Author: Paul Van Metre
For many shops, UPS, or FedEx overnight shipments are a way of life. Those packages show up virtually every day, or sometimes multiple times per day. In a way, they are a lifesaver, and it’s amazing that you can order something the afternoon before, and have it on your doorstep early the next morning! It’s also a bittersweet pill to swallow every time you need something shipped overnight – you’re grateful it can happen, but it’s painful and expensive at the same time. These are situations where you’re using overnight shipping to get something at the last minute because there wasn’t enough lead time to ship/order it via a non-expedited method. Where you have a machine down because you are missing a special thread gage, or you used up your last drill for a hot job. When you have to ship a box of parts to your anodizer overnight both ways because you got behind schedule and in order to make your customer’s due date, everything has to be expedited. These are situations that happen all day, every day at shops around the world. And it’s a HUGE problem. When overnight shipping is used because the customer is paying for a rush job, that’s no problem at all. It’s the ones at your own expense that we’re concerned about.
I’ve talked with shops who spend only a few hundred dollars per month on these expedited fees, and I’ve talked with shops who spend many thousands of dollars per month on these fees. Those shops believe it’s just the cost of doing business, and a way of life that they can’t avoid. Besides the money itself for overnight shipping, there are many other hidden costs which are far larger than the shipping cost itself. For example, the CNC machine that is sitting idle for 16 hours until the shipment of tools arrives tomorrow. These shipments are symptomatic of a far more serious and insidious problem within your company. They are indicative of a lack of process and proactive planning within your company. Overnight shipments are nearly always a result of something that didn’t go right because of poor process, poor execution, or lack of forethought. And they are almost universally avoidable.
What causes overnight shipments:
There are almost unlimited scenarios that result in these last minute shipments. Here are just a few. How many of these do you recognize in your shop?
- A job doesn’t get programmed until the day before it needs to be on the machine. There is a special tool you don’t have on the shelf which you need the next day.
- An FAI part shows up in the QC lab when you find out that the special thread gage you need is out at calibration, or you never owned one in the first place.
- A setup goes sideways and takes much longer than expected, and that job that is now a couple of days behind schedule. You must overnight a partial or all of the jobs to your OSP vendor and also pay an expedite fee to your vendor to turn the parts around faster.
- In the assembly area, you go to install some helicoils only to realize you don’t have enough.
- You have a tough job that goes through taps fast, and you realize that you just broke your last one, but you still have lots of parts to make. The machine will sit idle until you get more taps.
These scenarios all have different causes. But the one common theme is that it was a lack of being proactive enough, and instead of being reactive to a bad situation. In the same order as above, they could have been solved by:
- Programming the job sooner, or at least looking at the tools needed when the client order was entered.
- Tracking your thread gages and where they’re being used, or if you own them at all.
- Have more complete setup documentation so you can avoid those long setups and scrap in the first place.
- Using MRP early in the process to predict when you need your BOM items and ensuring they show up on time.
- Forecasting the usage of your taps based on the part/material/qty being run on your work order so you can predict the high usage and order more in advance.
When discussing these topics of being more proactive, the most common response I get is “we’re too busy for that”, “it’s just faster to get the job on the floor ASAP”, or “we just like to wing it”. This is coming from the same shops who are always scrambling, fighting fires, and paying exorbitant fees to UPS and FedEx. I promise you that the ROI for being a bit more proactive is HUGE. It takes some foresight and trust in the process, but it’s well worth the time. I’ve never talked with a shop that wasn’t better off after deciding to be more thorough.
How to fix this:
In order to start getting a handle on this, analyze some of the shipments you’ve had recently and use the 5 Why process. This allows you to really get to the root of what caused the issue in the first place. Then come up with as simple (yet thorough) of a system as you can to solve the root cause. You’ll likely find some common reasons that you can solve with the same solution. Basically, every time you run into a situation where you need to expedite a shipment, ask yourself what system could be created to eliminate this problem from happening in the future. After doing this for just a few weeks, you’ll find that you can dramatically reduce the cost of your overnight shipping and that’s all money that goes straight to the bottom line!
How Does ProShop Help?
ProShop has many tools designed to eliminate these issues from happening in the first place. ProShop is essentially a very efficient operating system for a manufacturing company. When the process is followed, a significant number of the root causes of last minute shipments are eliminated. Here are just a few:
- Integrated contract review/planning processes
- Built-In checklists so you don’t forget things
- No paper to lose and forget about
- Cutting Tool Management ensures you never run out of tools
- Inspection gage tracking and calibration
- Much simpler and faster order of materials, etc.
To underscore the importance of these features and the impact it has, we spoke with 3 different clients who all saved more money by reducing their UPS and expedite fees than their entire ProShop annual costs!