Mastering The P-Q-D Equation

Manufacturer’s representatives are familiar with the saying, “I can give you price, quality, and delivery – which two do you want?” In today’s economy customers want all three. Manufacturers are expected to be distributors as well as producers. Competitive advantage is going to companies able to solve the P-Q-D – the Price-Quality-Delivery equation.

The Just-In-Time Window

The major change affecting manufacturers and their profit margins is the increased involvement in delivery and distribution. Today’s customers typically want products delivered to meet current needs; they want orders customized, and they want them now. Companies have moved from a product-centered dynamic to a product/solutions/services dynamic.

Important New Questions

It’s not sufficient to improve in-plant operations, as important as that may be. In today’s fast-changing business environment it is proving essential to take second looks at both front and back end processes. The important questions are these: Are purchasing and procurement relationships being created? Are there alliances in place with strategic suppliers? Are supply procedures in place to cope with economic downturns? How are inventory fulfillment and delivery being managed? Are customers happy with the process?

The Supply Chain Relationship

One of the core competencies manufacturers have to add to their repertoire is a more creative relationship with suppliers.

This means central purchasing, with its network of boundary-spanning activities, is more important to plant profitability than ever. It is now proving vital to manage inventories through close relationships with suppliers and transportation, distribution, and delivery services.

Strategic Sourcing

Suppliers are a vast, often untapped resource. Suppliers help manufacturers cut costs and improve quality by their awareness of newer, more economically priced raw materials. The method of managing all those links – suppliers, customers and others – is the means to leverage several organizations’ expertise and operations.

In-Plant Assembly and Leaner Inventories

Efficient distribution tactics are vital in slashing idle inventory. In manufacturing the goal is to have as little stock inside the four walls as possible. The integrated distribution network is the idea – a scenario where goods enter one side of the plant, are assembled with parts supplied by others and then move right out through the other side.

Order to Delivery/Dock to Door Thinking

To better meet the challenges of price reduction, just-in-time delivery and quality improvements, it is essential to view manufacturing as a holistic process. Dock-to-door efficiencies are tied to continuous flow manufacturing. Does each part of the production line receive its new parts supply just in the nick of time? You have to know which stations and what components are responsible for stoppages, delays, and idle machine or personnel time on the factory floor. When plant procedures flow smoothly, manufacturers have time to ask: How much time do finished materials spend in the warehouse before shipment?

Integrated Distribution

More and more, America’s most successful manufacturing companies see their operations as part of an integrated whole. As manufacturers know, it isn't easy, if their customers are demanding all-new colors or styles or sizes. This is why security of supply and the ability to assemble components right there on the factory floor has become vital for price, quality, and delivery.

A Formula For Success

The goal is to realize value-added benefits. You want to be able to show the combined efforts of the supply chain produce results. Manufacturers are only as good as their P-Q-D, especially when they turn the equation into a formula for success.