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by Janev K. Veettil, Specialist Master, Deloitte Consulting, LLP | Mohan Thiruvadi, Senior Manager, Deloitte Consulting, LLP January 8, 2014
SCM – 

Janev Veettil and Mohan Thiruvadi of Deloitte Consulting LLP explain how to reduce lead time for product prototypes by creating forecasts for only the needed components, without production orders.

Procuring components without building assembly production orders is a common requirement for creating product prototypes. You can meet this demand by creating a forecast for the assembly material and running material requirements planning (MRP). Discover the material master settings to use and walk through a test procedure for verifying the functionality.

In a normal industry scenario for established products, building subassemblies to stock to meet the expected demands of a final product is a norm to reduce the lead time of production. However, in many engineering design scenarios, procuring components in advance is required without building subassemblies and final assemblies. This is because the subassemblies can be built only after a design is finalized. This is applicable for almost any industry that uses engineering builds. A good example is semiconductor motherboards for which assemblies cannot be built until the design configuration is complete, but components need to be procured in advance.

One key area that drives value in the semiconductor domain is the “Design Win” process, which requires coordination with channel partners to manage leads, campaigns, and market design, and to share revenue. Another important task is to enlist contract manufacturers and component suppliers to bring economy of scale to reduce the cost of manufacturing. This requires an extensive collaboration between the upstream and downstream channels of information, inventory availability, and sales data.

A key competitive advantage for this process depends on how fast a prototype can be built for customers. Creation of the prototype, also known as engineering builds, calls for building the prototype as soon as the design is complete. This build is critical for design wins.

Planning without assembly, without make to order is a strategy that is used to procure components on the basis of planned independent requirements and to initiate production of the finished product based only on actual sales orders. This planning strategy ensures that you can react quickly to customer requirements even if the finished product has a long overall lead time. You can avoid the main value-added process until you have a customer order.