Supply Chain

for 

Small Companies

Joshua Schultz

2019-08-25

Defining

Supply Chain

A Network of Companies

Buyers

As buyers receive product, they perform value processes and prepare to make money. That is, to ship and become suppliers.

Sellers

In order to provide product to a customer, there are certain raw materials needed to transform. Therefore, sellers are inherently buyers.

become...

A Network of Operations

Rather than think about firms, consider processes / operations.

This allows you to streamline

A Network of Operations

Consider the repeated parts for each transfer as chance for optimization

Supply Chain

Material Flow

  • Sourcing
  • Procurement
  • Quality
  • Logistics
 

Sourcing

Material Flow

Find

The Right
Supplier(s)

Search
Qualify
Test

Searching

  • Google Search

  • Directories (ThomasNet)

  • Postings (Alibaba)

  • Transaction Data (Import Genius)

  • COI (Zhou)

  • Foreign for-hire

  • Random / Lookout

Qualifying

  • Response Time

  • Email Professionalism

  • Quote Professionalism

  • Online Presence

  • Certifications

  • Target Questions

  • Audit Forms

  • Visits

  • Audits

  • Quality Machine List

  • Production Equipment List

Testing

  • Other customers

  • Other markets

  • Samples

  • Dual Order

Procurement

Material Flow

Order the right part, on time for the right price.

Right Part

  • Information Agrees with Supplier

    • ​Verbal review

    • Sales Confirmation

    • Signed Intent

    • Make sure your order states everything!

  • Requirements

    • Dimension

    • Certifications

    • Industry Norms

    • Compliance

    • Packaging

    • Shipment

    • Quality Requirements

On-Time

  • Lead Times

  • Transition Times

  • Supply Route Disruptions

  • Internal Turnaround Time

  • Usage

  • Minimum Orders

  • Locale specific criteria

  • Order Grouping

  • Shipping consolidation waits

Right Price

  • Part Cost

  • Material Understanding

  • Geographic Considerations

  • Shipping & Freight (FOB)

  • Trade Regulations

  • Quality Time

  • Admin Time

  • Storage Costs

Quality

Material Flow

The Part
=
Your Order

Check all "Source Documents"

 

  • Legal compliance

  • Customer Purchase Order

  • Customer Design Prints & CAD

  • Customer Referenced Documents & Standards

  • Customer Instructions, Guides, and Procedures

  • Industry Standards

  • Industry Norms

Document Findings

  • Checklists
  • Records
  • Photos

Logistics

Material Flow

Move
& Store
Material

Logistics

Port

Boat

Plane

Airport

Airport

Port

Truck

Truck

Supplier

Customer

Shipment Type Urgent Not Urgent
High Volume Look for Alternative Source Boat
Low Volume Air Boat or Air

Decision Matrix

Inco Terms

Storage

Supply Chain

Information Flow

  • Supplier Management
  • Part Management
  • Order Management
  • Quality Information

Supply Chain

Financial Flow

  • Cash Cycle
 

Cycle Factors

  • Inventory levels
  • Inventory turns
  • Accounts Payable
  • Accounts Receivable

Cycle Factors

  • Higher Inventory is Less Cash
  • Inventory / (COGS / 360)
  • (AP x 360) / COGS
  • (AP x 360) / Sales

Terms Matter

Other Considerations

  • Lead Time to Cash Cycle
  • Return on Investment
  • Cash is Optionality

Supply Chain Considerations

  • Compliance
  • Inventory & Storage
  • Communication

Compliance

  • Export Controls

  • Military Controls

  • Sanctions and Black Lists

  • DFAR

  • FAA

  • Flow Down

Inventory & Storage

  • How will you stock and organize?

  • How much safety stock is enough?

  • How will you pick?

  • What will the shipping process look like?

  • How are parts pulled?

  • Labeling

  • Shelf Information

  • Packaging 

How will you communicate with...

  • Customers

  • Suppliers

  • Co-workers

  • Partners

How will you communicate on...

