In this Lean Minute, TXM UK Senior Lean Consultant, Lee Candy explains the principles behind reducing stock and increasing frequency can help you manage you supplier relationships more effectively. This Lean Minute was filmed at Broadfix UK
Read the Video Transcript
The problem many manufacturing, and warehouses businesses face is how they manage their stock especially from long lead time suppliers.
Hi I’m Lee Candy and this is a TXM Lean Minute. Does your business often receive large delivery quantities from suppliers where by its much more than you can consume in a given month. This is a common problem that many companies face, and this is a by-product of not being in control of your supply chain.
You’ll typically find that you’ll have too much stock at certain times and not enough stock on other occasions and if you these same effects its more often the result of your ordering pattern.
If you order infrequent and sporadically your delivery will be longer, and your shipment quantities will be higher. Now if we look at it from your suppliers’ point of view, how can they plan a slot in their production if they don’t know when the order is coming.
To mitigate this, they may increase their lead times and also their MOQ’s to you. Now a Lean supply chain means a controlled supply chain where both you and your supplier work together in more of a partnership basis.
Your goal naturally is to increase the order frequency and reduce the delivery quantities’ as much as you can. So, treat your supplier as a partner look to consolidate suppliers and give your preferred ones more work. Share visibility with them, agree how often you’ll place orders on them and when, agree higher frequency drops and lower quantity and work together to identify creative solutions to challenges you may face.
And with increased frequency and reduced order sizes you’ll not need as much space, the time it takes to unload and process each delivery is reduced, the stock take time is reduced and there is less cash tied up in stock.
Call us at TXM to find out how we can help you reduce your stock and improve your on-time delivery. I’m Lee Candy and thank you for watching this Lean Minute.