A Digital Transformation Guide to Optimize Inbound Parts Delivery Costs

Leading manufacturers work to master lean tools like Plan for Every Part (PFEP) to streamline their supply chain by mapping the dozens of variables impacting inbound parts delivery. Subsequently, they’re rewarded by realizing and maintaining lower supplier delivery costs. Organizations that have yet to begin their lean journeys could generate reductions up to 15 percent for delivery costs when implementing PFEP. Even industry-leading lean manufacturers or ones who haven’t audited their delivery processes recently could see similar cost reductions.

Derived from lean supply chain best practices, the definitions and requirements of a PFEP vary depending on specific needs and industry, but in general, a PFEP fosters the accurate and controlled management of critical part commercial information and provides visibility into an expanded set of important part-level data that traditional enterprise resource planning (ERP) systems don’t.

By streamlining the end-to-end supply chain using digital lean tools such as Automated PFEP software, manufacturers and suppliers are working real-time to optimize inbound parts delivery performance. In fact, partnering with suppliers to optimize delivery performance is critical to realizing lean extended enterprise performance results.

Common Inbound Part Delivery Challenges

Most plants allow suppliers to ship products as the suppliers choose, but many plants don’t control incoming material in a way that levels the workload of the receiving department. To do this, plants will use receiving windows. By leveling workloads and increasing efficiency using PFEP, receiving windows can lead to fewer errors and less wait time between the receiving dock and purchased parts market.

In an ideal plan, there are specific delivery targets, receiving capacity and maximum inventory levels; then, there’s reality. Industry business challenges and variable inter-dependencies need to be understood and accounted for to bring about results.

What Delivery Optimization Success Looks Like

The key to swiftly refining your PFEP is mastering the interrelationships between inputs and outputs. This is another area that software assists as a productivity tool by automatically calculating outputs. For example, the OEM and Tier I supplier revised their Reorder Period from daily to twice daily to ensure better production flexibility. Further, by transitioning from dedicated partial full truckload shipments to more efficient milk run shipments, they lowered inbound parts delivery logistics costs.

Small adjustments can enable rapid transformations. During times of sudden volume shifts, continuously reviewing and dialing in the appropriate input variables is key. Your adjustments add up quickly as each dollar saved goes straight to the bottom line.

5 Actions to Optimize Delivery Performance

1. Define Inbound Part Delivery Goals

2. Audit Current State of Supplier Deliveries

3. Balance Supplier Receiving Windows

Today, your receiving windows will likely change more frequently based on a multitude of factors, varying sales forecasts, production forecasts and parts availability. Therefore, you need an agile system that can update you in real time. Many manufacturers are finding success using Automated PFEP software that allow real-time supplier communication of delivery changes.

4. Add Receiving Buffer for Delivery Volatility

Further, it’s smart to assume everything doesn’t always go as planned. Although you’re striving for more balance, you need to prepare for the unknown. Set an initial receiving buffer capacity of 20 percent in your schedule to account for missed delivery windows and initial delays. Then, reduce the buffer over time as you achieve your delivery goals.

5. Involve Stakeholders & Track Performance

Partnering to Sustain Optimal Delivery

Supply Chain for Tomorrow’s Technology. Ann Arbor, MI.