On the ninth (work) day of Christmas my supplier said to me “We are working on it, but when do you REALLY need that Just in Time delivery?”
The answer to the question in the title is, of course, Just in Time. Inventory management is critical for modern supply chains. The longer that parts inventory is held by your company, the more money it costs. If parts deliveries are early then inventories can pile up, and the cost of maintaining that inventory stock increases with it. Conversely, if those deliveries are late then you could have to halt production.
Either of those situations are bad news for a manufacturing company, and if the supplier has to ask when the Just in Time delivery is, that’s a bad sign.
Maintaining inventory is a delicate balance. The general rule of them is that the less inventory you’re keeping in stock the better.
Learning to recognize the signs of potential issues and correcting them leads to fewer early or late deliveries resulting in lower costs and more consistent forecasting. Supplier communications are key. Don’t just send an email assuming that it was received, and everything is moving according to schedule. You need structured, process oriented b2b communications if you want to operate with efficiency and effectiveness.
Let’s look at the example of charge backs and penalties for deliveries made outside of the Just in Time delivery window. Chargebacks can occur for a variety of reasons, but they’re particularly common for just in time delivery infractions. In fact, the number one cause of a chargeback is not receiving an ASN on time. This is a huge reason to make sure that your suppliers are electronically enabled.
This brings us back around to the first post in this series. When your suppliers aren’t compliant with your standards it is really difficult for you to enforce just in time delivery standards because you have no way to verify that mission critical business documents are being sent and received on time.
How are you enforcing your Just in Time Delivery standards with your non-EDI suppliers?