Note: This is an ongoing series of posts on new developments within the automobile supply chain, with examples of best practices. In my last three posts, I talked about order aggregation, new inventory replenishment policies and why a network model makes so much sense. Today I want to discuss the all important ASN.
The ASN is the electronic transfer of shipment data from a supplier to a customer. Traditionally the customer plant utilizes the information contained within the ASN in three ways:
- Determine and confirm goods in transit
- Verification against the shipment as product is received
- Generation of an electronic invoice for supplier payment if the supplier is ERS (evaluated receipt settlement) approved.
This way of thinking about the ASN does not maximize the supply opportunity around cost control. Traditional software solutions do not allow for the case where if the trading partners are operating a Min/Max replenishment policy and the Tier 1 wants to prevent early shipments which inflate their inventory positions, they can control the ASN such that they do not allow the Tier 2 to issue the ASN if it is going to violate the Max inventory setting. This transaction is represented by the “procure to pay” cycle. Why try to understand and improve the performance of the “procure to pay cycle” by recombining multiple transactions across multiple systems when we can simply implement a single transaction across multiple trading partners who control the transaction by managing and reacting to state changes within the transaction through a permissions framework?
ASN accuracy is paramount given the importance placed on the integrity of information related to inventory records, supplier schedules, and invoice payments.
These transactional state changes provide trading partners the ability to control a transaction and address exceptions prior to executing a transaction that would have produced a poor outcome given policy violations or changing conditions. Thus at any point in the “procure to pay transaction cycle”, whether it be sending the PO, acknowledging receipt, committing the order, creating the ASN, order pick up, order in transit, order scheduled to factory, order delivery etc., visibility and control is provided across trading partners based on their permissions framework which is based on their trading contracts and easily set up as part of their network subscription.
The ASN must be created upon finalization of the shipment and be received by the customer plant within one hour from the time the shipment leaves the supplier’s shipping location, or prior to its arrival at the manufacturing plant, whichever is earliest.
Given the sensitivity to timeliness, all shifts in a manufacturing plant must be capable of sending the ASN to meet these requirements. Suppliers will be able to confirm customer receipt of the ASN if effective network connections and visibility have been deployed as part of the communication infrastructure. However receipt confirmation is not considered to be a successful transmission if certain information is not included as part of the ASN. Most manufacturers will require that the ASN’s contain accurate and timely information in the following areas: BOL Number (Bill of Lading); Shipment date/time; Gross weight of shipment; Net weight of shipment; Total Bill of Lading quantity (e.g. # of cartons); Standard Carrier Alpha Code (SCAC); Mode code (e.g. “E” for expedite, “A” for air, etc.); Pool point location (if applicable); Trailer number (or air bill if it’s an air shipment); Packing slip number(s); Ship from location (our supplier code or supplier DUNS Code); Ship to location(s) (plant code(s) including dock code(s)) or DUNS Code; Part number; Engineering change level (Part); Quantity shipped; Unit of measure; Purchase order number; Number of cartons shipped of each part; and Quantity per carton.
ASN accuracy is paramount given the importance placed on the integrity of information related to inventory records, supplier schedules, and invoice payments. Timeliness is critical to information accuracy and functionality. Failure to issue ASN’s in a timely fashion will typically result in non-compliance and the potential for a charge-back. Visibility and control related to accuracy and timeliness, along with an exception based framework that corrects issues prior to them becoming problems, is what is required to nail the all-important ASN portion of the order transaction.
If you’d like to know more on this and related subjects, I recommend you read the newAutomotive Inbound Supply Best Practiceswhitepaper. It’s an incredibly comprehensive deep dive of what automotive suppliers are being asked to do, and it provides a clear road map for how they can achieve it. I think you’ll find it enlightening and useful as a practical guide to improving your business.