Supplier OTIF - A Measure of Success?
With any business your supply chain management can be critical to success. This is why so many organisations impose OTIF (On Time, In Full) targets on their suppliers. It makes sense, if our purchasing process is effective, our suppliers will deliver on time.
The question is, if your supplier lets you down, has your purchasing process failed? It seems obvious to say yes but, perhaps we are only looking at face value...
It's really easy to pass the blame, for your delayed services, back to your suppliers. However, an effective purchasing process would include precautions to keep you on target in the event of a supplier failure.
Instead of simply asking "was it on time and was it right?" we should be focusing on the internal issues that are created by such problems. Has our supplier failure impacted our internal processes? Has our supplier failure impacted our client?
One of our clients who have had incredible success in managing their supply chain has recently set their own internal object for purchasing effectiveness:
"No Supplier OTIF Failures, to cause delays in production schedules!"
Through the use of this qualification of the OTIF Issues, they are no longer just worrying about what wasn't on time. This objective has driven a change in their purchasing process and production scheduling, to ensure that projects are planned with potential supplier failures in mind.
For example, when they know there is a 12-18 week lead time on a supplied product, they schedule the production after the 18 week point, not at 12 weeks!
This has not only meant that they are having less internal disruption but, it is allowing them to more consistently manage client expectations too.
Plus there has been a fringe benefit that their suppliers are much happier dealing with them, now that they aren't being pushed for unrealistic lead times. In fact, a lot of the suppliers they were initially struggling with, have actually improved their overall OTIF performance as a result!
The OTIF Figures they have been tracking for years have given a solid indicator of which suppliers may continually cause hold-ups and delays, so this information becomes part of the scheduling. Less delays, more happy customers...
Just a thought...