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Are outdated just-in-time and just-in-case practices creating havoc for your on-time deliveries?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 demand forecast fluctuations?
Is your MRP system up-to-date with suppliers’ shifting lead times?
Our client, a leader in technologically advanced and intelligent solutions for the global aerospace and defense industry, was challenged to improve the accuracy of their demand forecasts. Constant fluctuations caused the clients team, and our team, to operate in a reactive mode more frequently than either team desired. 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
Nortech’s account team partnered with the client to assess the root cause of the issue and map a more effective path forward. The inefficiencies of constantly shifting the production build schedule to address fluctuating requirements was traced to outdated information in the client’s MRP [materials requirement planning] software. The MRP contained outdated and obsolete data regarding component availability and lead times for multiple suppliers. Forecasts which were based on the outdated lead times were inevitably skewed and would prove inaccurate time and again. Yet, maintaining and updating the ever-changing lead times from the client’s hundreds of suppliers was an onerous task.
With careful analysis of a long history of usage, plus forward-looking expectations of demand, the teams were able to set up a process to build components based on a reliable forecast AND to put processes in place to safeguard against fluctuations. These processes included a stocking program to keep inventory on-hand for swings in demand.
Some Fluctuations Will Happen: Have a Process in Place to Ship Product On-Time
Due to the nature of the defense industry needs, the production schedule needed to be flexible enough to accommodate adjustments and swings. One contributing factor to swings in demand for this client were requirements to fulfill aftermarket repair or replacement orders. Although there were some activity trend KPIs that set a baseline volume of components needed for aftermarket orders, ultimately it was impossible to predict fully the needs of the aftermarket orders. A stocking program safeguarded for this and kept product flowing smoothly and efficiently.
Once the scheduling agreement was established Nortech’s account team led regular and complete 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 enable both teams to stay on track.
By combining an analysis of 24 months of order history with the customer’s forecast, the teams have proven 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. The client now receives on-time delivery of their components 98 percent of the time.
The client’s team has been very receptive to the changes in forecasting and scheduling process, moving 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 Supply Chain Management program here.