The new supply chain isn't a proactive one, there is a good reason for that. It is really hard to predict the future and allocate resources including labor, materials and facilities properly. If you make the wrong prediction it could really put you at risk financially and/or with your customers.
Being proactive doesn't make sense, so whats the solution? Just In Time (JIT), a demand driven reactive model to the entire supply chain. It's crazy to believe, but the JIT system works, and it works well, IF (big if) it is planned and managed properly. JIT has numerous advantages, some are focus, reduced inventory, capacity utilization, flexibility and agility.
We wanted to be a player in this JIT, lean supply chain so we did our analysis and found it wasn't going to be easy. The electronics supply chain is crazy, long lead times, AMLs, crosses, End of Life, Part Changes, there is just too much to handle. But we wanted to do it and we are proud to say we accomplished it with our Custom MRP . With our JIT system we are able to:
- Scheduling - We use a pull based production system so we work on the job that needs to be done at that time. We are able optimize our facility, manpower and cash.
- Free Up Cash - The pull system brings in raw inventory when we need it (this cash is now used for safety stock)
- Vendor communication - We developed a great way to communicate with vendors, we automated it. Now vendors can keep us up to date with the supply chain with a click of button.
But there is risk involved too, if something goes wrong, everything falls apart. We are able to give our customers a safety net, the safety net is is safety stock. Safety stock works as a buffer allowing for us to react to increases and decreases in demand. It's really a win-win for us and our customers, our customers know they will get product and they can keep their inventory lean and we can optimize use of our resources.
With JIT, we are a well oiled machine ready for the demand driven supply chain.
Live Long and Supply Just In Time.