Lean techniques were not enough to solve scheduling for a high variety product mix. A blend of Theory of Constraints and software helped JARP achieve estimated ROI < 400%!
How Much Can a Missed Delivery Cost You?
At its worst, a missed delivery can literally mean the difference between growth and profitability or stagnation and financial decline.
The cost of a missed delivery is usually hard to quantify, especially in the short-term. Other than cases when Sales or Customer Service alerts the company that a customer has threatened to withdraw their business, little or no attention is paid to quantifying the margin contribution of a specific customer’s business based on your delivery performance. However, the long-term financial impact is significant!
This fact is especially true if marketing and sales not only promote quality and price, but also the responsiveness and reliability of your delivery. This market impact can dwarf any short-term savings you can achieve with better synchronization of internal processes.
Inevitably however, modifying internal processes to achieve higher on-time delivery translates into tangible savings. Simply put, releasing orders early to the manufacturing and distribution flow leads to excess inventory and higher work in process (WIP) and finished goods (FG) costs. Releasing orders late to the system jeopardizes on-time delivery, causing unnecessary overtime, expediting and other related costs. Thus, it produces chaos for those in operations and reduces contributions to the company’s overall goal of making more money.
On-time delivery (OTD) and tangible, bottom-line financial results are in fact correlated. Improvements in OTD are always accompanied by a significant Return on Investment (ROI) in the double or triple digit percentage range, unless the selected approach unwisely involves flooding the system with just-in-case inventory at an unaffordable cost.
When our clients commit to an OTD improvement project, they also must justify the expense with a return on investment (ROI) that exceeds the company’s cost of capital. This ROI is at the heart of On-Time Edge’s offering.
Let us demonstrate how we can affect your bottom line and create an offering that will pay for itself, many times over…