Customer keeps wanting parts early, what to do.

My largest (best?) customer keeps me pretty busy with production work. They are always extremely busy in the summer. Thus we are always super busy in the summer.

Anyway, we run some parts on a blanket PO that is good for the whole year. Others are just sent to me every 6 weeks or so. Lately they have been sending a PO with 4-5 week lead times and then calling and asking for parts 2-3 weeks early. I can understand once or twice getting in a bind, but this is becoming a habit. I'm not going to make parts and put them on the shelf in hopes they will buy them.

The problem is that we waste so much time trying to get them the parts they want right now that it screws up the schedule for the parts that would have been on time. We end up late on some parts because they wanted other part early.

What should I do? Tack on some expediting fee? Tell them to wait? Ride it out until the end of the busy season?

I find it very frustrating. We don't get any kind of compensation to tear down a setup and sneak in some emergency part. Not to mention it just wastes my time.

I'm guessing up to this point you have just laid over, said nothing and done everything you can to make them happy?

Welcome to the world of job shops. I think if it were me, the first thing I'd do is explain to them how that's going to make other parts late. Everyone knows when you have a set schedule, and you slip something in the middle, or at the top, it pushes everything else down. They should be able to understand that. Second, if they still insist, I'd explain to them the extra cost involved in doing this, and that the job was not initially quoted with extra set ups and tear downs, so you will have to charge them extra to cover those costs.

I would recommend contacting the customer and explain the situation. At first, don't make it to be a big issue, but that you are trying to "work level" your facility to prevent added costs that effect both organizations. If done right you are telling them what is going to happen if you don't get assistance. You want to talk lean manufacturing buzzwords here to speak their language (most likely). I'm going to make the assumption that they are mostly repeat jobs...that appear to have sporadic demands otherwise they would set them up on blanket orders that are consistent.

So you should consider approaching your customer about entering into a legal binding agreement that they will purchase reasonable inventory amount at the agreed selling price if parts are not ordered in a reasonable time frame, gone inactive or you lost the contract. Of course you need to define "reasonable".

We would define this in terms of "months of inventory". We agreed that we would always have between 1-2 months of inventory that would be able to ship in 2 days. If they happened to order say 5 months of inventory, we would ship our on hand available and then schedule the part to run to make the balance. It would still get priority on the schedule, however the inventory allowed you to pad the value stream so that product continues to flow to the end user while giving you more scheduling flexibility.

If they are worried about writing a huge p.o. and get burned by you, have them write a p.o. for a quantity that is say 3 months of inventory and you then remind them when it needs renewed or updated. They may even have controls in their system to take care of that for you.

It allows you more flexibility on your scheduling, provides a more consistent value stream to you customer, and reduces their inventory if done properly.

The true problem you are trying to resolve is the end customer is requiring parts faster than the current value stream can produce. Inventory for the time being, has to be instilled somewhere to set the benchmark to further improve the process. Of course, perhaps this is a low lying fruit type problem where someone is sitting on the sending the purchase order for a few weeks eating up your reasonable lead time.

Regardless, I'm sure they would like to hear you want to improve their value stream for their benefit.

Next time they want them three weeks early, politely let them know that due to having an extra tear down/setup and OT the parts will be 1.5X if they want them next week, or X if they want them at the scheduled time. If they're just paper pushers they might not even know that theres setup involved.

Most of the time they don't actually NEED them right now, they just WANT them right now.

The extra cost helps them decide which it is pretty quick.

I'm not going to pursue any "legally binding agreement". I don't have the money or desire to enforce it. I'd either like this behavior to stop or to be compensated for the PITA factor. I just want to know how to approach them.

ewlsey said:

I'm not going to pursue any "legally binding agreement". I don't have the money or desire to enforce it. I'd either like this behavior to stop or to be compensated for the PITA factor. I just want to know how to approach them.

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In that case, I'd just ask them. Tell them how that costs you extra, and put it to them as a question, "Is there any way you can help me re-coup these extra costs"?

Doug said:

Isn't that what we all do for our best customers?

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Yes, I've certainly done the same in the past but there is a breaking point where it becomes ridiculous as can be seen here. At some point you have to stand up for yourself and do what is fair for your shop and fair to the customer. I suppose the fear of laying down the law with a customer is they will simply go elsewhere so there's certainly a delicate balance at play. It really all depends upon the relationship established which is a case by case basis.

If the schedule is full I let them know it'll end up bumping other work, most likely theirs. Usually that's fine.
Sometimes there's extra costs to do it that fast.
Sometimes I say to send it to another shop if they can take it on, I know they all have a dozen other shops they deal with, so long as I got enough for me I don't care.

ewlsey said:

I'm not going to pursue any "legally binding agreement". I don't have the money or desire to enforce it. I'd either like this behavior to stop or to be compensated for the PITA factor. I just want to know how to approach them.

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If you are not interested in any "legally binding agreement", what do you really think a blanket purchase order is?

