Author：Gilbert Chen
Today, it’s difficult to figure out quantity needs for the next few months. The reason is that more and more corps change their policy from “production by plan” to “production by order’’. We are facing a serious problem for the long lead time parts purchasing as we change the scenario to production by order. I would like to describe the solutions for current difficult situation here:
- Standard L/T for regular orders
We’ll normally set the PCB fab to be the longest L/T for the regular order. Buyers try to get all of the parts no later than that date. Below procedures are the urgent ways to handle material delivery schedules over our expectation.
- To source the parts from other suppliers
Some parts have other’s brand in the AVL (approved vendor list). If the schedule of the first brand couldn’t fit our expectation, we’ll try to source the parts from other suppliers in the AVL.
- To source the parts from spot market
If the schedule of some parts from formal channel could not meet the production schedule, the alternative choice is to source the parts from spot market. Of course, it’s the worst way to get the parts. If we are unlucky sometimes, we’ll get fake parts accidentally and get into big troubles in the production.
- Waiting
Some parts are really difficult to get. When we go through the efforts above, the parts still can’t be found. The only thing that we can do is waiting. It’s unacceptable for everyone. Therefore, I would like to describe some better ways to control the long lead time parts below. When we do more plans about long lead time parts, we’ll also control the quality of products better.
People would do some forecast for the production in advance to ensure enough stocks to sale. Due to the fast changing market, everyone do the forecast more and more conservative. Therefore, rush orders become a normal situation currently. To solve the problem, PSI always does some safety stock for the long lead time parts every month. We can use the safety stock to adjust the quantity of production and prevent the problem of material loss shortage.
- For long lead time parts
According to 4-month historical average quantity, PSI suggests the quantity of safety stock to customer. We consider the requirement of customer and the kind of products , then the safety quantities will be determined. After discussed with each customer, we’ll select the best way and get the agreement for dedicated customer.
- For the regular parts
Material loss and scrapped is usual during the production process. We should have enough safety stocks to secure the on-time delivery of the products. PSI counts the safety inventory by the beginning of every month from the usage of last four months. We have a rule of calculating the quantity to prevent the risk of dead stock and also ensure enough safety stocks for production.
This is the most important way to control the status of long lead time parts. PSI will do the historical analysis every month. And provide the sales forecast information to the customer for approval. Another way is that the customer provides the sales forecast. After the sales forecast is settled, PSI will buy the long lead time parts out of the delivery windows. The customer and PSI will review the forecast monthly and adjust the quantity to prevent the risk of over stocks. See table 1 below for the control chart of firm order and sales forecast.
In the product design, people always use the materials of the same series to increase the bargain power with vendor for dedicated materials. That means we can’t forecast the specific long lead time materials by product, but we can do estimation for the specific long lead time material with better precision. PSI has another control method for this kind of material as table 2. Of course, some criteria are set to judge the monthly quantities in the chart. You are welcome to talk to our sales team and determine the way to handle these kinds of parts.
To win current business game, we need tools and new ways of thinking. People in PSI always open their mind to welcome any requirements. We have many scenarios to face all the requirements from the customers. Running business is risky these days. However, PSI can minimize customer’s risk by wisdom.
Table 2
