Sustainable improvement in supplier performance for low-volume, high-complexity manufacturing

Our client, a Prime Manufacturing Contractor, is a specialist in low-volume, high-complexity marine systems manufacturing. Long and failed supplier lead-times are a long term challenge due to a lack of visibility. This is impeding careful management of components in the supply chain. Corrective action is often required by the Prime and this usually involves expediting activities; investing in additional resources to monitor KPIs and chase down parts (often after a failure has already occurred, or is inevitable). In addition to long lead-times, the timely certification of parts is another significant challenge for the Prime.

The challenge

Legacy systems and a lack of robust supplier management processes lead to inaccuracies and delays in the flow of information. This is creating tension throughout the Prime’s supply chain. Relationships with suppliers are strained and a culture of distrust and lack of collaboration has taken hold. The Prime selected Unipart Expert Practices to help develop a new approach that will improve end-to-end supplier management, starting with a pilot within a number of strategic suppliers. The client is looking to create better supply chain relationships in order to improve capability and to:

  • Decrease lead times by 50% (presently 90-120 days)
  • Improve monitoring and reduce arrears (typical arrears around five per month, which in a very low volume environment is significant)
  • Increase on-time delivery performance to >60%, with a longer-term target to reach >80%
How we helped

The Prime’s supplier base was first divided into two groups of ‘process’ or ‘product’. This reflected the two very distinct value chains of machine and material suppliers within our client. A portfolio of five strategic suppliers would be selected to develop and test a new approach over an initial six-month pilot. Following this, the new way of working would then be rolled out across the Prime’s supplier base.

We worked with our client to create, train and coach a new supplier development team from within the Prime’s workforce. In contrast with previous initiatives, the new supplier development programme would be fully supported by senior management, with an agreed governance and reporting framework.

With Unipart’s support, the new team engaged suppliers in a “drains up” value stream mapping exercise across both supplier and customer processes. This required all levels of staff, from senior management to operational staff in the network partners involved in the programme, to collaborate in a way that they were not used to. New relationships were nurtured and the team were engaged by their ability to identify and execute some quick wins; cultural differences were overcome and trust was built.

The supplier development team were tasked to establish a standard blueprint for supplier development. During this process, they would create a robust assessment tool to benchmark suppliers. This “ten-to- zero” supplier development tool would assess suppliers against required standards and identify gaps and the appropriate remedial activities that would be needed to close them. Crucially, the Prime dedicated resources to help its suppliers implement the new blue print; the suppliers’ staff needed to be developed, coached and trained.

Following the initial groundwork laid by the supplier development initiative, the Prime has started discussions on forming a joint business strategy and plans to drive mutual benefit (improving service at lower cost, increasing volume and predictability) for all supply chain partners.

The results

The project met its targets and a supplier development programme has been developed for the Prime. Improvements to value streams have resulted in significant improvements in revenue. By reducing long and failed lead times the costs associated with remedial expediting activities are now able to be avoided.

  • 60% to 80% reductions in lead times were achieved across the supplier base - 90 day lead times were now down to below 35 days
  • Arrears have been eliminated, significantly reducing costs and improving the service received by customers
  • Right first time improved from 60% to over 80%
  • On time delivery improved from 65% to 95%
  • 100+ team members in both the customer and suppliers businesses trained in core tools enabling the teams to further improve their processes
  • The Core team within supplier development have had their coaching skills improved, enabling them to be better project leaders when in the supplier base.

improving manufacturing performance