Business Case
A power equipment manufacturer producing surge arresters and zinc oxide discs through a technical collaboration with an American partner served customers requiring high reliability and strict delivery schedules.
In recent months, the company faced increasing pressure due to delayed order execution and customer complaints related to delivery commitments. Analysis of recent orders revealed that delays in the procurement process for key raw materials were a major contributor to missed delivery schedules.
The goal was to reduce procurement cycle time and improve on-time delivery performance.
Current State Observations
To understand the causes of procurement delays, our team conducted a structured diagnostic with the procurement, manufacturing, and quality teams.
- Procurement lead time averaged around 42 days, significantly affecting the company’s ability to meet customer delivery commitments.
- Vendor negotiations were time-consuming because there was no mutually agreed price formula for key raw materials.
- Vendor manufacturing and incoming inspection activities were sequential, resulting in additional waiting time before materials could be released to production.
Solution Synopsis
- A structured problem-solving exercise was conducted to identify root causes behind procurement delays.
- Reliable market price references were obtained from local traders and used to develop a base price formula for key raw materials.
- Vendors were engaged to introduce parallel manufacturing processes, reducing the vendor production lead time significantly.
- Coordination with the quality team ensured that incoming inspection was completed within one working day of material receipt.
- Long-term actions were defined to maintain price transparency with suppliers and sustain improvements in vendor manufacturing timelines.
Outcomes
Focused problem-solving significantly improved procurement responsiveness and reduced order execution delays.
Before
- Procurement lead time averaged 42 days, delaying manufacturing schedules.
- Vendor negotiations and pricing discussions extended the purchasing cycle.
- Vendor manufacturing and inspection activities were sequential, increasing waiting time.
After
- Procurement lead time reduced by 35%, from 42 days to 27 days.
- Vendor manufacturing lead time reduced through the introduction of parallel production processes.
- Faster inspection turnaround enabled quicker release of materials to production.
