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Better Supplier Communication Improves OTD, Cash FlowDownload Now
Who in the world thought, in the midst of a pandemic, that a company would see improvement in any metrics, let alone supply chain metrics and on-time delivery metrics?
Terri Decker, Supply Chain Performance Manager at JBT AeroTech
Improvement in Supplier OTD
OTD to Customers
Reduction in Missing Parts
As Production Started, Employees Wondered ‘Where Is That Part?’
Makers of airport gate and ground equipment, JBT AeroTech experienced a boom in business in 2018. They relied on their Syteline ERP to help with demand planning, but they quickly recognized a problem. Despite strong demand planning tools, they often found themselves without vital parts on the day production was scheduled to begin for a product. In fact, they found that critical parts were late nearly ⅓ of the time.
When business took a hit in 2020, JBT AeroTech had already taken huge strides to improve on-time delivery from suppliers. What they didn’t know was just how much those improvements would positively impact other areas of their business.
When all was said and done, we found the #1 issue to be communication. Our suppliers weren’t communicating well with us; we weren’t communicating well with our suppliers.
At JBT AeroTech ‘What Gets Measured Gets Improved’
- Fewer Missing Parts Reduced missing parts at production start to only 8%
- More Parts Arrived On Time Parts arrived from suppliers on time 89% of the time
- Increased OTD JBT AeroTech delivered on time to their customers 89% of the time
- Speedy PO Acknowledgement Suppliers acknowledge new POs within 72 hours 86% of the time
- Automated Communication Order changes are tracked through SourceDay, instead of complex spreadsheets
- Missing Parts Parts were missing on the production start date 31% of the time
- Late Parts from Suppliers Parts arrived from suppliers on time only 68% of the time
- Low OTD JBT AeroTech delivered on time to their customers only 69% of the time
- Unacknowledged POs When new orders were not acknowledged by suppliers, they were late 100% of the time
- Manual Communication Order changes were communicated largely through complex spreadsheets
If a PO was not acknowledged, it was not going to be here when we started production — 100% of the time.
As OTD Improved, So Did Cash Flow
In order to combat late supplier orders, JBT AeroTech had gotten in the habit of ordering extra inventory. Like many organizations, the negative impact of slowing down production vastly outweighed the cost of buffer stock.
As they began to use SourceDay’s Supplier Scorecards regularly to guide conversations with suppliers, they watched late orders decrease. Finally, they could count on their suppliers with enough certainty that they no longer needed to carry as much buffer stock.
“At the end of 2018, we had well over $1M in inventory of one supplier’s product. At the end of 2020, it was about $200k,” Terri Decker said. That’s $800k in savings for only one of their few hundred suppliers. With decreased demand for aerospace products in 2020, the company luckily didn’t have to look far to find massive cost savings opportunities.
Improving Supplier Performance Meant Looking Within
Terri Decker is quick to admit that the processes JBT once followed could make life challenging for their suppliers. “We would create these elaborate spreadsheets, telling the supplier what we wanted and when we wanted it, and we’d fire it off in an email. Maybe we’d send that every Monday. Well, by Wednesday, we’d send them another one,” she said.
Recognizing that PO changes are an inevitable part of supply chain management, JBT vowed to do away with the complicated spreadsheets and to communicate changes through SourceDay instead, asking their suppliers to do the same. They also required that suppliers acknowledge all POs through SourceDay within 72 hours.
These process changes allowed both JBT and their suppliers to have frank conversations around supplier performance for the first time, aided by supplier scorecards. “Once we got beyond the initial finger pointing, then the suppliers started seeing what their performance looked like and they wanted to get better,” Decker said.
Supply Chain Automation Leads to More On-Time Deliveries
As a result of changing behaviors and leaning into technology, JBT found they could count on the parts they needed to show up when they needed them. They also found that they could eliminate large swaths of buffer stock as a result.
By the end of 2020, fewer than 10% of parts arrived after the start of production (down from 32%) and 86% of POs were acknowledged by suppliers within 72 hours. Most important of all, JBT delivered to their own customers on time nearly 90% of the time, up from only 69% in previous years. As Decker remarked, “Who would have ever thought, two years ago, we’d get there?”
Who We Are
SourceDay is a supply chain performance software that bridges the gap between the ERP and the supplier network, making it easy to manage changes throughout the direct spend lifecycle. For too long, change has been the only constant for manufacturers, distributors, and CPG brands relying on legacy processes to manage suppliers. With SourceDay’s suite of collaborative products, entire teams can trace a single part from PO issuance through delivery, giving organizations unprecedented command and control over their businesses. SourceDay has helped thousands of businesses prevent surprises in their supply chains and, in doing so, enabled them to ship billions of parts on time, uncover new cost savings, safeguard revenue, optimize operations and protect sacred customer relationships.
John Bean Technologies Corporation (JBT) is a leading global technology solutions provider to high-value segments of the food processing and air transportation industries. We design, manufacture, test and service technologically sophisticated systems and products for our customers.