Keys to Creating an Effective PFEP Strategy
Has your business struggled with part shortages and disruptions over the last two years? You’re not alone; companies nationwide have dealt with issues in sourcing, procurement, and material flow. One of the ways to overcome supply chain hardships and achieve better supply chain visibility is to implement a PFEP strategy. Find out what this is and how it can help inventory control, material handling system, and replenishment of inventory!
What is a PFEP Strategy?
PFEP is an acronym for a strategic approach known as Plan for Every Part. The PFEP strategy, or Plan For Every Part strategy, is a methodology first utilized in lean manufacturing to manage inventory and reduce costs. The idea behind this approach is that every item in your supply chain should have its own unique plan with specific key performance indicators (KPIs) that can be measured against it.
These KPIs ensure that you can track the performance of your inventory items regularly and use those results to improve the effectiveness of your supply chain management system as a whole. This will help you increase profitability and reduce costs by ensuring that you’re using resources efficiently, minimizing waste throughout all stages of production, and reducing delays caused by inaccurate forecasting techniques.
Why Should I Use a PFEP Strategy?
A well-defined PFEP strategy improves the overall efficiency of your supply chain network by reducing costs while increasing capacity utilization. The reduction in costs can happen through better asset management, resource optimization, and inventory management (even finished goods). It also improves on-time delivery, reduces rework/repair rate, increases quality assurance, and reduces operating expenses. All that leads to improved customer satisfaction —which in turn leads to increased revenue generation for your organization.
Components of a PFEP Strategy
The first step in creating your PFEP strategy is to define the problem. Before you even think about solutions, think about what you want to achieve by implementing this plan. What are some specific goals you have in mind?
- Define your supply chain objectives.
- Identify your supply chain KPIs.
- Define your supply chain strategy: Are you looking to improve profitability, increase customer service levels, or reduce risks? What do you want to achieve by improving the efficiency and effectiveness of your supply chain?
- Identify target metrics for each objective that align with the strategies. These may include measures such as time, cost, quality/cost trade-off, and inventory holding costs.
- Decide on a structure for measuring results against targets – this could be KPIs or other metrics. Whatever they’re called, they should form part of an effective PFEP toolkit that guides daily decision-making.
Once these elements have been defined, ensure clarity on who owns what part of managing them so that responsibility is not lost when it comes down to implementing changes.
Collecting Relevant Information
A PFEP strategy is a defined set of processes used to collect and analyze information, make decisions, and manage your supply chain. These processes form the foundation for all of your functional systems. When implemented correctly, they help you achieve cost savings by reducing inventory levels and improving quality control in the production process.
When creating your PFEP strategy, each component requires that you make important decisions about what information to collect and analyze. The following questions should be answered when making these choices:
- What PFEP data do we need?
- How much data is needed (part numbers, storage locations, etc.)?
- What types or formats do we need the information to be in?
- Where do we get this data from (internal/external)?
Align PFEP With Your Business Goals
A PFEP strategy is a plan for every part of the supply chain. It’s about creating a system that is focused on continuous improvement and optimization of the supply chain. A PFEP strategy helps to improve supply chain performance:
- It helps you achieve your goals by ensuring that all parts are working together efficiently. For example, if you want to reduce lead times, then your PFEP strategy will focus on reducing the time it takes to get products from production into customers’ hands.
- It improves visibility across the entire supply chain so everyone can see what they’re doing well and where they need improvement.
A PFEP strategy that is aligned with your business goals can significantly improve your supply chain performance.
Supply Chain Excellence
In order to make the most of your PFEP strategy, enlist the supply chain experts at Real Time Intelligence. Real Time Intelligence will help you to examine your internal and external processes and identify areas for improvement. Contact us today to get started.