May 29

Written by: Andrew Hall
5/29/2008 8:46 AM

During a Supply Chain workshop with a client this past week, the subject of Firming requirements on a Supplier Schedule became a hot topic of discussion, and I thought it would be worthwhile to discuss this in general terms in this week's blog. In this client’s environment, the supplier is an intercompany supplier that is based in Asia and is supplying its US-based sister company. This particular client is a Tier 1 automotive supplier and they are using Supplier Schedules and Customer Schedules to communicate demand and execute shipments between the companies. Historically, the Asia-based supplying company required a 3-week Firm period (not inclusive of shipping lead time), as this ensured 100% compliance to schedule. The main driver for this requirement was the fact that responsibility for premium freight charges between Asia and the US was historically a very parochial issue. During the workshop, a value stream mapping exercise illustrated the negative impacts of the firm period on the stability of the supply chain. Additionally, a frank discussion of the over irrelevance of ownership of the premium freight costs within the larger corporate structure allowed us to eliminate the Firm period and create a more flexible and stable supply chain. This is another good example of the benefits of thinking in terms of process and the entire organization’s value stream.

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