Bold Group
The backlog lived in procurement’s buying rule.
A manufacturer with a growing order backlog. The backlog looked like a production problem, and the plan on the table was a bigger warehouse.
The situation
Production was waiting for material, so everyone looked at production. The material was waiting for space.
Buyers were measured on lowest unit price, so they ordered in the supplier’s lot sizes to earn volume discounts: more than the current production plan needed. The material would be used in time, but the leftover of each lot took up warehouse space. New material could not be received, and production waited for it.
The turn
The pain showed in production. The rule sat in procurement.
A growing backlog is a production problem, and a full warehouse needs more space.
Where does a backlogged order actually spend its days, from purchase to delivery, and which rule puts it there?
The decision: change how procurement is managed, so the space problem goes with it, rather than build more space for the leftover lots.
Before
- Order intake · 1 d
- Planning · 2 d
- Procurement · 3 dbuys discount lots, beyond the plan
- Warehouse · 3 dfull: no space to receive
- Production · 12 dwaiting for material
- Delivery · 2 d
Everyone looked at production. The cause sat two steps earlier. Day counts are illustrative.
Proposed
- Procurementlots sized to the production plan
- Warehouse rent charged to procurementin the buyers’ KPI, beside lowest price · validated with procurement and finance
- New ratio: price plus storage, per unit usedvalidated with finance
- Material received, production runs
Buyers see when a cheaper lot costs more to hold.
Schematic, not to scale.
How we worked it
How the order was traced.
- 01
Map the order end to end
Follow a backlogged order from intake through planning, procurement, warehouse, production and delivery, and split each step into working time and waiting time.
- 02
Find the rule behind the wait
Production was waiting for material, the material was waiting for warehouse space, and the space was full of leftover discount lots. The rule was the buyers’ lowest-price KPI.
- 03
Rank the changes, and validate them
Rank the points of change by impact, and test each with the people who would own it.
Mapped the order from purchase to delivery, found the rule behind the wait, and ranked the changes worth making.
Owns the procurement KPI, the new ratio and the decision to adopt them. Its CEO took the decision on the warehouse expansion.
What came of it
Two changes, ranked by impact: allocate warehouse rental cost to procurement and add it to the buyers’ KPI beside lowest price, and track a new ratio of purchase price plus storage cost per unit actually used. On receiving the report, the CEO cancelled the warehouse expansion that management had requested.
What is known is the CEO’s decision on the expansion. We do not claim a measured change in backlog, lead time or inventory. Figures in the published extract are illustrative.
How we label evidenceIs this your situation?
Signs
- The pain shows in one function, but the work waits because of a rule in another.
- People are measured on a number, such as unit price, that does not carry the cost it creates elsewhere.
- A large investment is on the table to make room for the problem.
Start here
Bring the result you need, and the thing you have been told cannot change.
One hour with a founder. You leave with a first view of where the answer may sit, and which engagement, if any, fits.
Teerasak WongpiyaCo-Founder and Managing Director
60 minutes, in Thai or English, online or at your office.