On the seventh (work) day of Christmas my supplier said to me “We just finished that batch. I’ll have to start a new one to make that change.”
You just want to issue a quick change-order, but you’re too late. Just as they receive the notification, they have just finished the batch of your parts. Well. Now what? They want to start a new batch. Who will pay for the scrap from the first batch?
Communication with your suppliers is critical for maintaining a fast and efficient supply chain.
If the supplier was given advance notice via an EDI 860 transaction set that a new specification was on its way, then the whole situation might have been avoided. Normally, the supplier is only responsible for making parts that are compliant with the specifications they receive at the time of the order. This means that the lack of structured supplier communication has resulted in you as the customer covering the cost of a new batch or trying to find a work around that allows you to use the newly out of spec parts.
If new specifications are received after production begins, then the cost of halting production and retooling is owned by the purchaser of the parts who sends the new specifications. There is no ethical dilemma here. It is the right thing to do. It still costs money, and that comes out of your company’s profitability.
So, what is at the root of this problem? I’m glad you asked.
Emails are lost and phone calls are missed. People are busy. When schedules do not line up and supplier communication is not standardized, production can continue for days before your change-order is received.
What’s the bottom line? You need your suppliers to be tightly integrated so that you have both process and visibility in your communications in order to make these incidents much less common.
How do you manage change-orders with non-EDI suppliers?