What the Duck?! Episode 26 Transcript
HE’S GOT THE MEATS: How to Reduce the Number of Past Due Orders with Afif Mango
Welcome to What the Duck?! A podcast with real experts talking about direct spend challenges and experiences. And now, here’s your host, SourceDay’s very own manufacturing Maven, Sarah Scudder. Thanks for joining me for What the Duck?! Another Supply Chain Podcast brought to you by SourceDay. I’m your host Sarah Scudder, and this is the podcast for people working in the direct materials part of the supply chain. I’m @Sarah Scudder on LinkedIn and @SScudder on Twitter. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct materials supply chain content. Today, I’m going to be joined by Afif Mango, and we’re going to discuss how to reduce the number of past due orders. If you work for a manufacturer and are struggling to get your product to your customers on time, then this is the episode for you. It’s a very big challenge for almost every single manufacturer and retailer. If you miss a customer delivery, you can lose a customer for life, get bad reviews, and it can definitely have a ripple effect.
Afif started his career in a meat processing factory. In addition to the standard supply chain challenges, he had to deal with expiration dates, regulatory and health issues. Afif has worked in procurement, production and material planning, logistics, and order entry, which gives him an understanding of the entire supply chain. Welcome to the show, Afif.
Thanks, Sarah, for having me.
So, what did your first mentor teach you?
He would used to go, “You buy well, we sell well,” which took me a while to understand. What he was trying to say with this thing just went over my head for a bit, and then I figured it out.
Yeah, that was a quote that, when prepping for our interview, really stood out to me – the importance of how buying correctly has such a direct impact on sales and revenue for a manufacturer. So, Afif, tell me your story about how you got into direct materials procurement.
Fresh out of school, I worked for a company that sells detergents and soap, and through one of my sales calls, I met the CEO of a meat processing facility. I didn’t know at the time, so we were just chatting about what I do and how things work, and so forth. He said, “Have you thought about supply chain and procurement?” I’m like, “No, what’s that?” So he started telling me that they’re opening this factory and they’re renovating this factory. Any idea that I started working there and I discovered that my passion was working in supply chain and how buying and getting components into one end and getting it out of the other is just creating magic. So that’s how I got into direct materials and manufacturing.
Why the love for manufacturing? One of the themes throughout your career has been that you’ve always either worked at manufacturing companies or been in the IT space working to automate processes and systems for manufacturing.
I’m always fascinated by how things are made and how things get created. So manufacturing and technology are both the same. It’s just putting input from one end and creating a product from the other end and making magic happen. So that was my fascination, and it’s always a challenge for me to challenge status quo, looking for better ways to do things.
One of the things that stood out to me when we were prepping for our interview today is that you took a gig doing order entry, and you felt this was one of the most important positions that you held in your career. Why is that, and what did you learn from it?
It was a two-week gig doing order managing and order entity for Honeywell and the amount of details that go into an order and the I didn’t realize how much work was in it and how it is and how important it is until I worked for that team most of the professionals that worked at the team were seasoned professionals in that industry it was in the pulp and paper route for Honeywell and then they started asking secondary questions
I would hear this team interact with the customers customers being procurement engineering maintenance folks like across the board and and what I’ve learned from them is they always ask secondary questions and listen to what they’re asking for and give them suggestion and say and and would say did you think about you ordering this however you need you also need to order this this maintenance skill or you need to add this and if you’re changing this part you also need to add to change this other part like it’s it wasn’t just absent it was more of providing them a service and moving their product into a way that understanding what they’re asking for and making sure the team is understanding what they wanted and relaying as much as as much as and as clear as information down the pipe because they’re the first entry point between the customer and the rest of the organization so they took their job about getting as much Clear information as clear as possible and as fast as possible so it was fascinating for me how that was how that has the rippling effect across the board
yeah it seems like the the seeking out more information asking questions being a good listener really helped you do well in the manufacturing space since it’s such a process driven industry and you really really helped from end to end with manufacturing plants looking at what’s working and what’s not working so walk me through your career progression and you know tell me where you’re at today
my career started within meat processing manufacturing then I worked for a company working in FMCG fast-moving consumer goods and then going into heavily more into heavy manufacturing and then switching to technology procurement but it’s procurement and supply chain has always been the theme what what that made working in different Industries giving me a different perspective on how different Industries standard procurement so it’s giving me an added edge on looking for different solutions and providing different answers and and understanding how the process works and where this added value and whereas you know wasted effort or just non-value added Solutions in in manufacturing in technology and software and hardware there’s always things to be changed and things to be automated and making it better right now where I’m at I’m in you know seeking my next adventure last few years I worked in the technology and manufacturing problems setting up procurement teams getting to know how to create an added value a better added value procurement in technology especially for startups.
