Supply Chain Logistics

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MANUFACTURING BASICS & BEST PRACTICES BULLETIN

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Competitive Knowledge for Manufacturing People 

Supply Chain Logistics
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April 25, 2005

Hi [[firstname]], welcome back. 

Many American companies have been slow to reinstate 
their training programs and that is not good news for 
our manufacturing teams and management.

My e-tutorial business used to be 90 percent domestic 
and 10 percent international. Today, it's 50 percent 
international and 50 percent domestic. Not a good 
trend for the future of our American manufacturing 
industry.

If we're to reverse the outsourcing of the American 
dream, we need to get even more competitive than we 
are today. And, it's no secret that education and 
training are requisites to expanding our competitive 
edge. 

It's amazing how many companies have great people and 
sophisticated systems yet fail to achieve their full 
growth and earnings potential. They're a lot like the 
Green Bay Packer's football team before the arrival of 
Vince Lombardi ... all the potential in the world but 
with no focus on executing the basics of their 
profession. 

Like the Green Bay Packers, manufacturing teams must 
identify and master the basics of their profession ... 
manufacturing basics that provide the foundation for 
performance beyond everyone's expectations.

In order to transfer this powerful knowledge to the 
broadest possible audience, I have written, taught and 
counseled on "how to" identify and master the power of 
manufacturing basics. Believe me when I tell you that
the need for "Back-To-Basics" training and education 
is greater now than at any other time in our history.

If companies don't identify and master the basics of 
their manufacturing environment, they will never realize 
their full growth and profit potential? 

This week I'm sharing another of my manufacturing 
basics, "Point-of-us Logistics," a key to getting the 
right parts to the right place at the right time. 


Have a nice day, keep the faith, and stay connected.

Bill Gaw
Business Basics, LLC
Bg@bbasicsllc.com
760-945-5596

Supply Chain Logistics
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Point-of-us Logistics
"Just give me the parts!" said the foreman. 

Point-of-use logistics, the relocation of materials 
from the stockroom to their point of use in the 
production area, is not a new concept. The auto 
industry has done it from its beginning and most 
industries have had point-of-use success with low 
cost hardware.

Material handling and inventory storage are two of 
manufacturing's high cost, non-value-added activities. 
The elimination of the stock room, as it is known 
today, should be a strategic objective of all 
manufacturers.

Point-of-use logistics that focuses on getting the 
right materials to the right place at the right time 
and at the right price must replace "beating-up" on 
suppliers for price reduction alone.

SUPPLY CHAIN MANAGEMENT IS THE KEY TO 
POINT-OF-USE LOGISTICS

Supply Chain Logistics

Companies will never achieve their full growth and 
profit potential, as long as business leaders continue 
to treat their suppliers as adversaries.

Most business leaders underestimate the depth and 
breadth of business skills that are required to 
initiate and nurture an effective supply chain 
management program.

Usually, these leaders hold suppliers at arm's length 
and struggle to keep any economic gains to themselves. 
In fact, organizations often try to weaken a supplier 
to ensure their own control of profits.

This of course is ridiculous and is the first obstacle 
to be overcome if point-of-use logistics is to be 
successfully implemented ... for without a strong 
supply chain management team, there can be no point-
of-use logistics.

Management in pursuit of point-of-use logistics must 
understand the value of supply chain management and 
be advocates of:

* Business and information integrity 
* Day-to-day supplier communication and cooperation 
* Free exchange of business and technical information 
* Responsive win-win decision-making 
* Supplier profit sharing. 

A "top down" commitment and investment is a requisite 
to developing a team of "make it happen" supply chain 
management professionals.

Supply Chain Logistics

A POINT-OF-USE LOGISTICS SUCCESS STORY

A manufacturer of electronic component test equipment 
was in need of additional factory floor space to build 
a new multi-function tester. In lieu of leasing 
additional space, they decided to convert some of their 
existing stockroom space into a tester production area.

It was agreed that none of the new tester parts would 
enter the down-sized stockroom and that all parts common 
to other testers would be relocated to their using 
production areas as "point-of-use" inventory. The key 
to making this project a success would be the creation 
of a powerful supply chain management team and the 
development of a supplier support network that would 
provided timely and innovative point-of-use parts and 
logistical support.

High communications integrity, real-time scheduling, 
visual materials control, flexibility, responsiveness, 
superior quality, special materials transportation/ 
kitting racks and a positive "continuous improvement" 
mind set were some of the characteristics of the 
developed relationship.

