PCB007 Magazine

PCB-Jun2018

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JUNE 2018 I PCB007 MAGAZINE 81 and changes, increasing your price. Is JIT a good choice for non-standard products (made- for-order product)? • Continuous replenishment of stock will consequently also increase handling and transportation costs for all parties. • Most buyers will seek to reduce their in- ventory, as inventory equals costs when cash flow is tied up in the warehouse. Accounting and logistic departments are knowledgeable in this respect and seek to continuously reduce the inventory. However, do you compare the price of credit compared to volume orders! Re- member if you ask your supplier to hold the stock he will also have to adjust to this reality and in the medium to long run increase the price. Space Most non-standardized products (e.g., PCBs) require very little space and should not be a challenge regarding space. Many customers' unique products also have a shelf life and con- sequently storage time can be a limitation. Hence, these products should optimally be produced to order. Lead Time Lead time will be reduced by these sup- ply chain agreements. However, this reduc- tion is dependent upon at least one party tak- ing the extra cost of increased credit terms as the products are invoiced, according to con- sumption in these programs. There is no rea- son to store non-standard products in a cen- tral storage for dispersal to several customers, because demand is customer unique. This im- plies that somebody has to be responsible for the increase or decrease in demand and conse- quently the cost! Potential Quality Defects The quality defect ratio for non-standard products and supply chain programs will, in practice, be equal to normal deliveries, hence there is no evidence of quality improvement from employing these programs for custom products. However, these programs will in- crease the price of quality handling as defects will affect a wide array of complex processes in the supply chain such as storage, communica- tion and transportation. Complex and custom- er-specific products have more defects than standardized products. For example, if a non- standard product is transported by sea and a quality defect is detected during assembly, the consequence will be significant with respect to new production (unique product), transporta- tion, and assembly. What is the solution for non-standard products and Lean manufacturing? As demonstrated, the four goals of supply chain programs are not applicable to non-stan- dard products. The question is, how do we ad- dress the two elements these programs aim to achieve, namely, increased flexibility and cred- it terms? How do we reach the goal of increased flex- ibility and credit terms at minimum cost? Be sure to set minimum and maximum stock, a large minimum yearly demand to ensure that no small products are subject to the supply chain program, and analyse parameters re- garding shelf life and maximum time in ware- house. This will allow for the implementation of automatic invoicing to reduce communica- tion, since time is money. Only consider non-standardized products for Lean manufacturing processes where you can provide the supplier with binding and adequate weeks forecast. This will allow the supplier to adjust the production volume and The question is, how do we address the two elements these programs aim to achieve, namely, increased flexibility and credit terms?

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