The Quantum Leap: Next Generation
Documenting the forces shaping today's demand-driven markets, this comprehensive desk reference provides a proven mathematically based roadmap for implementing Demand Flow Technology (DFT).
TABLE OF CONTENTS The Quantum Leap: Next Generation
Chapter 9: DFT Procurement Forecasting and Quality Source Management
Unfortunately, some manufacturing companies begin their Demand Flow Technology (DFT) implementation program with their suppliers and procurement process. These companies mistakenly believe that DFT creates an inventory-reduction program that forces suppliers, rather than the consuming manufacturer, to carry inventory. The program sounds attractive on the surface: Drive down inventory investment via more frequent deliveries, reduce costs via negotiated agreements based on higher volume, and receive-higher quality material based on tightening specifications and eliminating inspection. This is a highly attractive, alluring prospect. It is also a very dangerous trap.
Suppliers Are Not Warehouses
Demand Flow manufacturing should never start with suppliers, and effective procurement programs should never drive suppliers beyond the capabilities of the consuming manufacturer's own internal process. It is of little benefit to insist on daily deliveries from suppliers while the manufacturing process continues to schedule, pick kits, and build multilevel subassemblies. Transportation costs will rise as deliveries increase.
Without a freight program geared toward reducing total transportation costs, overall product costs will also increase. Reducing lot sizes and increasing deliveries can increase storeroom transactions and costs. Eliminating incoming and/or in-process inspectors without first ensuring a quality part and process at the supplier results in higher quantities of defective purchased materials in the product-assembly process. As a result, adverse scrap and rework costs will go up.
Figure 9.1: Communications Network
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