Issue link: https://iconnect007.uberflip.com/i/551288
28 The PCB Magazine • August 2015 Cephas sets out to optimize the supply chain and information bifurcation theory, which is a well-established mathematical framework that explains and models how a small, smooth change in a system can cause a sudden, dramat- ic change overall. Williams: Since I have been teaching Goldratt's ToC for the past 10 years, let's dive deeper into your particular slant on this theory. How can this methodology be flowed down to drive im- provement in supplier performance? Friberg: Let me use an exam- ple, with delivery as the con- straint that needs to be evalu- ated (or "exploited" in ToC vernacular). Using some sim- ple analytics of on-time deliv- ery (OTD), what has the sup- plier performance been over 1 year, 6 month, 1 quarter, and the last five deliveries? Keep- ing in mind the critical factor with OTD is to the customer's dock, not shipment from the supplier's dock. Sounds simple, but over 75% of companies miss this correlation. Looking at per- centage and also span (when late and how late), subordinate everything else. From this there are three quick takeaways: 1. If the supplier is late equal to or less than transportation time, chances are they are work- ing to the customer's PO date as a ship-date and not the customer's dock date. There is a quick fix! 2. If the supplier is consistently late a con- sistent number of days, check your MRP system to validate that the supplier lead-time in your MRP system is consistent with the committed and demonstrated lead-time in the supplier's system. Could be another quick fix! 3. If the supplier is consistently late and the part is on the critical path of your indented BOM, your committed lead time to your cus- tomer is suspect. Chances you are making up the delta by expediting, working overtime, pay- ing a premium for an alternate supplier to re- place late or problem parts, or paying for expe- dited freight to your customer. This results in margin shrink! Williams: So, Fane, the focus of this issue of The PCB Magazine is the War on Process Failure; when you and I first talked about this, you mentioned that it all starts with your suppliers. Can you ex- pand on that? Friberg: Failure within the value chain is not limited to the factory. The supplier is an extension of the process. If a supplier has a great price, but unreliable delivery perfor- mance, it is very difficult to correctly schedule the manu- facturing site simply because operations are not sure/con- fident of when the parts will arrive. Unfortunately, too many companies spend a lot of money deploying expedit- ing teams to continually run down where late parts are in the pipeline. If the supplier is not part of the organization's dock- to-stock program, not only is there waste (muda) from the re- dundant inspection at the receiving dock, but also costs multiply when a defect is found. Is the failure only on this lot of parts or have there been other escapes into the manu- facturing facility that could show up later— or even worse at the end-user—as a latent defect? It is important to research and evaluate sup- pliers based on price, quality, selection, service, support, availability, reliability, production and distribution capabilities, transportation cost, and supplier's reputation and performance his- tory. Then, enhance supplier development by communicating performance standards and developing joint improvement initiatives with quantifiable measures of success. Williams: Selecting suppliers by evaluating their performance and capabilities seems like simply good business practices. Why do you think so many organizations just don't do their homework when it comes to their supply base? FeAture AN INTERvIEW WITH FANE FRIBERG continues if a supplier has a great price, but unreliable delivery performance, it is very difficult to correctly schedule the manufacturing site simply because operations are not sure/confident of when the parts will arrive. " "