It was a two-week gig doing order managing and order entity for Honeywell, and the amount of details that go into an order and the I didn’t realize how much work was in it and how important it is until I worked for that team. Most of the professionals that worked at the team were seasoned professionals in that industry. It was in the pulp and paper route for Honeywell, and then they started asking secondary questions.
I would hear this team interact with the customers, customers being procurement engineering maintenance folks like across the board. And what I’ve learned from them is they always ask secondary questions and listen to what they’re asking for, and give them suggestions. They would say, “Did you think about you ordering this? However, you also need to order this maintenance skill, or you need to add this. And if you’re changing this part, you also need to add to change this other part.” It wasn’t just absent; it was more of providing them a service and moving their product into a way that understanding what they’re asking for and making sure the team is understanding what they wanted and relaying as much as as much as and as clear as information down the pipe. Because they’re the first entry point between the customer and the rest of the organization, so they took their job about getting as much clear information as clear as possible and as fast as possible. So, it was fascinating for me how that was how that has the rippling effect across the board.
Yeah, it seems like the seeking out more information, asking questions, being a good listener really helped you do well in the manufacturing space since it’s such a process-driven industry. And you really, really helped from end to end with manufacturing plants looking at what’s working and what’s not working. So walk me through your career progression, and you know, tell me where you’re at today.
My career started within meat processing manufacturing, then I worked for a company working in FMCG (fast-moving consumer goods), and then going into heavily more into heavy manufacturing and then switching to technology procurement. But procurement and supply chain has always been the theme. What made working in different Industries giving me a different perspective on how different Industries standard procurement. So, it’s giving me an added edge on looking for different solutions and providing different answers and understanding how the process works and where this added value and whereas you know wasted effort or just non-value-added Solutions in manufacturing in technology and software and hardware. There’s always things to be changed and things to be automated and making it better. Right now, where I’m at, I’m in, seeking my next adventure. Last few years I worked in the technology and manufacturing problems setting up procurement teams, getting to know how to create an added value, a better added value procurement in technology, especially for startups.
So, in the last six months, what have been the one or two greatest direct material challenges that you’ve had to personally overcome? The two things that keep popping into my head is the changing deadlines and pricing. I get the delivery dates and the price changes, and I think those are one of the bigger ones. So a common theme when we were prepping for our interview that continuously came up was your work around how to make purchase order changes not so painful. So I’d like to have you start by talking about why do manufacturers have so many purchase orders changes?
I see that you’re laughing when I say this, the memories. The fact is, the purchase order is, in a lot of ways, the source of two. It is how vendors get paid, but at the same time, it’s how internally you relay information and how it’s connected into your production system and your finance system. So two crucial importance, money and time. And it goes back to my first mentor, “if you buy well, we sell well.” Why the changes and why it’s important and why is that the day-to-day life of an operational buyer or even somebody that’s not a buyer but goes into entering purchase orders? You get these requests that are flying in left, right, and center, sometimes organized, sometimes not organized, but your job is to process them as quickly as possible, as fast as possible, and just making it happen to make sure that you’re putting this information in as accurately as possible with the right information and moving into the next text. So you can reduce that backlog of requests or orders that come in from internal stakeholders, and the components that one of the bigger components that go into a standard purchase order is what the item is, what the quantity is, and the delivery date. If it’s not a preset delivery date lead time, you have to put that information in that to the vendor, “I need you to deliver this item X within a certain period of time,” and you move on. Part of the challenges there is you get the PO confirmation or the order confirmation from the vendor, which occasionally has a price change and or a delivery date change. Unless you’re in your career, were those the two most common changes that you’ve seen? Price change and delivery date change, yes. And then the, “or this item is no longer end of life, this is a replacement part,” that kind of stuff. So I had to really or or out of stock, discontinued product or discontinued are the stock exactly. So part of my job was to go back to the engineering team or the design team, saying, “Hey, what this item is no longer available, this is the replacement part,” or “this manufacturer doesn’t have this part, we have to look for a different manufacturer or different supplier.” So moving parts, and this is on top of your daily task of your operational bike. So the less interruption that you get as an organization from the outside, meaning the price change, delivery change, discontinuity, that kind of stuff, it’s a lot of part, it’s a lot of changes, and there are changes that are coming in pretty rapidly. How are they coming into you and your team? And that’s a very good point.
That’s what I wanted to mention. It’s then trying to dig information on what changes happen, because sometimes if you’re not on top of the changes, at the end of the week or end of the month, when you get this invoice from your vendor, and your finance team comes and says, ‘There’s a discrepancy in the value of what we’re paying. Our internal PO system says we need to pay the vendors the X amount, and their invoice says why, there’s a variance.’ And you have to spend extra time to figure out the differences or the item doesn’t show up on time, and you have your manufacturing folks or production folks coming to you, like ‘Where’s this item? I’m late. I can’t do this. I can’t deliver this.’ So, it’s those follow-ups and those information, having a way to gather this information, one-stop, or let’s say one hand to shake, to figure out this information, makes life easier and more efficiently.
