A large manufacturing plant was frequently short on certain items of spare parts inventory. The rush orders cost the company thousands each month including airfreight. Without the needed parts, there were times when the lines were shut down – revenue was being lost due to the missing parts.
The plant knew they had problems but blamed it all on the supply chain, saying they were disorganized, not ordering items on time, unaware of the lead times, etc. A quick look at the data showed that adherence to the production schedule was under 50%, and the lead times of key components were missing from the ERP system. Of course, there were other issues, but these main ones accounted for a large part of the spare part shorts issue.
We worked with the company to improve adherence to the production schedule as well as with the procurement team to contact suppliers so that we could find out and input the lead times. These actions dropped inventory shortages, rush orders, freight charges, increased production uptime, and made a significant impact on the balance sheet.