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Just tell your customer no

January 29, 2018

AC company a long time customer of DMI found itself in a parts shortage due to their customer putting pressure on them. Most of the orders for AC company consisted of short runs of 5 through 25 parts as a normal order size. This parts shortage was causing AC to issue far more purchase orders than normal as well as changing the schedule on a daily basis.  The changing of the schedule on a daily basis was putting DMI in an impossible position of trying to play catch up to the ever changing production environment.

 

Eventually this was causing the schedule to be two weeks behind. Something had to be done to rectify the situation. As the person in charge I made the decision to just say no to the schedule changes and to weather the fire storm that would result. 

 

Step one in the plan was to ignore the schedule changes and work the schedule in the order as presented with the stipulation that I would look forward on the schedule and run all orders for like parts in one set up. Step two was to ship all of the completed orders of like parts in a single shipment clearing out future orders. In one week DMI was caught up to the schedule and in two weeks DMI was head of schedule.

 

DMI moving forward continued to use the group all like parts on the schedule into the future and was never again seriously challenged by the schedule. Even when AC company decided to try just in time inventory. During the just in time inventory phase DMI would shelve the look ahead parts and ship them in the delivery window stipulated by AC company.

 

As a side note the method of short run production used by AC company was not conducive to just in time inventories and as time went by more and more rush orders were being pushed through the system. DMI by using common sense look ahead part runs was never seriously challenged by the just in time shortages. AC company payed a heavy price for placing one and two part orders as we charged the setup fee for each order even though DMI grouped purchase orders into multi order part runs.

 

Moral of the story is someone has to take charge of the supply chain when the customer pushes it out of balance and by saying no to schedule changes your company work out the issues rather than falling further and further behind. This becomes even more critical if your customer is docking your company for being late.

 

 

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