Machine Inc. views every part that it ships as a direct representation of their commitment to quality. Every step in their manufacturing process is carefully monitored to guarantee the precision machined components are built to the highest standard. For years, Machine Inc. has embraced lean manufacturing principles and has utilized lean practices such as Kanban replenishment systems to ensure on-time delivery and optimal inventory levels.
When one of Machine Inc.’s largest customers, ThermoFisher asked them to become part of their Collaborative Supply Network, Machine Inc. wanted to know how their participation would impact their business.
Overview
Industry
Manufacturing-Machining
Customer Profile
Machine Inc. is a precision machining contract manufacturer. The company serves customers in the Medical, Aerospace, Environmental Sensing and Electronics industries.
Business Situation
A large customer of Machine Inc. requested that they become part of their Collaborative Supply Network. The goal was to convert from the existing manual kanban system to an electronic replenishment system.
Solution
The company implemented the Ultriva Collaborative Supply Portal. The portal provides Machine Inc. to gain real-time visibility of demand, the release of orders and kanban cards. The portal also provides Machine Inc.’s customers with up to date status of acknowledgement, shipments and inventory status.
Benefits
- Supplier on-time performance improved by 35%
- Inventory as reduced by 40%
- 10% reduction in logistics cost
Situation
Prior to using the Ultriva Collaborative Supply Portal, Machine Inc.’s customers were using a manual kanban system to trigger replenishment. Because the system was manual there were cases where the cards were misplaced or misfiled. This resulted in late releases to production and in some cases, missed or late shipments. Because of this they were forced to machine parts in a batch mode, resulting in excess inventory, the inability to use standard shipping containers and the consumption of machining capacity that negatively impacted their ability to serve their other customers. In addition, it was difficult for their customers to make adjustments to the manual system replenishment system when demand swings occurred, resulting in a lot of non value-added communication and expediting costs.
Solution
While initially skeptical that using a web portal to facilitate material replenishment with their customer, Machine Inc. was willing to try it out. The implementation was simple as the supply portal only requires an internet browser and a few hours of training. Once Machine Inc. was online, it was easy to see their demand, the release of kanban cards and a real-time exception alert system to raise visibility of changes to the plan or the status of shipments.
Machine Inc. no longer has delays related to critical demand, order or kanban information from its customers. In addition, the supply portal is a closed-loop system, ensuring kanban cards are not lost or sitting idle. 100’s of replenishment transactions are tracked and supplier performance can be measured and reviewed for continuous improvement activity.
Benefits
Not only has their on-time delivery improved with ThermoFisher by 35%, but their overall on-time delivery has improved as they can schedule their factory more effectively without the expediting they experienced previously. In addition, they have been able to reduce their inventory investment for those parts on the Ultriva Collaborative Supply Portal by 40%. An unexpected benefit has been their ability to reduce their logistics cost by better use of standard containers and lower transportation costs.
Their goal is to look for more ways to have their customers and suppliers use the web portal technology and electronic kanban to reduce the total costs across their supply chain.