  • Orders

  • Issues

  • Questions

  • Processes

  • Design

Product Cycles

Prototyping

Test pieces usually made in extremely small batches for form - fit - function approval. Use specific prototyping settings. Will not be actual production process, supplier, material, lead times, costs, etc.

Production

Higher volume production, good for end unit testing and selling. As project scales, continual improvement in material, inventory, production methods, and even supplier at times.

Assume Change!

Design for

  • Procurement
  • Testing
  • Function
  • Quality
  • Manufacturability
  • Safety

Iterate

Initialization

Deployment

The

Supply Chain Cycle

The Cycle

  • Usage

  • Demand Plan

  • Order

  • Production

  • Shipment

  • Incoming

  • Inspection

  • Assembly

  • Testing

  • Distribution

Creating a

Supply Chain

The Issues in Creating

  1. Find suppliers
  2. Qualify suppliers
  3. Quoting
  4. Placing Orders
  5. Tracking Orders
  6. Receiving Orders
  7. Tracking Production

Source

With a tightened BOM you need to look for suppliers for each part.

 

Remember:

  • Try Domestic and Foreign
  • Look for Low/Mid/High
  • 3-5 for each risk premium
  • Always be Developing

Qualify

With a list of suppliers in hand, you need to find the one(s) you will try

 

Remember:

  • Capability
  • Capacity
  • Character

Quoting

Send out a request for quote. This doesn't need to be super professional. One line, to a full out RFQ.

 

Remember:

  • Price, Time, Quality
  • Professionalism
  • Response Time

Purchase Order

Send an order

to the chosen

supplier(s).

 

Remember: 

  • Contract
  • Terms
  • Reduce Risk
  • Rely On

Tracking

Understanding shipments, timelines, methods, dates.

 

Remember:

  • Know when it's due
  • Know when it's off schedule
  • (Have a schedule)

Receiving

The receiving process sets up all others, can greatly reduce errors if done well, and saves hours of time if invested.

 

Remember:

  • Record Receipt
  • Ship / Stock / Cage
  • Tracability
  • Product Info if first
  • Package / Label

Managing a

Supply Chain

The Issues in Managing

  • Information
  • Communication
  • Compliance
  • Negotiating
  • Traceability
  • Metrics & Data
  • Own The Relationship

Supplier

Set up how you want things done, and share it with your suppliers. Create policies to prevent issues, problems, and risks on your end. Streamline your operations for logistics and inspection by putting in place requirments

Customer

Answer all common questions and share them with your customers. Make your processes clear and alleviate their concerns.

Manuals

Write complete and clear emails!

Suppliers carry risk and thus remain technical.

Undertand the Regulations

  • ECCNs
  • ITARs
  • HTS
  • Hazardous
  • Antidumping

Ignorance isn't accepted as a excuse.

Trace Everything

  • Figure out Traceability Granularity
  • Create a scalable system
  • Record / Save Relentlessly

Metrics and Analysis

  • Create Strategy Objectives

  • Find the few metrics that show how well you are doing.

  • Find where that data is created or kept

  • Create a way to obtain or collect the data

  • Create non-intrusive systems for assembling

  • Create automated systems for reporting

  • Understand the strategy is greater than the metric

  • Look for blind spots

Relationships Solve Problems

The Small

Supply Chain Team

1 Person

  • Good Luck!

2 People

  • Parts
  • Information (Info / Money)

3 People

  • Flow - Parts
  • Flow - Information
  • Flow - Money

4+ Team

  • 2:2:1 ratio for Parts:Information:Money

5 People

  • Warehouse (Parts)
  • Inspector (Parts)
  • Quality Manager (Information)
  • Admin (Money)
  • Buyer (Information)

Async
Remote
Scalable

Use Team Inboxes

You want to focus on systems that scale with breaking.

Document Everything

Repetition will harm you. 

Mistakes will kill you.

Meaninglessness will frustrate you.

 

Write everything down. 

  • Reduces Training
  • Increases Scalability
  • Creates a Core to Improve
  • Reduces Mistakes
  • Reduces Risk

Record Everything

Data created within the organization should be recorded and kept, as seamlessly as possible. 

