Increased globalisation stretched supply chains to their furthest extents, and then like a rubber band pulled past its limit, a snap quickly sent everything spiralling out of control. The supply chain pressures preceding that snap continue, and today’s manufacturers and their partners must learn how to adapt to that strain.
Review existing vulnerabilities
It’s time to refresh those SWOT analyses and critically examine your supply chain.
Where are the threats that can’t be seen?
Where does the reliance on specific partners create issues?
What does one own that is not been optimised?
Where does one lack visibility to know if there is a threat?
Most companies had to throw out demand planning and forecasts from 2020 and then again in 2021. That has been frustrating, especially as supply chains continue to shift and the bullwhip effect creates long-standing uncertainty.
Unfortunately, there’s no shortcut here. Perform those same projections and analyses again. Update the understanding and see where the risks are. Then look for short-term and long-term ways to address them. Plans are required so that adaptation can be started and then have a plan for consistency whenever supply chains finally land on what is now “normal.”
Shore up alternatives for raw materials & supplies
Manufacturers have had a mantra of finding alternatives and backups for decades. Today’s conventional wisdom is just asking to expand this coverage. Boost the options whenever it’s possible and share when there are restrictions around items such as batteries.
During the pandemic, supply chains faced major disruptions and shortages. Most still see issues with materials like steel, but there’s also a shortage of heavy-duty cardboard and packaging materials. It’s time to introduce alternatives here or ensure your supplier has more than one source. Pallets are another key consideration because of their use and wear. This requires a steady supply of durable pallets and clear processes for using, returning, and replacing pallets throughout the year. Some supplies have their own complex supply chains, including returns management.
Onshoring and near-shoring almost always make the shortlist when it comes to alternatives. But, there’s some caution here. Those processes can take significant time. Treating this level of change as long-term planning instead of adding it to your quick-fix list for the entire process.
Facilitate bidirectional communication across tiers
The manufacturer should aim to become a trusted tier one supplier so that the manufacturer can address issues and maintain production even when something happens elsewhere in the supply chain. This “trusted” status varies from company to company, but generally, it means that the partners will allow taking proactive and reactive steps to fix a problem or move something forward.
This can be achieved through frequent updates with high-value information. Offering more than just a passing note that production is running and learning what is important to the partners and communicates that regularly, could also be a progressive step towards the supply chain management.
Part of communicating well will set good expectations for the partners. What information does one need to be more effective on? Are customers been asked about the plans to expand or how they fared during COVID? Taking care of the customers and operations by providing and requesting continual communication is the key functionality towards this type of engagement.
Discuss production with assured availability
Supply chain pressures come in the form of products and capital. One way to alleviate pressure is to prioritise production for products and parts that are easy to source or adjust quickly. This is a step beyond the standard selection of a secondary supplier - which can take months to vet, test, run QA, and more.
COVID showed that changes hit fast, and entire supply chains can get swept out to sea. Therefore, one must, reevaluate the production options and even product composition to see where one can be flexible and increase input availability. If the person is on the B2B side and not D2C, then reach out to learn where companies can be flexible with their products or what still might meet service and quality goals.
This prioritisation of availability might mean to minimise one production line in favour of others when sourcing slows. In this case, one may need to outsource components or adjust designs as shortages hit. Analyse and test to determine what is most likely to remain viable as supply chains shift and, often very slowly, return to normal.
Regularly refresh pricing
Keeping with the capital mind-set, manufacturers also have opportunities to adjust pricing based on demand and availability. The contracts and service-level agreements (SLAs) impact the supply chain. Therefore, bring these operations professionals into supply chain management discussions to determine what flexibility can be achieved. Consumers and businesses have seen a wide range of costs rise since 2020, everything from individual products and parts to large jumps in freight rates. There may be opportunities for one to wade directly into the increased market demand and availability to update pricing to encourage sales.
Units one can produce more easily can be paired with a lower per-unit cost or a greater discount for bulk orders. Similar items with more complex supply chains or limited resource availability can have costs raised with clear reasoning. Here, cost refreshing may help you maintain product availability and prevent complete line shutdowns. It’s a tricky gamble but can help maintain customer relationships and protect against labour woes.
Showcase your credentials as an alternative
When thinking about alternatives, manufacturers mustn’t stop at sourcing. In many cases, manufacturers could be the alternative that another company needs. One way to alleviate supply chain pressure is to have a high demand for materials and services. The more a manufacturer produces, the more likely materials providers will prioritise the orders when there is an availability concern. The same scenario can be considered for carriers. Protect oneself by making the case to potential partners and customers. Demonstrate how well he/she are positioned to support their needs and growth. Then, take that information to suppliers and carriers to firm up the upstream supply chain. When a manufacturer makes the customers feel more secure from a revenue standpoint, the manufacturer become a pivotal piece in relieving their supply chain pressure. This strengthens the manufacturer network and helps keep the doors open and the lines running.