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CASE STUDIES

A major US manufacturer: supply chain and planning optimization

EXPERTISE

Procurement

INDUSTRY

Manufacturing

LOCATION

US

In a post-COVID-19 world, businesses’ supply chains need to be reimagined. We helped a major US-based manufacturer fully understand the effects that COVID-19 had on its main suppliers and tackle these issues head on by delivering a focused Management Operating System (MOS) and building sustainable prioritization and scheduling tools — namely a Procurement Advanced Warning System (PAWS).

  • Outcome 1: Created a focused Management Operating System (MOS) to adapt to the new reality at pace, bringing structure to escalations and defining and rolling out a process to quickly deal with issues
  • Outcome 2: Created a Procurement Advanced Warning System (PAWS) which has been attributed to doubling daily revenue figures by the client
  • Outcome 3: PAWS prioritizes $40m worth of part shortages, reducing the time it takes a buyer to understand necessary action by over 90%

The Challenge

One of the many implications of the COVID-19 pandemic was the realization that companies must reimagine their supply chains. Failing that, they’ll be left behind, facing serious delays and shortages for manufacturers. From labor shortages to raw material unavailability, and health, safety and environment (HSE) concerns, the pandemic challenged both component suppliers and finished goods manufacturers to face historic and unprecedented obstacles. While many companies stabilized and pivoted operations to manage in a post-COVID economy, it is essential that businesses now understand how COVID-19 has impacted their main suppliers, in order to create a strategy to directly address these issues. We were challenged by a major manufacturer to solve these issues at their most distressed plant.

Our client was facing significant supply chain issues as a result of the pandemic. Our analysis showed that 53% of all production delays were logged due to sourced part shortages, 70% of which were due to raw material shortages, labor shortages, and other supply chain issues – those caused directly by COVID-19. We also found that an additional 7% of sourced part shortage delays were due to the suppliers’ inability to fulfill orders as accepted due to capacity constraints.

We partnered with our client’s procurement manager and their team of buyers to gain further insight and understand some of the conversations they were having with their suppliers. Comments such as “the supplier’s supplier is having raw material issues” and “the McDonalds down the street is offering higher pay than us” bring to light the widespread significance of our client’s challenge.

The Approach

Firstly, we conducted an in-depth root cause analysis of the problems our client faced in the procurement process. This involved high-level system mapping to understand why SAP (their enterprise resource planning system) wasn’t doing what the team wanted or needed it to do. Our team also partnered with our client’s procurement manager and her team of buyers to analyze over 2,400 orders, which were unable to be released clear to build due to a missing part from a supplier. By engaging with key stakeholders, we took an approach that put their pain points at the heart of the solution.

We created a machine shop schedule to unify production schedules across the plants, ensuring the right parts are made, as well as devising executive dashboards to track issues and resolutions, and installing a playbook to document processes and strategies for long-term benefits. All of these solutions helped streamline the process based on insights from our client and their suppliers.

The Impact

Our analysis of the current situation led to the creation of a focused Management Operating System (MOS). This has helped our client to adapt to the new reality at pace, bringing structure to escalations, and defining a process to quickly deal with issues in an organized manner. We also created tools that identified orders that could be released to the production floor, developing algorithms at pace to unify sources of data. While this normally took our client’s internal teams months to do, we delivered this in just 6 weeks, rapidly accelerating efficiency levels.

In a time when dependency on the global supply chain has been put to the test, we recognize that the most successful businesses are finding creative ways to ensure their future success. So, we created a Procurement Advanced Warning System (PAWS) for our client to help tackle their challenges.

PAWS is an online tool designed to help buyers identify and prioritize the parts they need to purchase, giving them a rolling view of which purchase orders need to be expedited to prevent shortages. Unlike executive dashboards, we designed this tool to be actionable and granular enough for operational buyers at the plant-level. It offers buyers three unique ways to track their most important parts through a prioritized target list, a part deep-dive and a supplier tracking page.

Since creation, PAWS has doubled daily revenue figures. It has prioritized $40m worth of part shortages for our client and reduced the time it takes a buyer to understand necessary action by 90%.

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Eric Rich

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