So, what you mentioned earlier was finding a better way to do this was very important. Why is following up with purchase orders so important as well? This is something that you also mentioned many times when we were prepping. Not only having a better way to deal with the purchase order changes but also following up with POs, getting acknowledgment that the purchase order has been received and it’s being processed. If I am sending a purchase order, or a buyer is sending a purchase order, and not following up on it, you assume that the vendor has received it and they’re actually doing it. The fact is it may have been misread, not actioned, they forgot to deal with it, whatever. There’s a million and one reasons what could go wrong, and all of a sudden it comes back to you. A lot of our job is, I go teach this to my junior staff or people starting in supply chain. There’s a lot of ways, it’s a fact this job, if we do our job very well, nobody knows we exist, but the moment things fall off, that is when everybody’s after us for updates and what happened, why the changes, and whatnot. So, avoiding those kind of conversations in a good way, getting information in as good and as fast as possible, as clear as possible, will allow us to be buying better, so we can sell better.
How have you managed the PO follow-up process with you and your teams, so it’s not so crazy and cumbersome?
A lot of ways, at the time, not a lot of automation tools were available. So it was, you know, “What have we done this week?” Today, I’ve sent these, just go back and follow up on that. I send, “This is this done?” to talk to the vendor, and just go to the vendor and say, “Today, I’ve sent you X invoices or expertise orders,” and I look at what. Then, I would do a variance report, pricing invoice pricing versus purchase order pricing, and look for changes. So it’s a lot of manual, strenuous details going into the details, so it would have helped a lot having somewhere we can look at this, rather than going into different tools and different Excel sheets and following updating Excel sheets, and you know, so it’s a lot of follow-up. I call it death by email or desk by Excel, true.
So we’ve chatted about why there are so many purchase order changes, what are those typical changes, and then why is falling off PO so important that the title of our conversation today and the topic for our discussion is around preventing past due delivery. So how do you actually get your product to your consumers on time? Past due orders are a major, major problem for manufacturers. I think every manufacturing company that myself and my team have ever worked with have struggled with this, and it can cause you to go out of business. In one of your roles, you reduced past due orders by 66.6 percent, which went from 1.2 million to 400,000 dollars in just 21 days. How did you do this?
This was two weeks, and then my boss said, “Hey, you want to come in full-time?” and then it’s like, “Oh, by the way, we’re moving a production facility from Phoenix, Arizona to my facility, and because of the change, the ERP systems didn’t connect, and all of a sudden, there’s this backlog of orders.” And what ERPs were you on? The new ones were Oracle and SAP, and so it was fun for me, back to technology and going to order entry, like building builds of material, understanding what the bill of material does, and when it expands, where does it go? And if it’s going to production planners or material planners or your Tactical bars operational buyers or even the shipping team, it’s understanding the order team, the order management team puts it in and where it expands, and that’s going back to the details in there.
Part of my job is going into the other management team would go put this order in, but I would follow up, literally what my boss would call walking the line every day. I got a sequence of orders; I would make sure that the bits of material were actually correct, that it’s actually going pointing to the right target team, production planning, material planning, etc., and then going to the material, the buyers, making sure that they add you got the right request in the right quantity. It took a lot of details on walking the lines and understanding where is it pointing to, and once you start fixing those details and how important it is getting the direct material in the right way, updating the pricing, updating the lead times, updating the how long does it take to manufacture based on critical path, and updating those informations into your ERP or MRP, it helps reduce the stop. It has to reduce the backlog of items in there, understanding working with the different teams on why things are not working and how to make them better and how to automate all these requests. So a lot of details.
So it sounds like it was a lot of manual work and the focus was on cleaning up the data and getting that clean data back into your ERP? Yes, and a lot of another… a lot of right go ahead. Oh I was going to say a lot of this information was the operational buyers were just manual information that they needed to process into the purchase order platform. Like whatever they’re putting the information the acknowledgment that came back or the lack of the follow-up on those purchase orders were, you know, quantity, delivery, pricing, lead times affected. It has a critical effect. The major effect on your end product.
Another thing that you mentioned to me when we were prepping for our chat today is that you improved key performance indicators, also known as KPIs, with a key focus on time-to-promise performance, from 70 to 95, by improving processes. So, what does on-time-to-promise performance mean, and then how did you make such a big improvement in this statistic?
