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The logistic contract is a commitment linking a customer with its supplier on a quantity to be delivered over a given period of time, specifying the quantity and frequency of each delivery.

Introduction

The function of the ” Logistic contract ” is to decide on a detailed need and to help give customers what they want, whenever they want and in the right quantities.

As a customer/supplier contract, the document engages the teams on the delivery of items defined in the contract. By engaging the company and its client on a monthly need, the logistics contract facilitates the smoothing of production over the month rather than adapting to the day to day variability in its demands and our own variability. This leads to:

  • Logistical teams: To have a level of forecast as reliable as possible and to foresee either to manufacture in advance or to use the stocks.
  • The production teams commit themselves to deliver the products and take into account the hazards related to the output (machine failure, absenteeism,…).

The calculation of the contract

The calculation of the contract data must take into account many parameters to optimize the process as a whole. It does not boil down to making an average of the customer demand over the next month. The calculation as such takes into account:

  • The level of security stock required.
  • The current stock level.
  • Absenteeism statistics.
  • The training and other leave of the employees planned over the given period.
  • The cycle time of our lines and thus the data on our different configurations (5 person if Takt time to 25 sec, 3 people if Takt time to 35 sec…).
  • planned ” stops such as preventive maintenance, testing, validation of new products…
  • The technical possibilities of line configurations and thus determine the line/product/cadence Suitability
  • The real needs of the customers, and therefore, the Takt Time.

The contract exit data

We can organize to minimize waste. This can be done because we can then:

  • Identify the Takt Time of each of our lines.
  • Identify the line openings according to our configurations.
  • Calculate the need for our suppliers and therefore limit our stocks.
  • Validate the numbers per line and the availability of each.
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