Should have said that in the first place. Your comment regarding inventory only talked to the issue of being compensated for the inventory not that you are not interested in doing so. Thanks for wasting my time trying to help you.

Call them and talk to them, what I suggested may come up and be prepared to tell them no I guess.

countryboy1966 said:

Should have said that in the first place. Your comment regarding inventory only talked to the issue of being compensated for the inventory not that you are not interested in doing so. Thanks for wasting my time trying to help you. :cheers

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Please. A PO is just a guide that helps me plan. Fighting a PO in court would be a last act of desperation. We're far from that.

Head down and bust ass. If it continues after summer then I'd approach them. I'm in the same situation and decided I need to ride the gravy train while it lasts....

ewlsey said:

My largest (best?) customer keeps me pretty busy with production work. They are always extremely busy in the summer. Thus we are always super busy in the summer.

Anyway, we run some parts on a blanket PO that is good for the whole year. Others are just sent to me every 6 weeks or so. Lately they have been sending a PO with 4-5 week lead times and then calling and asking for parts 2-3 weeks early. I can understand once or twice getting in a bind, but this is becoming a habit. I'm not going to make parts and put them on the shelf in hopes they will buy them.

The problem is that we waste so much time trying to get them the parts they want right now that it screws up the schedule for the parts that would have been on time. We end up late on some parts because they wanted other part early.

What should I do? Tack on some expediting fee? Tell them to wait? Ride it out until the end of the busy season?

I find it very frustrating. We don't get any kind of compensation to tear down a setup and sneak in some emergency part. Not to mention it just wastes my time.

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You are not just a chip-maker. Already proven yourself a Manager of scarce resources, time among those, and an advantage-maker where risk is involved. That's not a guess. I researched it.

Largest and best customer with a blanket PO and a track record of 'more, more, sooner sooner!"

They've signaled all they dare.

Bite the bullet and pre-build for stock next time they are tooled-up and running. Not enough extra to fill ALL of the next order. Just enough to buy time enough the rest are routine, not drop all else intrusive. First go, already buried, you might have to sweat scheduling, contracting, OT, extra shifts WORSE than you have been.

But only once.

Thereafter, you'll both win.

And competing with you just got tougher for the next seeker.

Bill

"Approach" them by giving them the parts they want when they want. Then tack on an EXPEDITING FEE onto the invoice with no other explanation. That will either get their attention and open up discussion, or they will simply pay the fee without
hesitation or questions.

Everybody wins!

dkmc said:

"Approach" them by giving them the parts they want when they want. Then tack on an EXPEDITING FEE onto the invoice with no other explanation. That will either get their attention and open up discussion, or they will simply pay the fee without
hesitation or questions.

Everybody wins!

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Including the alternative supplier they open up with to reduce dependency and keep costs down now, lower-yet going forward.

BTDTGTTS. At THEIR end far more than Wes' end.

'Single variable equations' do not EXIST in the business world. Squeaky hinges are replaced, not oiled.


Bill

dkmc said:

"Approach" them by giving them the parts they want when they want...

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This is your best move--give them whatever they want. But tell them, whenever they ask for a rush job, that you must add X$ for setup change. And work OT staying on your other schedules.

I suppose if you tell them it costs you less to do it to your schedule they may want a cheaper part.....
if your making a saving by the way you do things you may not want to pass on the full saving to them.

So either have some stock ( not the full amount, some breathing space ) or go the disclosure route and risk getting them having a cut of your savings.

The Japanese spread the savings around but they usually are owners in the other companies to some degree, the western ones are seperate owned entities.
They aim for a reduction in the price of items over time. The west aims for price increases.

I certainly would not complain about a order......as long as they pay swiftly as well. deliver early get paid early.

Step back and figure out how to meet it, up production, work longer, add a machine,change feeds,whatever works.

Sounds like your at full capacity in the way you do things currently, do things differently.

My best customer is a extreme version of what you have on your hands they will send orders down then change next day lead times can be in hours not days makes my skin crawl with pressure its unbearable,I have had no luck changing them extra charges they pay still the same carry stock you will always have the wrong or old parts. I have now jumped on the band wagon and just work the over time, but we are making money from all there parts some less than others if we got the right lead time things would be great.

countryboy1966 said:

If you are not interested in any "legally binding agreement", what do you really think a blanket purchase order is?

Should have said that in the first place. Your comment regarding inventory only talked to the issue of being compensated for the inventory not that you are not interested in doing so. Thanks for wasting my time trying to help you.

Call them and talk to them, what I suggested may come up and be prepared to tell them no I guess.

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I don't know in what world a PO is ever a legal binding agreement. I've never yet signed a customer's PO. It is them, binding themselves to a purchase, for me, it is nothing, I can't take a PO to the bank.

I feel your pain, I am usually in the same boat.

If they are a good paying customer, al you can do is grin and bear it. That's just the way it is.

(start bitching about it, as diplomatic as you can be, you'll start seeing your work going elsewhere.)