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ISQA 479

ISQA 479. Customer Value Smart Pricing Expediting. Customer Value. Timing and Lead Time Location Conformance to Specifications Information/Visibility Value Added Services Product Selection Price Long Term Relationship. Power Shift in Manufacturing. Contract Manufacturing Electronics

jerome-marshall
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ISQA 479

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  1. ISQA 479 Customer Value Smart Pricing Expediting

  2. Customer Value • Timing and Lead Time • Location • Conformance to Specifications • Information/Visibility • Value Added Services • Product Selection • Price • Long Term Relationship

  3. Power Shift in Manufacturing • Contract Manufacturing • Electronics • Clothing • Auto Sub-assemblies • Jewelry • Food • Furniture • Pharmaceuticals

  4. Locations • Hi Tech/ Hi Quality or Cheap • Asia • China • India • Malaysia • Indonesia • Taiwan • Korea • Japan

  5. Locations • Central and South America • Brazil • Mexico • Maquiladoras • Central America and Caribbean • Africa • Kenya • South Africa

  6. Smart Pricing • Customer Differentiation • Timing • Price According to Demand • Airlines • Hotels • Rebates • Surcharges

  7. Smart Pricing • Differential Pricing • Group Pricing • Regional Pricing • Product Versions • Transportation Preferences • Seasonality • Freight and Handling

  8. Pricing and the Internet • Information Availability • Expanded Customer Base • Expanded Supply Base • Price • Service • Customer Ratings • Look Up • Alibaba.com • Thomasnet.com • Solusource.com

  9. Sourcing and Expediting

  10. Sourcing Objectives • Fundamental Objectives • Continuity of Supply • Quality • Minimize Administrative Costs

  11. Avoiding Problems • Complete Specifications • Minimize Change Orders • Order Timing • Order Outside Supplier Normal Lead Time • Minimize Rush Orders • Continuous Supplier Information Flow • In Both Directions • Supplier Visits

  12. Expediting Objectives • Avoid surprises • Receive Materials ON TIME • Manage supply base • Persuade supplier to do what was agreed • Solve problems • Supplier Problems • Industry Problems • Build supplier relationships • Understand supply chains

  13. Why Suppliers Fail • Inaccurate lead times • Impossible sales promises • Lead time changes • Supplier’s sources • Overmatched supplier • Errors • Undercapitalized • Logistics • Force Majeure

  14. Before you place an order • Salesperson’s home phone • Manager’s home phone • Other emergency numbers • List of carriers in immediate vicinity • Other useful information • Organization chart • Credit manager • Engineering manager • Production manager • Purchasing manager

  15. Before Placing an Order • Early Delivery Bonus? • Sliding Pay Scale • On Time = Full Pay • Late = Deductions • Agree on Transportation • Mode • Carrier • Agree on Force Majeure • Agree on Liquidated Damages

  16. After Placing an Order • Read contract documents carefully • Think before you act • BE NICE but firm • Authorize overtime • Partial shipment • Next closest dealer • Next closest major customer • Available in another form? • Hold all new orders to supplier pending resolution • Threats are ALWAYS a last resort

  17. Structural Steel:An Example • Engineering Specs • General Contract • Sub-Contract With Installer • Sub Orders Materials • Local Steel Supply Firm • Order From Supplier – Bao Steel Shanghai • Bao Steel • Hot Roll • Fabricate • Deliver to Dock

  18. Structural Steel, Cont. • Load on Ship (Schedule) • Transit Time • Discharge at Port • Customs • Arrange Local Trucking • Deliver to Jobsite • Erect

  19. Structural Steel • Finalize Engineering Specs & Drawings 6 • Award Contract to LCL 4 • Contract With Installer 4 • Installer Orders Materials 2 • Local Steel Supply Firm 2 • Order From Supplier – Bao Steel Shanghai • Bao Steel • Hot Roll 2-4 • Fabricate 1-2 • Deliver to Ship 1

  20. Structural Steel, Cont. • Load on Ship (Schedule) 1-2 • Transit Time 2-3 • Discharge at Port 1 • Customs 1-2 • Arrange Local Trucking 1 • Deliver to Jobsite 1 • Erect • Total Lead Time Could Be 6 Months

  21. Structural Steel, Cont. • Assume Contract w/ Erector • Assume Steel Supplier Has Raw Material • Still Need Fabrication Time, Transportation Time

  22. Expediting • Ask Subs – “Does your supplier have the materials IN STOCK?” • If YES, is the material set aside and earmarked for us? • If not in stock, what is the lead time and what process does sub have in place to be sure it gets ordered in time? • Don’t forget that transportation lead time needs to be included (Permits?)

  23. Expediting and Project Management • This ties back to the need for prompt submittals and A&E approvals. • Do A&E folks know what lead times are for materials? • A Materials Critical Path?

  24. Expediting • Backward Scheduling • Date needed on jobsite • Slack • Transportation time • Fabrication time • Materials lead time • A&E approvals • A&E submittals

  25. Expediting • Make a materials checklist that includes proactive checking on subs to be sure they and their suppliers have ordered material in time. • Ask Subs – “What is your Forecast (not guess) for availability of materials?” Why? • Lead times change depending on economic conditions. Verify periodically

  26. Questions, Comments, Observations, Conclusions, Arguments?

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