How do I get suppliers to deliver on time? 3

[JLooking]

I work for a small engineering company and we design equipment for a process sector. While we have a workshop for assembly, we outsource our manufacturing (fabrication/machining) to local shops, the management of which is my responsibility. The items we outsource are often one-offs and low volumes. Because my region is so busy, and there are a shortage of skilled tradespeople, lead times and prices are through the roof. The problem is that while the suppliers always agree to deliver by a certain date, and I'm constantly checking in to see that they're tracking on time, when the delivery date arrives so does the excuses and the delivery always seems to blow out by an extra week or more. Our jobs are constantly running late and its hitting me at performance reviews. The suppliers don't seem to care if they do our work or not.

 

[jmw]

Delivery dates are often a mess. It isn't helped when suppliers have the wrong KPI's in place.

When putting together a proposal you request a quote with a delivery.
This is usually speculative because they don't know when you will order or even if so they'll do the minimum to assess it.
It isn't binding.

When you order, delivery is what they acknowledge to you as the delivery date. This is usually calculated based on the current parts/materials availability or lead times and the manufacturing load.

Even then things may go screwy and if there are any rush jobs/priorities etc you will find the date slips.
Also, in tough times, manufacturers will also throw the schedule out by trying to hit their end of month targets. If one job is slipping they may suddenly put the effort into just enough current work that can be completed on time.
This may include some work that isn't due for another two or three weeks.

The reality is many companies measure their manufacturing performance based on, firstly the end of month output and secondly actual delivery vs acknowledged delivery.

They do not measure how delivery stacks up against quoted delivery and they often don't even measure how any of these match up to client expectations.


Often, there can be a serious disconnect between the manufacturer and the client expectations.

Consider valves. 14-16weeks might be fine if you are supplying OEMS doing plant work but for offshore it is usually a case of "Time is of the essence and money is no object".
Same product but different markets and expectations.

In your case, you are being faced with serious delays. Equally, there are circumstances where goods are delivered early. This is also often a problem.

Strangely, manufacturers count this as an even better success when measuring delivery achieved against promised delivery.
I mentioned some examples above of why this might happen.
You have to find storage for it, and you have to pay for it ahead of the scheduled time. Your client may not want it or the project cannot accommodate it until much later. This can really affect cash flow.

Chances are, if they are doing small jobs for you, they are doing small jobs for a lot of other companies as well.

Typically, 80% comes from 20% of the client base.
They are the ones that get looked after.

But it means 80% of their clients, accounting for only 20% of the business, will always get shafted in some way or another. But they are needed because these small jobs infill the schedule like sand between the pebbles.

Usually, you can progress orders and get re-assuring noises all the way up till you are within a week or so of delivery and that is when you might get completed early, but more usually the end of the month is when you get bumped so they can satisfy a 20% company.

So, manufacturers need to measure, and test how well actual deliveries stack up:
What the market needs: does it need ex-stock 6-8 weeks or 12-14 weeks?
What is asked for.
What is quoted.
what is acknowledged.
when it actually is shipped.

They all ought to answer the same for all clients.

But as suggested above, you need to be placing orders with companies where your orders are important. You need to be one of the 20% delivering 80% of the business. It may mean you have to choose smaller suppliers even if you pay more.
Otherwise, all the complaints in the world won't help and they simply won't accept penalty clauses.
They want, collectively, the business that 80% of the clients bring in but no individual order or client from that 80% is going to be able to commend any special treatment. Far from it. They are there to help service the 20% by using up slack time between big orders and so on.


JMW

http://www.ViscoAnalyser.com

 

[btrueblood]

molten,

In only one case did the boss buy the beer, and he too paid cash out of pocket. Most of the other times, the project was my personal business, not the company's, and the beer was part of the deal, promised ahead of time with a handshake.

FWIW, I have standing offers from several local shops to do my work for cost plus a share of my profits. Good companies, good buyers, and good engineers, build relationships with people that do the work for them. It pays off in the long run...but you can't put that goodwill into a balance sheet or expense report, and you can't buy it, you have to earn it.

 

[gadkinsj]

In my company I am responsible for meeting deadlines but have no control over when PO's are finally issued, and when payments are finally made.

I'm lucky in that my company is the biggest fish in the area and I get more respect from vendors because of that than our accounting and purchasing practices really deserve.

But I've finally started adding 3 weeks to any date just to cover the time from when I write up the purchase in our system to the time our purchasing department actually puts an order in.

And accountants showed how the company can save millions of dollars a year if they only started paying their bills at 35 days out vs 25 days out. and took their bonuses and left without having to deal with the backlash.