In Paul Ericksen’s book, “Better Business: Breaking Down the Walls of the Purchasing Silo,” Paul looks at the idea that purchasing isn’t integrated into the overall enterprise at most Original Equipment Manufacturers (OEM)s, and, as a result, the function’s positive contribution to the bottom line is dampened or, at the extreme, stifled. Paul explains how lean supply chain performance can lead to better business by impacting executive-level performance metrics.
This article published by Industry Week summarizes some of the key discussions from Paul’s book including:
- OEM customer fill rates – In Paul’s experience, not many purchasing personnel are aware of their employer’s customer-fill-rate goals and performance. However this is an important metric to know because it ties a company to its customer base.
- Pre-built, pre-positioned finished goods inventory – While a larger percentage of OEM factories have focused on increasing their own capability to support varying customer demand, they have applied few resources to facilitating or understanding their supply chains’ ability to do so.
- Supplier “true” lead times – Quoted lead times rarely match true lead times and should be based on the actual factor physics (the time it would take to satisfy an unexpected customer order).
- Supplier part-specific capacity – OEMs need to understand that supplier capacity is based not only on the supplier’s own forecasts and error, but that available capacity is related to the supplier’s other customers’ forecasts and errors as well.
To read the full article, visit the Industry Week website.
Source: Industry Week
