Customers want shorter lead times for products, and suppliers want to be leaner, says Thomas LeBlanc, master scheduler at Varian Semiconductor. That requires a balance if one is to have a successful supply chain.
Due to the cyclical nature of the supply chain, customers demand a greater degree of responsiveness from their trading partners, and they know they can get it, LeBlanc says. The means that lead times have to be shorter, but delivering on that is complicated by suppliers who often are stretching their lead times. Those suppliers, understandably, are trying to get as lean as possible.
"So while our customers are requiring lead times of eight weeks or less, we're getting extended lead times from our suppliers, sometimes greater than 20 weeks for their parts. Trying to balance these and have the right parts available when they're needed when the orders come in from the customer, that is the most challenging aspect."
As a legal matter, Varian has entered into contractual agreements with approximately 50 suppliers that cover more than 700 of the most critical components used by the manufacturer. As a practical matter, the agreements allow the company to shorten lead times on product delivery, LeBlanc says. "And because we're more responsive, we're able to win business," he says. Varian chose RapidResponse from Kinaxis to help it manage the contracts.
Of course, there are degrees of responsiveness. LeBlanc says it is vital to act within the time frame of the customer's forecasted demand. At the same time, one has to be flexible enough to react promptly when changes occur.
LeBlanc says the Kinaxis tool, which was first introduced to Varian seven years ago, has enabled the monitoring and quick reaction capability that's needed. Master scheduling and demand management groups "latched on to it right away" to analyze changes in demand. RapidResponse now has 20 applications across Varian, touching seven functional groups.
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