How to Establish a Reliable Supply Guarantee for High-mix Low-volume Wiring Harnesses?

In general, the terminal products corresponding to high-mix low-volume wiring harnesses are mostly high-value and long-life cycle equipment in medical treatment, industry and other fields. These equipment are generally sold on a project basis. Therefore, there is a large demand for wiring harnesses with high mix and low volume. On the other hand, demand forecasts are inaccurate and fluctuating. These characteristics pose a great challenge to the reliable supply of high-mix low-volume wiring harnesses.

To solve the challenge of reliable supplies of high-mix low-volume wiring harnesses, the effect of unilateral efforts by wire harness manufacturers alone is limited, and both parties in the supply chain need to work together.

For customers, they need to:

1. Carry out common building block (CBB)

The common parts of different products or systems are extracted to establish standardized and universal core modules, which meet the requirements of specific application scenarios of end customers through secondary design or a combination of standard modules. It can not only shorten the development cycle of products and reduce the development cost, but also reduce the number of wiring harness models and the types and specifications of corresponding materials.

2. Carry out material normalization

Based on common block building (CBB), analyze the functional performance requirements of common blocks for equipment, and determine the preferred list and optional list of equipment in combination with the quality, delivery and cost performance of equipment suppliers, to further reduce the types and specifications of materials and ensure the availability and cost efficiency of materials.

3. Pay attention to the inheritance design of products while encouraging innovation

When developing new products, make full use of and learn from the verified design and component modules of existing products, and set rigid indicators to ensure the implementation of the inheritance design. For example, it is strictly required that the hardware reuse rate of new products for old products should exceed 70%, so as to prolong the life cycle of materials and avoid the loss of dead stocks.

Through the above measures, customers can reduce the types and specifications of materials, improve the availability and cost efficiency of materials, and reduce the difficulty in building material supply chains. Extend the life cycle of materials, avoid possible loss of dead stock and reduce stock management challenges.

As a wiring harness supplier, we:

1. Develop a suitable ERP system

There are three modes of planning material demand in common ERP: planning material demand by orders, by forecasts and by safety stocks. The materials for the early-scheduled wiring harness are arranged first in all three modes, based on the sequence of production tasks. The material planning principle and arrangement principle of the ERP system conflict with the supply characteristics of high-mix low-volume wiring harness as follows, so adaptive adjustment is required:

• Terminal equipment is usually sold on a project basis, and customers’ sales forecasts are often inaccurate. In addition, due to the short delivery cycle, the delivery time left by customers is very short, which can even not cover the delivery time of many materials. Therefore, material demand cannot be planned according to orders. In addition, the sales forecast is not accurate, and material demand cannot be planned with a single factor of sales forecast. For this purpose, we combine sales forecasts with safety stock to plan material requirements.

1.2.      The project-based sales of terminal products also bring about a problem: the demand for wiring harnesses fluctuates greatly, and customers often insert orders urgently. If the materials are arranged according to the sequence of production tasks, the materials originally arranged for the order with the replied delivery date will be occupied by the orders inserted urgently, resulting in the invalidation of the delivery commitment to customers. For this reason, we added the function of “locking materials” for replied delivery orders when planning the ERP system. Of course, this does not mean that we do not cooperate with customers’ temporary order insertion. The main purpose is to find out the material shortage caused by urgent order insertion in time so as to solve the material shortage through extra efforts without affecting the fulfillment of normal orders.

2. Maintain flexible material supply

First of all, we need to regularly review the quality, delivery and cost performance of materials, identify existing problems and risks, formulate a “procurement strategy”, optimize the supply chain according to the “procurement strategy”, iterate continuously, precipitate suppliers who understand and support high-mix low-volume business, and establish and maintain good and stable cooperative relations with them.

Secondly, we need to monitor the delivery risk of long-term materials, set a relatively extensive safety stock for long-term materials with delivery risks, and develop effective “risk procurement” procedures for emergency response, so that “risk procurement” can be controlled, which will not go out of control as “crazy procurement”.

Thirdly, we should treat material stock correctly. We cannot simply equate stock with waste, and only the part exceeding the necessary inventory is waste. If a certain amount of stock is required to serve customers well under the given business model, then this stock is necessary and not wasted.

Finally, given the long material life of wiring harnesses for high-value and long-life cycle equipment, there is a basis for spot sales. We need to carry out spot sales business for long-term delivery materials, pursue stock appreciation, and create conditions for setting extensive safety stock for long-term delivery materials.

3. Establish an agile and high-quality production system

Design the unit production line according to the idea of lean production, monitor and manage the variation of “man, machine, material, and environment” and other elements in the process of product realization through appropriate measurement methods, pursue balance by relying on “mutual adjustment” within the lean group and “direct command” by the group leader, and establish an agile and high-quality production system through collective performance evaluation and guidance for the lean group. (For details, please refer to “How to Effectively Organize the Production Process of High-mix Low-volume Wiring Harnesses” and “Quality Control of High-mix Low-volume Wiring Harnesses”.)

4. Maintain close interaction with customers

We are fully aware of the difficulty in ensuring a reliable supply of high-mix low-volume wiring harnesses. The problem cannot be solved by ourselves, so we must rely on the help of customers. Therefore, we have closely interacted with customers and actively assisted them in the normalization of wiring harness materials, and optimized and built supply chains according to their normalization results. We also actively understand the changes in customers’ demand for wiring harnesses and adjust material and capacity planning.

Through the comprehensive implementation of the above measures, we have better solved the supply guarantee of high-mix low-volume wiring harnesses, provided customers with JIT delivery experience comparable to or even surpassing mass procurement, helped customers improve stock turnover rate, reduced stock space and reduced capital occupation in stock.

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