In simple translation, if a sales or procurement person goes to a customer and says, “I’m going to deliver this item to you on this date,” that’s part of being a good supplier. Every supply chain professional out there would know that a reliable supplier is one that’s going to deliver the product when needed, as needed, at that time. Holding that standard is what drives me and my team to perform in a certain way. When I update the lead times, I know what the production timeline is, so what I might import my input and components live on time. That allows the system or the organization to deliver on time. That’s how I got an improvement on the lead times, on the weighted average lead time, by holding the fact that, yes, we’re going to get this item delivered on time, and this is a production time, and this is when we’re going to deliver it and planning accordingly. So again, the common theme here is going back to having clean, good data, actually knowing when the supplier is able to deliver, what the actual pricing is, and making sure that information is in your ERP.
I’m stuck. Another metric that you focused on in your career is called weighted average lead time, and at one point, you were able to reduce this from 65 days to 56 days, which doesn’t seem like a lot, but in the manufacturing world, that’s quite a dramatic decrease. What is weighted average lead time, and why was it so important to have this time reduced?
The lead time is the delivery date minus the date when the order was placed. Basically, when you’re getting the order shipped, the components shipping in, how much lead time you need to make this product and when it ships out. Why is this important? When a buyer is out there looking for a supplier to supply certain products, one of the criteria most buyers look at is price delivery time. So, when the salesperson goes into sell the product, they can say, “I can deliver this item within x amount of time,” which gives an average value of a lot of advantages. It’s not just pricing; it’s also delivery time. You can have the cheapest price in the world, but if your lead time is way too far, it has no value. But when you show up, when this person shows up to a customer and says, “Here’s my priorities, here’s my delivery time. I can make this happen,” that’s an advantage value back to reliability and going into finding a better product.
So, how did you reduce the weighted average lead time from 65 days to 56 days? A lot of work went into the process, understanding what the lead times were for different items, different manufacturers or different suppliers and different items, updating that information into the ERP system, and then calculating what needs to happen. Looking at inventory levels and what our average production was, what we needed to have inventory and how we can make this a better cycle time. I’ll work a lot with the production planners, inventory planners, and leadership, saying this is the added value of increasing the inventory on X product or increasing there and actually looking at the lead times right now with all these challenges in supply chains, logistics, and shipping, and all that kind of fun stuff that everybody is facing right now. Having those components into the equation and looking at better ways to do things allowed for a better response time to make that happen. So that’s how, what the… what I’ve done. I’m really, you know, watering it down but a lot of details, a lot of money would work and then seeing if we can do this better and how can we do this better.
So going back to the top conversation for today, which is about how manufacturers can reduce late orders (AKA how can they get their orders to their consumers on time), you mentioned that you designed and implemented production procedures for private label manufacturing during a part of your career. Tell me a little bit about how you did this and what you did to reduce the past due order challenges for the private label manufacturing.
This was actually a very fun project. I worked for a heavy steel manufacturing facility, and they do a lot of private labels for their owners on Home Depot and the home rental industry, and so forth. But part of the challenge was that folks would go out there and make the sales, and all of a sudden, the production planners would have this challenge where they’re shifting production to accommodate these requests. Being in supply chain, it comes back to me like, “Hey, can we get this better? Can we get this faster? What’s happening there?” A Google search helped me understand why the fire, it’s okay. Like, these are the sales guys. The sales folks are doing what they’re supposed to be doing. So in supporting them, giving them the tool that asks these questions, and a lot of times, it’s like, you can make this product, but all of a sudden, you can’t sell it. You can’t send it out because you’re missing a label. And a label doesn’t cost that much, but you can’t send the box without a sticker. It’s just as simple as that.
So what I did with this is I created this procedure form where I’m making it easy and simple for the sales folks. When they go outside a private label, they have, if you will, a questionnaire that says, “What are you looking for? What item? What kind of packaging is this?” And it has embedded in there the information that says, “If you’re looking for this kind of packaging, it’s going to be an additional week or whatnot, or this is the cost that’s going to be there.” It’s asking these questionnaires. In a lot of ways, it’s also the intake form to the sales order. It’s not just putting a sales requisition in. It’s also providing that information that this is the private label that they wanted. This is the artwork that they need to provide. This is what needs to happen for us to deliver on this time. If all of these components are available, it’s going to take X amount of time to deliver. Having that correct relay of information back to the client puts the sales folks in a better place to make that sale.
Thank you for discussing how to reduce the number of past due orders today, Afif. Where would you like to send people to find you?
LinkedIn. I live in brief LinkedIn. It’s Afif Mango on LinkedIn, Afif, and Mango, M-A-N-G-O. If you missed anything, you can check out the show notes. You can find us by typing in “What the Duck?! Another Supply Chain Podcast” in Google. To have optimal search results, make sure to add “Another Supply Chain Podcast” in your search to ensure you don’t miss a single episode. Make sure to follow this podcast and subscribe to us on YouTube. I’m @Sarah Scudder on LinkedIn and @SScudder on Twitter. This brings us to the end of another episode of “What the Duck?! Another Supply Chain Podcast.” I’m your host, Sarah Scudder, and we’ll be back next week.