Dear supplier, I really need this part. What’s the status of it?
One third of all materials and parts deliveries are going to be late.
This unfortunate reality plays out every day for manufacturers of all sizes and industries. It leads to operational inefficiency, customer frustration, and valuable capital locked up in partly assembled orders. The sooner a company knows that an order is going to be late, the more options they have for addressing the situation.
But late orders aren’t the only challenge. The precursor to getting the information about a late delivery is the supplier seeing the purchase order come through. If that supplier doesn’t acknowledge the PO, buyers are just left hoping for the best, which is certainly not an effective supply chain management strategy.
How IDEX Achieved 92% of Supplier Orders Confirmed Within 48 Hours
Bryan Felber, Director of Supply Chain and Strategic Sourcing at IDEX Material Processing Technologies, recently joined SourceDay for a webinar to explain how IDEX managed to achieve 92% confirmation of supplier orders within just 48 hours of the PO being received. If that wasn’t enough, they managed to do it while moving their manufacturing operation—but without disrupting their ability to play an important role in the fight against the COVID-19 pandemic.
This type of improvement is important to all manufacturers, but in IDEX’s case, it was particularly critical. They manufacture equipment used to make injectables—such as the COVID-19 vaccine—that are in use by all of the major pharmaceutical companies. Failing to fulfill those orders could have had serious human implications, so IDEX got their PO process automated just in time.
Given the complexity of their assembly process, IDEX runs a relatively lean operation. They have 4 different product lines, each with around 10 products in it, and everything is customizable. Their bills of materials are often between 500-700 pieces, and they cut 700 to 1,000 PO lines each week. Before SourceDay, all of those updates had to be handled manually, using email. It was both time consuming and risky.
Their buyer would create a purchase order and email it to the supplier. Then they would confirm the cost and delivery timeframe by email. The return information could be anything from a formal acknowledgement to a simple note reading, “Yes, confirmed.” All answers, good and bad, had to be manually entered back into the ERP. Depending on the buyer and schedule that week, not all of those updates actually made it back into the system.
The SourceDay Difference
Because IDEX’s work is made-to-order, they have to close the loop with their customers by making a delivery commitment. If they don’t have firm commitments from all of the suppliers, they can’t offer the same to their clients.
Now, SourceDay is integrated into IDEX’s ERP system. Instead of emailing POs to suppliers, they flow through SourceDay, which recognizes the new POs and sends out notifications to suppliers. If the supplier doesn’t acknowledge the PO within 24 hours, IDEX can configure SourceDay to automatically re-notify them.
But that improvement is just at the PO level – sometimes a supplier is able to confirm part but not all of a PO. That may lead to unnecessary hold-ups as they work to confirm the final line(s). SourceDay also makes it possible for the supplier to partially confirm the order at the line-item level, making the information easier to manage on both sides.
IDEX’s first goal was to get 80% of supplier orders confirmed within 4 days, and when they hit that target, they kept pushing forward until they reached 92% confirmed within 48 hours. Now, they are looking at tightening their process up even further, improving communications with their suppliers so they can accelerate delivery confirmation to their clients.
To learn more about IDEX’s streamlined PO process, watch our on-demand webinar with Bryan here.
