ORDER to CASH Process

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Logistics

EPE – Every Part Every Day

“A chain is no stronger than its weakest link” is a familiar cliché that still contains meaning when you’re looking for sustainable improvement in logistics and supply chain management.  Your customers are expecting that they can pull any part any day.  In Lean-speak that means that manufacturers must strive for EPE.

In many scenario’s this is impossible, but the principle remains the same.  The amount of inventory that needs to be on hand is a mathematical equation.  Inventory amount = demand * lead time or K = D*L.

When demand for a specific product is high – then the inventory needs to be high.  When the demand for a product is low then we can keep smaller amounts of inventory on hand.  The real key is the L. Theoretically if our lead time is 0 then our inventory requirements for our ware houses are …. 0.  It’s math.

Moving back from theory to practice, reducing lead times from 4 weeks to 2 weeks (well, you guessed it) reduce inventories by 50%.  Warehouse and logistics is a vital part of the order to cash equation and understanding the dynamics is critical so that we can move away from mass production thinking.

Additional challenges include:

– today’s ever expanding global economy
– increasing demands for supply chain transparency
– longer lead times and increased demand for fast delivery

Combine these issues with the number of “links in your chain” – from the customer to retailers to distributors to wholesalers to manufacturers to vendors and suppliers – you need a systems approach to continuous improvement to remain competitive.

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International supply chain map

Size
the
Prize

Pain

What are the Issues?

  • Little transparency / confidence to when customer orders will ship
  • Expediting is the normal mode of business
  • Inventory $'s are too high - and at the same time service levels are too low
  • We have 100's of suppliers - our network is simply too large

Size
the
Prize

Gain
  • $ 1MM Inventory reduction
  • 14 Days Kanban supermarket lead time reduction
  • 80% Facility distance reduction

Define your Problem Statement.

The first step towards breaking your organizational log jams is identifying and verbalizing the challenge you're facing. What are you trying to solve? This simple Problem Statement exercise can have profound implications for your team. It helps you define the issue and gives TGG some sense of where the soft spots could be in your Order to Cash process. We invite you to take a few moments to fill out this form. A TGG consultant will contact you shortly to discuss your Problem Statement and provide some insight on how we may be able to help.

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