 

  • What data do you need?
  • What is the best media to keep it?
  • How will you search it later?
  • Create Templates.

Keep Up

Things can get out of hand fast. Boxes pile up, orders stack on your desk, email inboxes get flooded with responses to your requests. 

 

1. Clean up

2. Have a System

3. Keep it up

Automate 

Automate as much as possible. Some tools I have used for this include:

  1. Trello
  2. Templates
  3. Python Scripts
  4. Alfred / Butler
  5. Custom Software
  6. Zapier

Integrate

Many tools integrate with others, creating a way to leverage data in one, in another. This means collaborative systems can be created very quickly with minimal transaction or transition time.

Do Work Once

You'll find you are often asked for, or ask for the same information over and over. Answer once, then use that for templates, checklists, forms, and manuals.

Grab Data Quietly

An example of this would be activity metrics that are grabbed automatically by doing the activity.

 

Non-intrusive usually trumps idealism.

Key Processes & Procedures

Contract Review

A Contract Review is a review of your supply chain, procurement, and parts to make sure they meet the customer source documents and requirements.

 

Customer Info?

Part Info?

Supplier Info?

Quality Actions

Quality Actions are generally categorized into nonconformance, corrective, improvement. They are for both internal and external issues. These are the lifeblood of the improving organization.

Demand Planning

 

Demand planning is essential.

Considerations:

  • Lead Time
  • MOQ
  • Consolidation
  • Domestic / Foreign
  • Material
  • Storage Cost
  • Seasonality Use/Time Yr
  • Usage Patterns

Receiving

Receiving sets up production for success.

 

Proper:

  • Coding
  • Packing
  • Recording
  • Stocking
  • Data Entry

Communication

The largest root cause I see is communication.

 

Issues:

  • Not being clear
  • Not recording
  • Not systematizing
  • Not updating
  • Not including people
  • Not responding

Information

The second biggest root causes has to do with how information is created, captured, shared, analyzed, and used.

 

  • Create Scalable Systems
  • Formalize Data Capture
  • Automate Data Analysis
  • Work Backwards

Revision Control

Understanding where and how new revisions are managed at both your site and your suppliers is key. 

 

How are you ensuring:

  • Sharing of updates
  • Production changes
  • Inspection changes
  • Supplier receipt and control of documents

Lot Control

Tracing everything from the supplier on through is essential in problem-solving, providing service, being compliant, and protecting yourself.

 

  • Create a lot system
  • Make sure it is in physical form
  • Make sure it is in digital form
  • Consider Hashing

{:supplier=>"", :customer=>"", :part_number=>"12345", :revision=>"06", :quantity=>"2000", :date=>"2019-10-22 20:24:44"}

Warehouse 

Parts and inventory should be ordered to be quickly found and assembled. The method largely depends on your business and pick methods.

Internal Audits

This has one of the best idea generators for improvements we have (as well as a great way to find problems before someone else does).

Key Forms & Records

Form

A form is a subset of a record. It is a document with specific spaces to record various types of data. It can be digital or paper.

Record

A record is recorded information that is created as a result of a procedure. It is part of the output of a repeated system.

Key Forms & Records

  • Purchase Order

  • Sales Order

  • Packing Slip

  • Pick Report

  • Job Router

  • Invoice

  • Inspection Checksheet

  • Company Information Sheet

  • Contract Review Form

  • Non Conformance Form

  • Print / Design Record

  • Material Requisition

Logs & Lists

  • Open Order Log

  • Non Conformance Log

  • Supplier List

  • Part list

Information & Record Keeping

Streamlined Information

  • Parts
  • Import/Export
  • Suppliers
  • Customers
  • Your Business
  • Employees

Parts

  • Part Number
  • Description
  • HTS
  • COO
  • Order Notes

Suppliers

  • Formal Name
  • Address
  • Certifications
  • Supplier Manual Read
  • Capabilities
 

