Expediting Costs: Expediting(1) is a process of procurement undertaken by businesses when they need to ensure the timely and quality delivery of material. The process involves a business contacting its supplier either for inquiries on the schedule of delivery or for a review of a delivery schedule due to a particular issue.
When it comes to matters of delivery, delays; either resulting from human or non-human factors, will sometimes be unavoidable. Having an effective expediting process(2) goes a long way in minimizing the costs incurred while improving the productivity and accountability of the involved functions.
Although expediting is today viewed as one of the costs of doing business, the acceptable expediting costs are still unclear with some suggesting a benchmark of 2%(3) while others preferring to set the benchmark at 0%(4). While 0% is an unrealistic benchmark, between the two, you’d rather have your expediting costs as close to 0% as possible.
While it is possible to minimize the expediting costs, some of the challenges often faced tend to make it difficult to do this.
A common challenge is determining who is meant to follow up(5) on the supplier. Typically, the person to do this is the buyer, but what happens when there is more than one stakeholder? In such a situation, everyone will be tempted to get involved. The more the people involved, the longer the process the takes. When a supplier is handling different clients and receives expediting requests from these various sources, it is almost impossible to prioritize the requests. This leads to further delays and more frustration for all the parties involved.
On top of such challenges, the lack of timely and accurate information, the absence of a formal expediting process, or the use of different communication mediums are some of the other issues that could lead to higher expediting costs.
Putting in place a policy or a process for handling this situation and having strong supplier relationships are two ways to mitigate a lot of the expediting challenges. However, it comes down to effective and timely communication.
Here is why effective communication is vital for expediting:
1. Having designated personnel to handle all communication streamlines the process
Having a dedicated individual or branch or in some cases, outside party to handle all correspondence during the expediting clears up uncertainties for the supplier in terms of who should give and receive updates on the progress.
Having personnel with clearly defined roles made known to the parties involved ensures more efficient communication and in turn, a more effective expediting process.
2. Establishing formal means of communication makes it possible to have uniform records
Queries, reports, and notifications should be relayed through one uniform and formal means of communication; established at the beginning of the process. This makes it possible to track all correspondence that takes place throughout.
3. Recording expedite requests and response times manages efficiency
Enabling a supplier to track the nature of the expedite response allows them to understand how urgent it is and how soon it is needed. Communicating this information makes it possible for the supplier to prioritize each request and helps ensure that the part is delivered during the requested duration.
4. Regular updates make it possible to share and handle complications as they arise
Communication is a two-way street. Have your supplier provide you with a list of your orders with their corresponding status. For even better communication, having it as a shared document that allows both parties the option of updating it, opens up an additional formal mean of communicating.
Communicating to your supplier(6); the part needed to be expedited, how soon the part is required, and having regular and timely updates notifying you of any further delays not only helps avoid making a bad situation worse but could also lower your expediting costs.
Contact ISS Group for your business solutions today. Our solutions are aimed at streamlining business-partner transactions, improving employee productivity, and reducing process time and costs, among others.
Sources:
1. http://valuestreamguru.com/what-is-expediting/
2. https://www.supplychainbrain.com/blogs/1-think-tank/post/29111-the-importance-of-paying-attention-to-your-expedite-process
3. https://www.lce.com/Expediting-Costs-How-Much-is-Too-Much-1378.html
4. https://www.lce.com/Expediting-Costs-How-Much-is-Too-Much-1378.html
5. http://supplychain-mechanic.com/?p=39
6. http://supplychain-mechanic.com/?p=209
