Mitigating Material Flow Exceptions in times of Supply Chain Disruption

7 steps to building more resilient material flow processes

Even “last mile” material flow disruptions, close to the Point of Use (POU) in the supply chain, quickly result in significant delays and unnecessary financial cost when it brings production to a halt. Mitigate material flow exceptions using the following recommendations:

1. Define Roles and Ownership: Clear ownership for each step in the hot part fulfillment process is critical to ensure the ball is not dropped.
2. Proactively Identify Shortages: A daily or per shift proactive plan should be performed consistently to detect and report potential part shortages before they have impact. 
3. Designate a Tool: Even if it is a simple spreadsheet rather than a dedicated software application, there must be a designated, “go to” tool used to avoid resorting to email or phone.
4. Provide real-time visibility: Ensure the requests are shared and tracked in a fashion that provides both management and operators the necessary visibility to make informed decisions and analysis.
5. Enable Consistent Execution: Ensure your process is repeatable and documented. If possible, use a tool to automate as much of it as you can. This includes the reporting to ensure consistency.
6. Ensure Effective Collaboration: Points in the process requiring cross location communication or hand-offs need to be well documented, trained, and ideally automated in a workflow tool.
7. Practice Continuous Improvement: Ensure your processes and tools are generating metrics along the way and analyze the metrics regularly using proven techniques to drive improvement.

Turn material flow disruptions into a competitive advantage

If this sounds like a lot of work and a lot of organizational change that may not be readily adopted by your organization, you will want to start by selling them on the benefits:

• Reduce the volume of expedites
• React more optimally when material inevitably needs to be expedited
• Capture the metrics that enable process improvement and quantify the improvement
• Perform process Improvement, thereby reducing the number and cost of production disruptions resulting from materials handling issues Improve the morale of all those involved through more predictable execution

The change will be easier if incremental expectations are set and then met. We recommend iteratively starting to act on each of these, focusing first on those at the top of the list. 

As you start to see some payoff based on taking one of these actions, gradually shift focus to the next one on the list. As part of continuous improvement, you will want to keep iterating through this list in an on-going fashion. So, keep referencing back to this document every few months, even after you acted on all seven actions. Next, you will find additional guidance on the seven actions and how to implement them

1. Defining roles and ownership in the material flow process

Material Coordinating or Handling is a key aspect of flow of material in the warehouse and the assembly plant. In many manufacturing organizations, there is a specific job title/role that is responsible for material handling, A common title is Material Coordinator. The Material Coordinator is tasked with ensuring availability of the material and resolving any issues that emerge with the flow of material to the point of use (POU).

Assembly Operators should be freed as much as possible to concentrate only on the operations they are tasked with. To a very limited degree, the assembly operator should signal to the material coordinator likely shortages in their workstation—such as parts missing, incorrect parts, or quality issues.

Warehouse Operators pick material as specified from the inventory in the warehouse. In the case of a Hot Part request, the hot part request specifies the material and quantity to pick. The warehouse operator then ensures the materials are loaded on the correct truck headed to the factory. If a part has not yet been received, the warehouse operators should be alerted when a part being scanned into inventory should be immediately diverted to the factory rather than put in stock. Depending on the tool, this may mean watching for parts flagged to be pulled before receipt.

2. Proactively identifying part shortages in the supply chain

It goes without saying, but shortages cannot be avoided if they are not identified early. 

As such, it is critical that, on a regular interval of time, the material coordinator walks through a specific route in the assembly plant and checks for potential shortages of materials that might occur, comparing part quantities staged on the floor to those that the resource planning system specifies should be present.

In extreme cases, there are special trucks running between a warehouse and the plant called hot trucks to expedite the parts. A hot part request can specify that the part should be expedited, or just be brought to the factory on the next regularly scheduled truck. You know your material flow situation is bad if you are having to run special trucks to expedite parts. Following the actions guidance in this document will eliminate the need for off schedule delivery.

3. Designating a tool to track materials flowing

Whether you use an Excel spreadsheet or another tool, the key is to have a tool that those involved are comfortable with and will adopt and use every day. While ease of use is critical for adoption and spreadsheets are easy for most, it is also critical that the tool helps enable the other six actions in this guide. A great tool will not only make entering and processing requests easy but will also provide real-time visibility. This makes it obvious who owns the request, what the next steps are, communicates automatically as the ownership shifts, and tracks key timing metrics automatically. 

Additionally, the tool should make it easy to evaluate the root cause and report on both day-to-day level statistics and longer trends. Tools like StrataFlows automate all of this. But at the same time, with a clearly defined process, a spreadsheet like the example mentioned in the appendix of this document can suffice. A spreadsheet approach can be a good place for an organization to start, work out their process, and then adopt a tool when the natural constraints of a spreadsheet start to be the limiting factor to further process improvement.

Once a tool is comfortably adopted and proving itself, further optimization can result through integrating the hot parts tool with other systems, such as an existing ERP system like SAP. This integration can be bidirectional—for example, values used within the form can be pulled automatically to auto-populate the choices for drop downs and to validate input. Also, as hot part requests are processed, the metrics being generated can be pushed to a data lake in systems such as SAP HANA to be aggregated with other valuable data. StrataFlows support such bi-directional integration through its API and event publishing system for EDI.

4. Providing visibility

Whether in proactive mode or reactive mode, managers and supervisors need data to make decisions to either avoid or react to disruptions.

Imagine an operator is almost out of parts.

