Costs Can Climb when Wrong Parts or Inaccurate Quantities Hijack the Supply Chain
The process of purchasing custom cable assemblies, standard cable assemblies, or wire harnesses, when executed in the right manner, can be a favorable experience. It generally begins with the purchasing department placing an order over the phone or via email. Cable assembly parts are received and are either sent straight into stock to be kitted for a job—or inspected, if needed, and then sent into stock. The standard or custom cable assembly (or wire harnessing) job gets built, no issues are found with the material, and life is good for all parties involved.
No hiccups and hassle-free, isn’t it? However, in the event that incorrect material or an inaccurate quantity is received for a custom cable assembly order, there can be many hidden costs and pains associated with it.
Here’s the hitch—if you have issues with just the parts, this could lead to the addition of these extra steps that complicate the entire process:
If Parts Go to Inspection:
- If they are rejected for being incorrect to the specification, the quality control person has to draft an official, and time-consuming, Discrepant Material Report (DMR) stating the issues.
- Next, purchasing will have to call the supplier to get a Return Material Authorization (RMA) to return the parts and obtain replacements.
- More time will be lost in processing an RMA to return parts, as it takes five to 10 minutes per RMA.
- In the event that the parts are not available locally, and the job is hot, it may be required that they be flown in. Usually the supplier will pick up this cost if it was the result of an error on their part, but it is not always the case.
- In this instance, more time would be wasted because the supplier needs to be called, details re-hashed, and new freight cost responsibilities discussed.
If Parts Are Not Coded for Inspection:
- The faulty parts will reach the production floor and cause bigger issues—rejection and rework that add up to more time and money.
- Measures are in place so bad material is stopped before being used in a build, but if it is not detected in time, well … that could cost everyone more than just time!
- Workers on the floor might not recognize a wrong wattage on a resister and the product might get rejected at outgoing inspection. If not, it will reach the customer and be sent back for rework due to the inaccuracy.
If an incorrect quantity of products is shipped, it could also be equally cumbersome, both time and money-wise, to fix the problem.
If the Inaccuracy Is Detected through Counting by the Receiver:
- Purchasing will be alerted and the supplier will need to be contacted to get more details, as well, more shipping costs will be incurred to complete the order.
- This may spark invoice issues that will need to be discussed with the supplier—and accounting will have to be brought into the conversation. For instance, if the supplier thinks they sent 100 pieces of something, and we counted 95, but are billed for 100 pieces, it will create an accounting issue that must be resolved.
If the Inaccuracy Remains Undetected:
- The inaccurate quantity of parts will be put into stock to be kitted into a job. When the kitter attempts to pull parts for the job, he could find that the inventory numbers are wrong and be short parts for the kit.
- The Dominoes affect this has is that we will be adjusting parts out of the system, which we ideally should have, but will need to re-order so we can complete the job, causing more time wastage and extra shipping charges.
What Are We Doing to Minimize these Costs?
As supply chain managers, we do everything we can to reduce these issues, such as:
- Aligning ourselves with good suppliers that have very low rejection rates and who will work with us if something does go wrong. They will usually absorb some of the charges as well, like shipping replacements overnight, if not sourced locally.
- We also have weekly DMR meetings to document each situation, discuss resolutions for pending issues, and also explore preventative actions.
- We train receiving to count items when needed and ensure that all inspection coding is intact, so we can catch any issues before the material gets onto the floor. This prevents issues from traveling further along in the production process, creating larger liabilities in time, money, and resources down the road.
In its simplest form, replacing wrong parts seems like an effortless exchange. But it doesn’t work the same way it might if you were exchanging a drill bit at the local hardware store for the next size up, or swapping out a different size jeans at the mall—those are pretty much one-for-one exchanges. When an entire supply chain—which is run in a precise and lean fashion—is interrupted, the potential for waste on many levels is multiplied. What appear to be minor errors and adjustments, add up exponentially, especially over the course of a year. At Fourstar Connections, our goal is to get the order right the first—and hopefully, only time around.
And when all aspects come together, everyone’s goals are met, if not exceeded. Read one account of a design for manufacturing (DFM) collaboration Fourstar completed with XL Hybrids that involved automotive electric connectors. Download it now to find out how we can help you increase your manufacturing goals.
This article was co-authored by George Quintong.