Understanding the Value of Gaining GNFR On-Time Delivery Control
Complete transparency in the entire acquisition process is the best way to operate so that companies can readily track errors and spending habits that may be inhibiting profit. But how does this work?
What Is On-Time Delivery and Where Does Visibility Come into Play?
On-Time Delivery (OTD) is a metric in which the supplier delivers the complete order to the right location, at just the right time. An On-Time Delivery Control tool allows for the entire process to be transparent, including supplier to inventory, inventory to end destination (e.g., store); supplier direct to end destination, supplier to 3PL; 3PL to end destination.
You should be able to see what is going on every step of the way, and the On-Time Delivery Control tool provides real-time information to the entire enterprise both internally and externally.
Consequences of Not Achieving On-Time Delivery
On-Time Delivery is the key factor in a GNFR Perfect Delivery. If the products reach their destination on time and in full with complete accuracy to actual demand, the Perfect Delivery has been achieved. If Perfect Delivery has not been achieved, there can be critical consequences to the bottom line, including the following:
- Lost Revenue
There are many ways an On-Time Delivery failure can lead to lost revenue.
For example, consider a company supplying materials for a retail store’s remodeling project. If there is missing material, the remodel will take longer to complete. Each day the remodel is late, the store loses revenue due to the drop in sales because of the remodel. Or, if a late deadline of a critical path occurs, the construction will be even further delayed. This can contribute to even greater lost revenue for delayed new store openings, as the new store won’t begin generating revenue at all until it can be opened.
- Increased Costs
In addition to lost revenue, your company could incur added costs due to a failure in any part of the On-Time Delivery process.
For example, say a retailer decides to update the TV display area. An installation team is sent around the country tearing down and then installing the new display in one night. The materials are shipped to the store but are incomplete. In the evening, the installation team arrives to tear down the old fixtures and install the new fixtures. Halfway through the install, it is discovered that fixtures are missing. The team must tear down the new fixtures and try to reinstall the old fixtures. Next, they must create a list of missing material and communicate with the home office. The install team leaves and must be rescheduled to complete the install. This creates additional time, effort, costs, and delays.
One of these misses could also be a critical path construction issue. They’re going to different locations on a set path, and now they have to return to one destination, putting back the entire chain’s project.
- Errors in Inventory Management
If the entire process is not clearly visible to all parties involved, it could lead to inventory management errors and the need to repurchase goods.
If there is nonexistent or poor visibility, a company could assume that all goods have been delivered in full and are consequently added to their inventory tracking software.
When it is discovered that the order was not actually delivered in full, the need might arise to reorder inventory. Since the item is only discovered missing when it’s needed, it’ll need to be rush ordered. The missing goods may even need to be overnighted (a huge addition in costs) or the entire buildout will be delayed, especially if it’s a critical path.
The Value of GNFR On-Time Delivery Control
As you can see from the pitfalls of not implementing On-Time Delivery Control, there are many advantages to the process.
- It creates a visibility tool to allow the company to take action in real time to ensure goods are where they should be at the right time. This gives companies the ability to identify receipt of GNFR and know what it is for and what department it should be delivered to. It also gives companies the ability to recognize if and when something will be missing, which allows them to make necessary adjustments early in the process.
- It creates an early warning system so that issues are solved immediately instead of escalating into larger, more costly issues than necessary.
- Full visibility of GNFR involves viewing the movement among the suppliers, 3PLs, and buyers in a smooth and efficient manner so that companies can keep track of the entire process effectively.
- Buyers can cut down on unnecessary costs. For example, having to place an expedited reorder when an order is not complete.
- It maximizes efficiency with regard to projects, allowing them to be completed with tighter time frames and allowing more work to be completed in any given fiscal period. Retailers can ensure that new or remodeled locations will be opened at the correct time, not wasting valuable time that could be spent producing revenue.
How to Achieve Visibility with Your GNFR Purchases
In order to achieve visibility, communication and planning are vital. The supply chain in the process needs to be a well-oiled machine, creating the Perfect Order and ensuring Perfect Delivery. Companies must invest in real-time On-Time Delivery Control for their GNFR order fulfillment and put in the necessary time up front to make sure it is implemented smoothly and correctly. Each part of the process is only as effective as its implementation.
Attaining GNFR high On-Time Delivery percentages can make a huge difference in a company’s ability to bring in revenue and cut down on costs. What this means is that not having full GNFR visibility can have a negative impact on these factors. This is why any company needs to make sure their order fulfillment is functioning as efficiently as possible so that everything works correctly and flows smoothly. Greater investments in technology for GNFR Perfect Delivery management is crucial for meeting these goals.
Lumatrak provides a full range of real-time On-Time Delivery Control tools to help 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 numbers 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.