• Is the visibility there to know if the “hot parts” are not yet received?
• Was there an issue locating the parts in the warehouse?
• Or are the parts inside the factory and being delivered to the work station in the next few minutes?

On a daily, weekly, and monthly basis, reports showing key metrics can help both on a tactical level—day to day, and feed longer term visibility of trends over the period of weeks and months to get feedback on whether or not process improvements are having the intended impact.

For example, daily, a list of the most critical shortages can be automatically distributed by email before the shift starts. A score card, showing how well each department performed on key metrics can provide opportunities to reward those performing consistently better.

Visibility in real time for information such as how frequently the material is being expedited can help drive thinking about what is the root cause for the recurring shortage.

5. Ensuring effective
collaboration to get the right parts to the right place

It is common in manufacturing operations for request needs to flow across company or geographic boundaries, orchestrating collaboration in such cases is very challenging. Often warehouse staff works for a logistics service that may not have access to the manufacturing company’s IT systems. In such cases, getting access even to the emails it sends, can be problematic in that securely sharing access to systems can be constrained by a company’s IT department especially if older, legacy systems are used. Cloud-hosted software apps, such as StrataFlows, can be a way to bridge these boundaries between organization’s IT systems. 

Whether the need for collaboration is signaled by a request showing up on the screen in a department’s queue, an email, or a push notification on a mobile device, it is critical to only put a notice in front of a user when they are expected to act. Otherwise notification fatigue sets in, and they stop paying attention to such notices—perhaps setting email rules that delete the notifications. 

One of StrataFlows’ strengths is its ability to only show a request in a queue, inbox, or mobile notification when it is important based on the workflow for that user to be bothered. Moreover, when the user goes to act, the tool guides them by presenting the options on forms that are applicable given their expected role in the collaborative process. All of this reduces the noise experienced by those executing the tool while ensuring effective collaboration.

6. Enable consistent
execution with material flow automation

Acting in an optimal fashion to a potential shortage requires a defined, repeatable process. The process must ensure that as the material is flowing from its source to its destination it follows a defined path. In some cases, it may be known that the part has not yet been received, and therefore needs to be pulled before it is put into inventory in an external warehouse and immediately sent to the factory. In other cases, materials already in an external warehouse may need to flow through paint or kitting. A tool with a defined workflow can help ensure the materials follow the required path.

Many tools support defining specific workflows for the different paths parts need to follow, capturing metrics along the way, and automatically triggering collaboration by email or mobile app notifications in a targeted fashion to avoid email overload. 

Below is an example of a workflow included with StrataFlows starter edition that embodies a defined, repeatable process that can send notifications in a targeted fashion to only those that need to be alerted. Given that it is cloud-hosted, it enables cross-company collaboration. As a plus, its mobile app permits collaboration and communication from the plant floor.

7. Turn material flow disruptions into your competitive advantage with a continuous improvement strategy

It is critical that throughout the execution of the request process, metrics are captured to feed later analysis. Metrics such as, which staff member took which action and when, an initial root cause for the need to expedite, and notes to capture any insight available for later consideration when reviewing how to improve and reduce the number of hot part expedites.

As can be seen in the form above, StrataFlows prompts the user for an initial thought on the Reason there is a need to expedite. It is important to capture this when the request is entered, but that alone is obviously not going to lead to improvements to help reduce future requests.

Rather, to avoid future requests, a Five Whys approach is recommended. This is an iterative technique used to get to the actual underlying cause—the Root Cause. This is called Root Cause Analysis (RCA). While the Five Whys is not directly a part of the Hot Parts module in the StrataFlows app, the technique can be applied outside the application, or if desired, StrataFlows does offer a manual explicitly designed for capturing RCAs. It offers both a means to explore and capture the Five Whys and to use another technique that we won’t go into here called a Fishbone or Ishikawa approach to explore RCAs.

To get to a root cause using a Five Whys approach, you start with the initial reason in the request. This counts as one of the five “whys” and asks why is that the cause?

For example, if the wrong part was in the work station, why is that? Was the wrong part delivered? If so, ask why again. Was it because the Bill of Material is wrong? If so, ask again, why is it wrong? You should be getting the point about now. The point is by iterating like this, you will get to the root cause. By addressing that root cause, the part should not need to be expedited next time this item is being produced.

Another technique used to reduce hot part requests is to use a Pareto Approach. A Pareto Chart is a simple statistical chart where the length of the bars represents the frequency of the occurrence of a cause. In this case, cause of the need to expedite a part. What a Pareto Chart can help determine is where to focus your staff’s energy to have the most impact. The longest bars represent where to focus— but a key point with a Pareto Chart is that almost always, 80% of the expedites will come from 20% of the causes. This means that if you focus on those few causes leading to the most expedites, the pay back should be greater. In most cases, the first couple bars on the left will be where you want to focus first. StrataFlows includes a Pareto diagram that you can view at any time or have emailed on a regular basis. Watching this report, as you improve, the chart will shift new causes to the left, and you will want to shift focus to the new 80% causes.

You don’t have to live with missing parts every day

While we will not try to tell you there’s any magic in what this blog suggests, we do have experience with many manufacturers and logistic companies helping implement these actions and are confident that through hard work and a focus on these actions, over time, you will see the following benefits:

• Reduce the frequency and volume of expedites
• React more optimally when material inevitably needs to be expedited
• Capture the metrics that enable process improvement and quantify the improvement
• Perform process improvement, thereby reducing the number and cost of production disruptions resulting from materials handling issues 
• Improve the morale of all those involved through more predictable execution