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Management of C-Class Parts Through Intergrated Outsourcing. Part 2


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A growing number of manufacturers are using an integrated outsourcing model to manage their high volume, low cost parts. With Integrated Outsourcing, managers still outsource the managing of local inventory, but they retain direct relationships with their suppliers for information and visibility. Integrated Outsourcing is a ‘pull’ system, where the actual parts usage triggers the request for more parts. Each time a part is used, a signal is sent up the chain and the one chain itself replaces the part. Since C-class parts are required in too great a quantity for a ‘one part, one trigger’ mechanism, a buffer is created to ensure there are always enough parts- in every bin, at every station and in-transit. This can be managed by an algorithm based on actual usage data.

The efficient supply of parts to the point of use relies on accurate, timely information being passed up the supply chain. The manufacturer maintains a direct relationship with its suppliers, captures the operational data, and provides visibility to all parties in the supply chain. Fundamentally, the flow is as follows: parts are received at final point of use and that usage is tracked by the parts management system. A trigger which is recognised by the supplier is sent upstream when a determined number of parts are used- an ASN is sent and the parts are shipped by the supplier and received at the warehouse. A monthly invoice generated for actual parts used and the Supplier is paid.

The integrated Outsourcing model- don't just outsource the management of your mission-critical suppliers without any visibility to their operation. Maintain direct contracts with the suppliers, capture the data, and provide visibility across the entire supply chain.

The Integrated Outsourcing model for parts replenishment delivers many benefits to the stakeholders in the supply chain:

  • Maintenance of current supplier relationships- Managers are still able to source their parts from the same suppliers. By forming long-term agreements for cost savings and consistency, the suppliers become directly accountable for their portion of the chain.

  • Ability to Monitor the Process- Assuring that the supply chain is in place- inventory management technology enables managers to monitor the actual usage at every station in every plant. They ensure that the rights parts are arriving at the right time and the right place, and that there are enough parts in the pipeline to ensure continuity of supply.

  • Monthly billing for Parts Actually Used- Rather than billing for parts received- suppliers keep the parts in their plants and only ship when the triggers tell them to do so.

  • Significant Cost Savings- From lower ‘owned inventory’ costs, reduced number of transaction fees, decreased shortages and stock-outs, and decreased management costs.

  • Parts Traceability- Enabling managers to divert parts from one warehouse and/or plant to another- it also enables better measurements for supplier performance and increased ability to quarantine or locate batches of stock for quality purposes.

  • Usage Data Collected- While forecasts are not the optimal way to drive a replenishment process, they are critical for long-term planning and production increases. Most manufactures will not stop using forecasts in the near future, regardless of how well their supply chain is functioning. Therefore, you can compare actual usage data to your forecasts and use this data to predict implications of increases in production.

Waer Systems can offer the leading supply chain management solution . Waer Systems can assist in C-Class Components Supply & C-Class Class Components Management .


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