Change to one supply chain variable can cause changes to another. In some cases, seemingly small changes can quickly snowball with devastating effects. Many Materials Planning and Logistics (MP&L) professionals today are struggling to keep pace with so much change afoot. This is understandable as the underlying supply chains were not designed or staffed to take on the current frequency and velocity of changes.
For example, automotive OEMs are bringing an unprecedented number of traditional internal combustion engine (ICE) and new electric vehicle programs to market, growing the number of parts that need to be launched and supplied by Tier I suppliers.
Tier II supplier shortages of raw materials like cotton-based fabric filter media, a core component of HVAC cabin air filters, have caused Tier I suppliers to continuously expedite parts to avoid shutting down OEM assembly plants. Supply consistency throughout the value chain has gotten so bad that OEMs and suppliers have had to approve alternative suppliers and agree to material substitutes to keep already hampered vehicle production limping along.
The net result is that MP&L professionals currently have more parts and change to navigate than many have faced in their careers. Their expanded list of parts all needs to be efficiently and effectively received, stored, and delivered to production lines.
A New Route Forward
If you find yourself firefighting every day and leaving work exhausted, you’re not alone. Small changes upstream can cause a massive wave of changes downstream. This supply chain ripple effect is often felt most by plant MP&L professionals who bear the brunt end of thousands of micro decisions made upstream by colleagues in purchasing and partners at Tier I and II suppliers. Consequently, it often falls on MP&L to problem solve creative solutions under pressure to keep production running. No small task.
Today, and into the future, supply disruption will never be completely preventable; however, there are specific actions teams can take to get more flow back into their day and optimize their material routes to better process inevitable change.
Below are five steps you can take to optimize purchased part flow while reducing your handling costs in the process.
1. Outline Vision Forward
Successful change initiatives start by outlining the “why” first. As a Materials leader, it’s key to share the reason(s) to pursue change with your direct reports. Further, it’s imperative to share your plans and align with key stakeholders in production. Time invested up front to clearly communicate a vision forward will return a multitude of better results, faster. A quick tip, make your plans practical, quantitative, and contextual. When, communicating your initial message be simple and direct.
For example, you might say to your team, “Let’s aspire to live differently, to build a better process together. We can’t create more time and we’re all tired. My ask from each of you is that we meet once in the morning, ten minutes before production, a second time in the afternoon, and ten minutes post shift, to collaborate and outline a better path forward. Simply put, my hope is we can all get more flow, and dare I say ‘fun’ in our day.”
The key isn’t using the specific words above, but rather it’s important that you communicate in your own voice. Regardless of your delivery style, a consistent variable for success is getting team buy in. Start small and be clear with your asks as a leader. Most importantly, celebrate the wins along the journey; find a way to make the game of continuous improvement just that, fun.
2. Build Data Foundation
Many of the 70+ critical data points required to foster and maintain healthy material routes isn’t available within your enterprise resource planning (ERP) software. Instead, the underlying data from part staging to use locations is likely stored within your operators’ memories and/or team spreadsheets. This offline data management approach worked ok in static supply chain environments with little change, but this won’t cut it today. Consolidate your data into a collaborative tool such as Automated Plan For Every Part (PFEP) software application to reduce the time required to analyze and maintain material route data.
Complex engineered product assemblies such as an automotive HVAC module are supplied with just in time (JIT) inventory, with thousands of sequenced globally sourced parts. With constraints in mind, focus on current material flow bottlenecks and supply issues to maximize impact. Automated PFEP software can accelerate your time to results by enabling multiple MP&L professionals to adjust variables when changes happen. Real-time visibility for all MP&L team members goes a long way toward accelerating your vision.
3. Outline Current Routes
Audit each existing route documenting both the time and location for each process step. Granularity is the key to enabling sustainable results. Be leery of the potential disconnect between planned and actual routes, which is especially true if you’re using established planned routes and/or a product line that has been in production for several years.
As change has occurred, operators have had to adjust to execute their job tasks. Walk each value stream with operators to document the actual routes to establish a solid data foundation from which to improve.
4. Automate Route Analysis
There are six critical calculations below that many MP&L professionals make periodically to optimize the flow from receipt of inbound purchased parts to delivery of parts to the production line:
- Total Material Route Distance
- Total Material Route Time
- Total Material Route Cost
- Material Route Recommended Adjustments
- Material Route Time Savings
- Material Route Cost Savings
Many of these calculations can be automated and presented to professionals in prioritized, tailored dashboards. The goal should be to maximize your team’s valuable skills and time. This is typically best done by reducing the amount of time analyzing data and increasing the time spent acting on information to eliminate material handling waste.
5. Enable Route Insights
The underlying math to calculate ideal material routes isn’t overly complicated. The art lies in making timely adjustments based on changes unfolding in the real world. Further, these small adjustments to where parts are stored and how they’re transported from docks to racks to production lines are not difficult to deploy; however, the sheer number of variables and frequency of changes within plants can prove daunting for already time-strapped MP&L professionals to analyze ongoing potential route changes.
Considering this, many MP&L professionals are connecting their Automated PFEP software to their ERP systems to enable real-time data updates and supply insights. As an example, if a supplier shipment was adjusted from once- to twice-a-day shipments, the total ideal square footage required to store the part would be automatically reduced and flagged. If many similar parts within a category followed this change, it might make sense to optimize the storage location within the purchased parts supermarket to reduce the amount of time picking the parts.
Maintaining Route Flow
Flexible assembly lines and inventory storage locations are becoming a requirement as manufacturers strive to bring a wider range of products with varying volumes to market. Coupled with change as a constant, evolving from static to dynamic material handling routes are a natural new expectation. The prior improved data foundation and insights will allow for more timely micro adjustments to various data points and equipment to continuously optimize routes in real time. As part variables inevitably change, people, processes, and equipment can then be adjusted as needed. These small adjustments can quickly add up to substantial cost savings.
The mindset is as important as the processes and tools. Find ways to reframe your team members’ outlook to expect change and celebrate daily adjustments that improve operations. The mark of a great leader is replicating your talents to make those around you better. Train the trainer. Use each small improvement, like from where parts are stored to how parts are handled, as teaching moments. The more your extended team can spot material handling waste along routes, the more you’ll reinforce a culture of flow.