By Aner Garmendia (CEO at EGA Group)
This article was originally published on Linkedin on September 4, 2023
The industrial sector, characterized by its intricate supply chains and myriad moving parts, greatly benefits from efficient suppliers. Regrettably, the trend for most manufacturers is to reduce stock levels in order to decrease the funds assigned to working capital. Within this sphere of efficiency, two hallmarks stand out for suppliers: delivering fast and delivering in full.
Such OTIF suppliers are worth their weight in gold, and here’s why:
1. Streamlined Operations
Operations within any industry hinge on the timely receipt of materials and parts. A supplier that delivers quickly ensures that production lines run without hitches, maintaining a consistent output. There's no need to pause, recalibrate, or shut down operations because of waiting on a delivery.
2. Reduced Inventory Costs
When a supplier consistently delivers in full and on time, companies can operate with leaner inventories. There's no need to stockpile excessive amounts of materials or parts as a safeguard against unreliable delivery. This translates to reduced storage costs and, in many cases, reduces capital tied up in unused inventory.
3. Enhanced Trust and Reputation
Reliability fosters trust. When suppliers consistently meet or even exceed expectations, it enhances their reputation within the industry. This reputation can lead to more business opportunities, longer-term contracts, and more favorable terms due to the trust they’ve cultivated.
4. Better Financial Management
Predictability in supply chain management directly impacts financial forecasting. Companies can plan their budgets more accurately, mitigate against financial risks, and optimize their working capital when they're confident about when and how their supplies will be delivered.
5. Increased Flexibility
Speed and completeness of deliveries empower companies with more agility. They can respond better to sudden increases in demand, launch new products quicker, or change production lines more efficiently, knowing that the materials they need are at hand or will arrive promptly.
6. Fewer Supply Chain Disruptions
Every missing or delayed component can set off a ripple effect across the supply chain, causing delays, increased costs, and unsatisfied customers. Fast and complete deliveries reduce the chances of such disruptions, ensuring that all elements of the production process move like a well-oiled machine.
7. Enhanced Customer Satisfaction
At the end of the day, the efficiency of a supply chain directly impacts the end consumer. When products are produced on time and without defect (due in part to reliable part and material deliveries), customers receive their orders on time. This reliability enhances brand reputation and customer loyalty.
8. Less Administrative Strain
Consistent full deliveries mean fewer discrepancies to manage, fewer backorders, and less time spent on communicating or negotiating with suppliers about missed items. This results in smoother administrative processes, allowing staff to focus on more strategic tasks.
9. Reduced Downtime
Every moment a production line stands still due to missing materials or components costs money. Fast, complete deliveries drastically cut down on this downtime, ensuring maximum productivity and profitability.
10. Opportunities for Growth
With a reliable supplier, companies can boldly take on larger contracts or tap into new markets, confident in their ability to fulfill increased demands. This security can be a significant enabler for business expansion and growth.
In Conclusion
Fast and full delivery in the realm of industrial supply isn't merely a "nice to have." It's an absolute game-changer. Suppliers who understand and implement these principles set themselves apart, providing immeasurable value to their clients and significantly contributing to the overall efficiency and success of the industrial sector. If you are an industrial end-user, praise OTIF!