Customers

  • Formal Name
  • Address
  • Routing Instructions
  • Tax Exemptions
 

Employees

  • Name
  • Address
  • SSN
  • Date of Hire
  • Exemptions
  • Role 
 

Business

  • Information Sheet
  • Credit Reference Sheet
  • What we do sheet
  • Hours
  • Routing Instructions
  • Policies
  • Corporate Books
 

Data Organization

Files
Record

Documents

Files

  • Where / How
  • Organization Structure
  • Nomenclature

Records

  • Templates
  • Master List
  • Historical Records

Documentation

  • Manuals
  • Strategy Documents
  • Standard Work
  • Findings/Learnings
  • Questions
  • Tables

Outsourcing

Sourcing

Outsource your sourcing by buying access to vendor databases. You can also hire sourcing firms. They are usually expensive and good for only for critical high cost/use parts.

Quality

Third-Party quality labs like IMR in Ithaca are good for material and other tests. 

Procurement

Procurement firms specialize in doing purchasing. This is usually done with MRO items that are identical for multiple divisions and departments.

Storage

Outsourcing storage can be anything from renting a warehouse, to do a full on fullfilment option.

Production

You can outsource to contract manufacturers or CMs. Creating process and procedures is still on you. There is a large amount of creation and training up front; and ongoing quality costs thereafter.

Customs

Customs almost must be outsourced (unless you are an extremely large firm). The easiest thing for smaller firms to get a reliable freight forwarder.

3PL

Setting up domestic shipments can be costly and time consuming. Using a 3PL keeps costs low and admin time outsourced.

Data

Data management and analysis and becoming more and more important. Many small firms don't have the in-house talent for this and so many outsource.

Multiple

This is where Chess or Procurem might fall in.

Software

  • Productivity Suites
  • Systems
  • Tools

Productivity

  • Google Suites

  • Office 365

  • Trello, other

  • Slack

  • Onenote

  • Slab / Notions

  • Mediawiki 

  • Alfred

Systems

  • Supplier Data Management

  • Accounting Systems

    • Xero

    • Quickbooks

    • SAP

 

Systems

  • Material Resource Planning

    • Excel

    • Smartsheet

    • SAP

  • Enterprise Resource Planning 

    • Quickbooks

    • IQMS

    • Epicor

    • SAP

  • Quality Data Management

    • IQS

    • GageTrak

 

Tools

  • AWS

  • Nextcloud

  • Pipedrive

  • ScannerPro / Scansnap

  • Zoom

  • Solidworks

  • Adobe Acrobat

  • Python / Jupyter Notebook

Other

 
  • ISO 9001:9015
  • AS9100 D
  • Export Controls
  • Six Sigma

Examples

  • Communication - General (Slack)

  • Communication - Process / Kanban (Trello)

  • Communication - Collaboration (Onenote, Quip)

  • Information - Files (Dropbox / Nextcloud)

  • Information - Documentation (Slab / Mediawiki / Jira)

  • Supplier Management (Procurem)

  • Lot Creation

  • Form Examples

Me

From Upstate New York. Worked in finance for 5 years, got an MBA, and now in supply chain for 8 years.

 

I am a systems guy at heart. My roles include Director of Operations, software developer, data scientist, professor, consultant, investor, founder, board member, husband & dad (my favorite).

 

I have lived in New York, Rochester, Rome Italy, Nanjing China, Monterrey Mexico.

My Work

I own and run four supply chain firms focused on:

  1. Supply Chain Services
  2. Supply Chain Software
  3. Supply Chain Analysis

 

I help build supply chains, customers, ml models, operations, companies, expansions, software, markets.

 

My interests and research are currently in:

  • Organization through Human Dev
  • Demand Planning through AI
  • Traceability through Cryptography
  • Strategy through Community

Projects

  • joshuaschultz.com

  • Procurem - SRM

  • Procurem - VMI

  • Open Source Manual

  • Sonar

  • Github - joshuamschultz

  • (soon) Data Science for Supply Chain

  • (soon) Supply Chain Community

Questions