The expediting of raw materials, parts, systems and subsystems in inbound logistics is a common but necessary evil for many companies. Reasons for expediting include missed contracted delivery dates, damage to stock, supplier-related issues and tight customer requirements.
Expediting can be a burdensome and stressful strategy in the purchasing process. Many stakeholders relying on delivery dates are involved in this process, especially when parts are critical. Even though “chasing” suppliers is not a job a buyer is supposed to do, it ends up doing so most of the time.
Lack of accurate and timely information, use of multiple forms of communication and absence of a formal process for expediting are some of the challenges that buyers must deal with on a daily basis while discussing revised delivery dates. Implementing a common process, having good relationships between suppliers and buyers, and ensuring that the organization has a policy for escalation is a good start toward improving the expedite process. But determining the root cause helps the company to reduce and mitigate expediting problems over the long term.
Process and Challenges
Companies place purchase orders for material based on their production schedules and their MRP system’s inventory at hand. Sometimes a customer might place an order that needs to be produced, as it might not be in finished goods inventory. The company might not have the required parts or material on hand to produce or ship the order, so expediting is requested, often by the salesperson representing the customer. In other cases, a company might have missed a delivery deadline, causing the order to be expedited.
Many small or mid-sized companies do not have a real-time tracking tool to record expedite requests, track response times and measure actual delivery improvements. The procedures in this part of the supply chain are often unstructured. Sometimes buyers receive multiple phone calls or e-mails from the same person, or multiple individuals. Buyers don’t know whether the expedite is important or not, and often there are no rules for escalation. There might be no record of how many expedites have been requested, no idea of the current status, or estimates of the time and effort expended by stakeholders. It’s difficult to assess how well the supply chain is responding, and gauge the amount of wasted employee time due to duplicate requests. Salespeople are often frustrated because they cannot effectively respond to their customers.
Companies need to be able to determine the following:
Number of expedites received per week, by buyer,
Mean time to respond to a request,
Number of open expedites,
Number of closed expedites, and
Number of successful expedites.
Some suppliers send buyers a list with all their orders and the status of the ones that they haven’t delivered yet. The buyers might need to update this information in their information system manually. Some suppliers might not send the buyer a status list, further complicating the work of the buyer, who now needs to follow up on the orders.
A Case Study
One of the companies in this research study (Company X) created a custom form to track expedites. This was done in Oracle order entry, and attached to the order itself. The salesperson went into the order-entry form and clicked on the part number and expedite form icon in the ribbon. The form was auto-populated with the part, quantity and manufacturing location. When sent, it would transmit a system-generated e-mail to relevant parties.
Customer service needed to know three things about the expedite: the customer who requested it, the requested shipping date, and the tier level of the customer. This was a vital step of the process. The company could not cost effectively provide the same level of service to all customers in all situations, so it needed a way to differentiate expedites based on the importance of the customer and urgency of the need.
Expedites were tiered, with the tier going up if the company did something wrong, based on standard criteria related to customer or level of need:
Tier 1 (lowest): An expedite was done if there was no system date given for the part (lead time infinity). If the customer requested a better date but did not meet Tier 2 or 3 criteria, the customer was advised, and the system generated an estimated ship date that was the best date the company could promise at that time. The line was committed in the system.
Tier 2 (medium): Delays caused by missed ship date, line being down, significant impact on project timeline, or an order for a strategic account were reasons for this level of expedite.
Tier 3 (highest): Company error, missed committed dates and multiple triggers from Tier 1 or Tier 2 for order value greater than $100,000 were reasons for this level of expedite.
Upon receiving a response to the expedite, customer service changed the scheduled ship date and committed the line. The customer service representative who did so was tagged in the system, and a daily report was generated for follow-up. If a commitment was missed, the representative automatically did another expedite and changed the tier level to the next highest tier. When the new scheduled ship date was received from manufacturing, the customer was contacted. Depending on the tier, the company would pay for expedited freight to the customer location.
Manufacturing was notified via system-generated e-mail when an expedite was entered into the system. It was responsible for reviewing and communicating back to customer service an improved scheduled ship date, with a response due in 24 hours or less. If production promised a commitment, it was expected to meet it; if not, it had to have a reason why it missed that commitment.
Most manufacturing groups had production schedule meetings where raw materials and production schedules were reviewed, and scheduled ship dates determined. Responses to expedites were sent to customer service, which then had the responsibility to determine the date the order would leave the warehouse — the one it would tell its customers. If the answer was unacceptable to the customer, the company performed escalation.
The company tracked missed commits by manufacturing location and on-time shipment by warehouse, to measure the efficacy and efficiency of the expedite process. It tracked two key metrics for expedites: the number of responses received within 24 hours versus total responses, and the percent of orders where the scheduled ship date was achieved.
The process had an impact on the production side as well as supply chain and customer service. It reduced workload and “noise” in communication. It also improved customer service and commitment to promised dates, which the company could now guarantee with a much higher level of accuracy.
In addition to Company X, which used an expedite form tied to Oracle order entry, companies using just an e-mail system to manage expedites, and those using an Excel-based template, were studied. If the company had an enterprise resource planning system, using an expedite process that was tied to the ERP’s order entry had significant advantages, even though it involved additional cost and took time as another I.T. project.
Expediting is a fact of business life. Delays caused by human and non-human factors will continue to affect companies, who must react and ensure that they meet customer-service goals in a cost-effective manner. An effective and efficient expediting process can help all companies in lowering their expedite costs, while increasing service levels and improving the accountability and productivity of all functions, including the supply chain, production and customer service.