Why its important to implement
Prevents costly mistakes - ordering/repairing before approval risks paying for declined work. Production manager must oversee through daily walks and ensure same-day submissions.
Production manager oversight
The production manager should pick this up on his shop floor walk through in the morning or afternoon. All parts needed with photos should then be sent for approval the same day and followed up the next morning.
Pre-approval consequences
If the parts are ordered or damage is repaired before approval and the insurance company or customer declines the claim the business may have paid for parts not needed and perhaps not able to be returned and have carried out labour that will be non chargeable.
Business Impact
Administration cost increases, profit loss from denied approvals and non-returnable parts, cashflow impacts.
Production
Administration cost - time wasted if continued - more staff hired – higher admin cost
Profit
Administration cost - Parts manager time wasted if continued – unable to take care of role
Profit
If any approval is delayed or denied
Profit
If parts cannot be returned cashflow affected
Overall Business Impact
Production and Profit are affected through increased administration costs from time wasted and potentially hiring more staff, parts manager time being diverted from core responsibilities, delays or denials in approvals, and cashflow impacts when parts cannot be returned to suppliers.
action steps
Implement no-order and no-work policies until approval, establish same-day submission rules, enforce with warnings.
Policy Enforcement
Strong internal warnings if policy not followed once established.
Submission Requirements
Make a company rule, that all supplementary must be submitted within the same day.
Authorization Policies
Implement a no order policy until final written approval is given. Implement a no work continuation policy until final written approval is given.
Related tasks
Milestone:
04: Production Management Optimisation