Understanding GNFR Perfect Delivery
Previously, we discussed the GNFR Perfect Order and everything needed to achieve it. GNFR is a complex area in terms of the number of suppliers, number of product/service categories, number of transactions, and number of internal stakeholders. Therefore, it should come as no surprise to learn there are various pieces that must move into alignment to succeed in ordering the right goods at the right time so they’re delivered to the right location when they’re needed.
The same goes for creating the GNFR Perfect Delivery, which is what we would like to cover in the current article.
What Is GNFR Perfect Delivery?
The perfect GNFR purchase order delivery (or Perfect Delivery, for short) is one that is received OTIF (on time, in full) and meets the following specifications:
- Correct item(s)
- Correct time
- Correct condition
- Correct packaging
- Correct quantity
- Correct documentation
- Correct intermediate destination
- Correct final destination
If an order reaches its intermediate and final destinations OTIF and everything is accurate, it can then be said that it has achieved Perfect Delivery status. However, it’s important to note that it’s not solely the responsibility of the supplier to make sure that the order is correct. It’s a multi-step shared process from the buyer to the seller, and in some cases a 3PL, all the way to the goods arriving at the final destination.
First, it begins with the buyer crafting the GNFR Perfect Order.
How GNFR Perfect Order Relates to Perfect Delivery
As discussed in the previous article, the perfect GNFR purchase order (or any order, for that matter) requires accurate demand planning. Demand planning for GFR is based upon sales forecasts that by definition are inaccurate. Typically, a 10% forecast variance is considered acceptable. On the other hand, demand planning for GNFR can be more accurate for many of the major categories.
For example, let’s take a retailer that plans to remodel 200 stores over the next fiscal year. Since demand is set by executive management, the challenge is in creating an accurate bill of material and designing a delivery plan to ensure the project timeline is met.
Without an accurate GNFR demand-planning process, it is difficult to know how much material is needed or when supplies should be ordered to get to the designated location on time. And when an imperfect order is sent or an order is simply failed to be sent out to the suppliers or 3PL, the delivery will be imperfect as well.
Why Is the GNFR Perfect Delivery Important?
If any of the aforementioned specifications (item, time, condition, packaging, quantity, documentation, intermediate or final destination) are off, the buyer must put in additional time and money to rectify the issue.
Further, this can result in missed deadlines creating lost revenue or unnecessary spend.
In the case of lost revenue, consider, for example, a large chain that generates roughly $100K per store each week. If 10 of their new stores open one week late, they will have lost $1M in revenue.
When it comes to unnecessary spend, the dollar-for-dollar impact upon the bottom-line net profit hits much harder than it does for lost revenue. For example, it costs that same large retail chain store about $1M to remodel one of their locations. If the cost overrun is 10%, that is $100K that is directly lost from the bottom-line net profit. This has the same impact on profits as the $1M in lost revenue from delays if that chain operates at a 10% margin.
Ultimately, not having the Perfect Delivery can have a significant impact on a company’s bottom-line net profits.
How to Address Errors in an Incorrect GNFR Purchase Order Delivery
If a company does not receive a Perfect Delivery, it’s important to trace the issue to its source.
When there is a failure in delivery, there are many possible explanations. Below are a few examples:
- The supplier never received the order.
- The supplier did not receive sufficient lead time to deliver the order.
- The supplier failed to have the product ready to ship on time.
- The supplier failed to ship complete on time.
- The supplier shipped to the wrong location.
- The supplier short-shipped replenishment orders to the distribution center.
- The carrier lost the product.
- The carrier damaged the product.
- The 3PL failed to ship on time.
- The 3PL shipped to the wrong location.
- The destination did not accurately receive the product.
- The product was lost or misplaced at the final destination.
- The product was damaged at the destination.
Or, it could be the result of any number of other possible errors.
As is quite evident above, there are multiple risks and potential points of failure. Failures in Perfect Delivery can be very costly unless ameliorated quickly. The key is knowing immediately that a problem exists, what the nature of the problem is, and who can resolve it. Armed with real-time information, direct action can be taken to minimize the impact of the failure and, in many cases, totally eliminate the problem with little or no impact upon Perfect Delivery.
How to Ensure GNFR Perfect Delivery
Demand Planning for GNFR
First and foremost, all parties who have a hand in ordering GNFR need to perform demand planning. Demand planning in this instance is referring to planning exactly which pieces need to be purchased for each project. Demand planning for GNFR is covered in more detail in another post of this series.
This powerful decision-making process can assist GNFR purchasers in determining the right goods to order at the right time, in the correct amounts for all the high-volume categories such as supplies, maintenance, and projects.
Once a good plan is in place, it is all about execution to ensure a Perfect Delivery and real-time insight (visibility) to know when and where failures occur to take corrective action.
GNFR Supply Chain Visibility
As stated above, there are multiple areas where a Perfect Order can crash and burn to cause a not-so-perfect delivery. A tool that is growing in popularity on the GFR side to manage Perfect Delivery in real time is supply chain visibility.
While ERP (enterprise resource planning) and P2P (purchase-to-pay) provide purchase order and payment visibility, GNFR supply chain visibility provides Perfect Delivery visibility. It is critical to know, in real time, the delivery status of a purchase, and it all starts with the supplier receiving the purchase order and does not stop until the purchase order is received at its final destination.
GNFR Perfect Delivery is the tool (and metrics) that locates supply chain failures in real time and alerts the right people so that the failure can be corrected immediately.
Achieving GNFR Perfect Delivery starts with creating the Perfect Order and monitoring, in real time, Perfect Delivery. When those involved in a company’s GNFR purchasing process have the appropriate tools, they can make sure the right goods are ordered at the right time so they arrive OTIF at the intended destination when they need to be there.
However, having the right tools means that companies must start investing more in GNFR demand planning and GNFR visibility management.
Lumatrak provides a full range of real-time OTIF visibility tools to help you better manage supplier and delivery performance from order to the final mile of your indirect goods supply chain. Provided in the cloud through its Software-as-a-Service (SaaS) offering and already connected to vast number of manufacturers and contractors, Lumatrak’s solution can be quickly implemented to complement and enhance any ERP, Strategic Sourcing and Procure-to-Pay systems.
To learn more about how a better GNFR-delivery management solution could save your company both time and money, contact the team at Lumatrak today.