule that was inefficient and unpredictable.
Our Client Now Sees 98% On-Time Deliveries
“In today’s dynamic environment with increased demand and supplier lead times, Nortech has aligned with us on a supply strategy to support customer demand. Nortech’s continued use of the supplier portal has helped with customer satisfaction and on-time deliveries.”
Our teams partnered together to discover the root cause and map a more effective path forward. Constant shifting of the production build schedule to address fluctuating supply chain demand requirements was traced to outdated information: the client’s MRP (materials requirement planning) software. The MRP contained outdated data about component availability and lead times for multiple suppliers. The supply chain demand forecast, which was based on outdated lead times, was skewed and inaccurate time and again. Yet, updating the ever-changing lead times from the client’s hundreds of suppliers was an arduous task.
To create a reliable forecast, we carefully analyzed historical usage. With forward-looking expectations of demand, the teams were also able to create a process for building components based on a reliable forecast. This helped create processes to safeguard against fluctuations. Some of those processes included a stocking program to keep inventory on hand for fluctuations in demand.
Fluctuations Will Happen: Have Established Processes to Ship Product On-Time
Due to defense industry needs, production schedules needed to be flexible enough to accommodate changes and swings. One contributor to swings in demand for this client were requirements to fulfill aftermarket repair or replacement orders. Some of their activity trend KPIs set a baseline volume of components needed for aftermarket orders. However, it was impossible to fully predict the needs of the aftermarket orders. A stocking program was the safeguard that kept product flowing smoothly and efficiently.
Once the scheduling agreement was established, Nortech’s account team led regular communication calls with the client’s team. Both companies wanted to ensure on-time delivery without chaos and shortages. Good data, consistent communication, and clear inputs on lead times enabled both teams to stay on track.
Optimal Supply Chain Results
By combining a 24-month order history analysis with the customer’s forecast, our teams have created a gold-star standard for maintaining an efficient and cost-effective schedule. Weekly team communication ensures alignment and provides a forum for early response to fluctuations. Since the process changes were implemented, 90-day forecasts have been consistently correct. Now, the client receives on-time delivery of their components 98 percent of the time.
The client’s team has been very receptive to the changes. Our new forecasting and scheduling process moved Nortech to the top of their supplier lists. The key purchasing contact recently shared with us that, “In today’s dynamic environment with increased demand and supplier lead times, Nortech has aligned with us on a supply strategy to support customer demand. Nortech’s continued use of the supplier portal has helped with customer satisfaction and on-time deliveries.”
Learn more about Nortech’s robust and efficient Supply Chain Management program now.