Many business owners find themselves asking the same question:
“How do I make the biggest impact, without spending a lot of money, on what I’m trying to achieve with my business?”
Before we answer this question, let’s review a little business operations history. The past century has seen the rapid development of multiple business management and business process improvement methodologies. Nearly every decade has seen a newly proposed efficiency framework, from early scientific measurement (e.g., time and motion studies) to the introduction of current Agile principles, with Six Sigma and Lean Manufacturing introduced in between.
Let’s look at an organization’s supply chain. It’s not just a business function, it is a life-blood business process. Properly managed, supply chains can create significant value to your organization.
The Upside of Reliable Delivery
On-time delivery has business value because, long term, markets reward the best on-time delivery performers with more business. Manufacturers can expect an increase in sales as a result of consistently excellent delivery performance. (Conversely, late product delivery can incur costly financial and reputational penalties.)
Combined with an increase in throughput from all constrained resources, an increase in sales has an enormous effect on the bottom line. The true cost of additional sales is essentially the variable incremental costs of raw materials, commissions, and freight. Therefore, more contribution margin dollars fall right to the bottom line.
Here’s how to get to this happy financial situation. Consider an Advanced Planning & Scheduling (APS) solution which allows users users to intervene pro-actively to address the true threats to late delivery to intervene pro-actively in the production of parts. The upside is improved on-time delivery and avoidance of late charges.
A Single Change with a Big Impact
Ken Neilson, CEO of Paratech (manufacturer of emergency service products), is and was intimately involved in our project with the company. In June 2018, Ken asked us to enlighten him about our high-performance manufacturing flow approach. Ken was up-front, saying he wasn’t currently using an APS solution and didn’t want to invest in an APS at the time.
We jumped into the project with their available resources and analyzed the quality and availability of their existing data. We made a single change to their operations without changing any of their current technology, which was an “APS-light” application called Visual Planner. We simply changed how work centers were operated and controlled the release of material to those workstations, synchronizing all to real customer demand.
This simple change skyrocketed their on time delivery. By August, less than 2 full months later, Paratech had their highest on time delivery rate, beating their previous record by more than 20%.
Simply put, better operational performance, which enhances a business's reputation as a more reliable supplier, also improves financial performance.
What simple, single change can you make that will match material and workflow to demand and have more dollars fall to the bottom line?
