How to Avoid Supply Chain Disruptions with Careful Planning
On a cold January morning, a director of operations, for example, arrives at his warehouse location for a new customer start-up. But, at 6:30 a.m.,he senses something is amiss at the freezer warehouse. This is what can only be described as a major disruption to the company’s supply chain. The culprit—lack of material handling equipment.
Planning is the first step toward identifying vulnerabilities and mitigating risks. Supply chain vulnerabilities may be internal and external and can include demand, environmental, process and organizational control risks.
When analyzing their supply chains, many operation managers conduct a thorough study of their products, scheduling, transportation, packaging methods and packaging materials. Often, the inclusion of material handling equipment as part of the supply chain is overlooked. But, with careful planning, operation managers can avoid supply chain disruptions and exceed customer expectations.
The value of acquisition and implementation planning
The inclusion of material handling equipment as part of the supply chain planning process requires both an acquisition and implementation plan. Failure to anticipate the need for material handling equipment and execute adequate planning methods can result in major supply chain interruptions.
Many customers have an in-depth knowledge of their specific needs, while others will engage the dealer in a collaborative process to determine the right truck for the right application. In either situation, the customer determines the best solution to fit their needs. Once the application of the equipment is determined—such as the weight of the pallets, width of the aisles and all freezer space or a combination of dry storage space—the acquisition planning begins.
Step 1: When, where and what?
The first question in acquisition planning should be—when do I need the equipment? The availability and delivery date of the required equipment is the most important link in the material handling planning process. The start of the planning process with the material equipment supplier must be the confirmation of the equipment specifications and the available delivery dates. If the required equipment is not available to meet the needed delivery date, the supplier should immediately make arrangements for the availability of short-term rental units and communicate those plans to the operations managers.
Acquisition planning also includes the equipment quantity, and if the equipment will be new or used, purchased, leased or rented and for seasonal or short-term usage. Any combination of the above is available to satisfy the material handling requirements for the operation. Used or short-term rented equipment can be combined with new leased equipment to determine the material handling requirements.
Step 2: It’s all in the details
With the material handling equipment on order, the team would work with the supplier on a detailed implementation plan to meet the requirements of the operational schedule. Most supply chain disruptions regarding material handling equipment are due to the lack of a detailed implementation plan.
A solid implementation plan consists of identifying the stakeholders who will be involved in the acquisition, delivery, operation and maintenance of the material handling equipment. Failure by the team to identify all of the stakeholders involved in the supply chain planning process can result in incorrect assumptions as to who is responsible for the material handling equipment.
Once identified, the stakeholders would create a communication plan to direct the delivery and installation of the material handling equipment. A complete communication plan is critical to the success of the implementation process. Everyone from the maintenance staff to the receiving clerk should be included in the date and time of the equipment delivery, the quantity and any other communication details needed for an error-free implementation.
Step 3: Ask the right questions
When the equipment delivery date is confirmed, it is important to review the communication plan with the supplier. Most suppliers will have several questions concerning the details of the delivery and installation process at the operating location. The success of the implementation plan is just as important to the supplier as the end user. Lack of a detailed implementation plan can cause the supplier extra work and the burden of repairing a supply chain disruption.
Critical delivery and installation questions include:
- Are there specified hours or days of the week for equipment delivery?
- Who will inspect and sign for the equipment?
- Is there a designated area in the warehouse to complete the equipment installation?
- Is a maintenance technician required to install any batteries or lift truck attachments?
- Who provides the technician—the operation or the material handling supplier?
- Who is responsible for the equipment service after the delivery?
If the supplier is providing contract maintenance, finalize the details of the contract, including costs before the equipment delivery. When the customer manages the equipment maintenance, the supplier should furnish details on warranty claims and repairs, parts availability and loaner equipment.
Step 4: Evaluate and evolve
The final step in the implementation process consists of a meeting with the supplier 3-6 months after the equipment installation and delivery to review the acquisition and implementation plan. During the review, the entire process—from the initial supplier inquiry to the delivery and installation of the equipment—is open for discussion and evaluation. This review is also an opportunity for both parties to offer suggestions for improvement to the process for future implementation projects.
As the morning wore on and unloaded delivery trucks lined up at the dock doors, the director of operations mentioned above realized he did not have enough material handling equipment for the new customer start-up. Instead of total panic, heinstructed his operations manager to contact their material handling equipment dealer and arrange for immediate delivery of any available lift trucks. Lessons learned? Always include material handling equipment as part of the supply chain project planning. Detailed supply chain planning with emphasis on an inclusive project team is indispensable inaverting the always dreaded supply chain disruptions.