Three years after the start of the project, this product 
line represented over 50% of the company's revenue and 
over 80% of its profits. At the start of the project it 
took 23 days to build the tester, today it is built in 
3-days. The average profit margin for prior testers was 
32%, the multi-functional tester generated a profit 
margin of 55%. Most of the credit goes to their supply 
chain management team and the powerful supplier support 
network that it helped develop.

VALUE-ADDED SUPPLIER PARTNERSHIPS

In today's competitive business environment, many 
manufacturing companies are turning to value-added 
supplier partnerships to achieve the material 
availability performance that is a requisite for 
successful point-of-use logistics.

When a company forms a supplier partnership that 
performs one of the links in the supply-chain, both 
stand to benefit from the other's success. The power 
of supplier partnerships is undeniable. To a great 
extent, they have the best of both worlds: the 
coordination and scale associated with large companies 
and the flexibility, creativity and low overhead usually 
found in small companies.

Suppliers have knowledge and insight that aren't 
burdened with guidelines from a distant headquarters. 
They don't have long forms to fill out and weekly 
reports to render and can act promptly, without having 
to consult a thick manual of standard operation 
procedures. 

In an increasing number of industries, value-added 
suppliers are proving to be fiercely competitive ... 
delivering high quality, competitively priced materials 
to precise buyer schedule requirements.

An excellent way of establishing the partnership 
relationship is to treat each other as an extension of 
one's business. The value-added supplier should look to 
his partner for services such as special procurement 
help on capital equipment and training needs and maybe 
some process engineering or quality engineering 
assistance.

The buying partner, on the other hand, should look to 
the supplier partner for product development input, 
cost containment ideas and high quality parts, 
components and assemblies delivered to the right 
place at the right time and at the right price.

To help you and your company optimize its supply
chain performance, please check out my Supply Chain
Management e-Tutorial. It's now available to you 
and your company on CD as a PowerPoint® presentation
with expert commentary and annotated footnotes by
yours truly ... it's like attending a seminar in
person, as I guide you personally through my
methodology. 

It can be used as a self-paced at your place e-learning tool or as a PowerPoint® training 
presentation for self directed business teams. 

WHAT'S IN IT FOR YOU AND YOUR COMPANY? 

This tutorial will help you and your company:

* Optimize MRP/ERP and lean manufacturing success 
* Eliminate the high cost of shop floor chaos 
* Transform your work environment from drudgery to fun 
* Minimize manufacturing day-to-day stress level 
* Put an end to costly end-of-the-month scrambling 
* Increase speed, improve quality and reduce costs
* And help you reach your full growth and earnings 
potential.

For additional info and to order go to:

http://bbasicsllc.com/scm.htm

Supply Chain Logistics

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Manufacturing leaders have a responsibility to 
educate and train their team members. 20-World 
Class Manufacturing, cost-effective, training 
modules are just a click away:

http://bbasicsllc.com/training-modules.htm

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your manufacturing teams, peers and upper management ... 
better yet, have them signup for their own copy at:

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Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596

Manufacturing Knowledge you'll not find at offsite 
seminars nor in the books at Amazon.com

Lean Manufacturing - Balanced Scorecard 
ISO 9000:2000 - Strategic Planning - Supply Chain 
Management - MRP Vs Lean Exercises - Kaizen Blitz 
Lean Six Sigma - Value Stream Mapping

All at one Website: http://bbasicsllc.com

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Manufacturing leaders have a responsibility to educate and train their team members. Help for developing a self-directed, World Class Manufacturing training program for your people is just a click away:

http://bbasicsllc.com/training-modules.htm

You are welcomed to print and share this bulletin with your manufacturing teams, peers, suppliers and upper management ... better yet, have them signup for their own copy at:

http://bbasicsllc.com/subscribe.htm

With the escalating spam-wars, it's also a good idea to WHITELIST our bulletin mailing domain via your filtering software or control panel: 

bizbasics@getresponse.com

This will help guarantee that your bulletin is never deleted unexpectedly.

Manufacturing Knowledge you’ll not find at offsite 
seminars nor in the books at Amazon.com

Lean Manufacturing - Balanced Scorecard 
ISO 9000:2000 - Strategic Planning - Supply Chain 
Management - MRP Vs Lean Exercises - Kaizen Blitz 
Lean Six Sigma - Value Stream Mapping

All at one Website: Good Manufacturing Practices

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Business Basics, LLC
6003 Dassia Way, Oceanside, CA 92056
West Coast: 760-945-5596