As the pace of business continues to quicken and your end customers’ expectation is for continuous improvement, making sure your supply-chain allows you to meet your delivery commitments is a key performance indicator that separates successful companies from those who can’t keep up. In 2016, outstanding quality, cost and delivery are a market expectation that must be met. Period.
While we’re all aware that on-time delivery certainty has value, it’s important to remember all the ways it can impact a company’s resources and therefore its bottom-line:1. Your Performance is Being Graded - As more and more companies adopt supplier scorecards and on-time deliver KPI metric tracking, your company will suffer as you are scored against your competitors. Very few (if any) companies have the luxury of being late on deliveries while simultaneously being able to keep their customers satisfied and coming back for more over the long-term.
2. Recognize the Bull Whip Effect - This is important for many reasons. At the heart of it, world class supply-chain leaders understand the value of establishing trust, communicating clearly, and that a foundation of outcome certainty is central to ensuring a lean and efficient supply-chain.
3. The Cost of Unpredictability – Without having the confidence to know that the product is going to be on-time where it needs to be (and within spec of course), teams within your organization will end up making ad-hoc, low-information assumptions to compensate for systemic uncertainty. This results in investing resources in contingency planning activities that do not create direct value for your end customer.
4. Management Distraction – As we all know, when you’re fighting fires and responding to crises related to late deliveries, you and your team aren’t working on productive endeavors to further your companies (or your customers) long-term strategic goals. For today’s high-impact managers, time is the scarcest of resources. Investment in supply-chain relationships that minimize firefighting is a high-leverage use of time.
5. On-Time Product Delivery is Simply Table Stakes - On the journey to building high-productivity, value-creating relationship with your suppliers. Conversations that you want your supply-chain team to be having with your suppliers, whether about DFM (Design-for-Manufacturing), improved EDI (Electronic Data Interchange), VMI (Vendor-managed Inventory) or other higher-level collaboration initiatives, can’t take place (practically speaking) until the trust is established between the supply-chain actors with each demonstrating their ability to deliver upon their commitments.
About the Author:
Andy Mulkerin (General Manager of APX York Sheet Metal) has 20 years of experience leading advanced technology development programs and overseeing global manufacturing operations. He has managed production/operations within the chemical processing, electronics, and commercial nuclear industries. He has worked on multi-billion-dollar investment and infrastructure deals, as well as spent more than a decade advising US companies on how to successfully navigate the Chinese energy market. Andy led initiatives setting up fabrication operations in China to produce equipment to the ASME NQA-1 and NNSA’s HAF604 specifications.
Andy has successfully driven technology transfer initiatives for dozens of Western energy companies including Babcock & Wilcox, Bechtel, Thermo Fisher Scientific, Energy Solutions and TerraPower. Andy is a recognized global leader in the field of US-China nuclear energy strategy and has been cited by the Wall Street Journal and the New York Times. Andy has collaborated on numerous initiatives with the US Department of Commerce and Department of Energy related to maximizing commercial opportunities for US companies in China. Additionally, Andy also was part of the core Blu-ray strategy team for Sony in Tokyo, Japan.
Andy has a BS in Chemical Engineering from Columbia University and an MBA from Harvard Business School.