Part 1 of a 2 Part Series– Automation and the Supply Chain
States are attempting to begin the process of reopening, but the disruptions caused by the Coronavirus pandemic are far reaching with effects stretching far into the future. Issues with supply chains, driven by both consumer demand and operational challenges unfortunately, won’t go away overnight. All businesses are struggling to manage and respond to everything from production delays to supplier issues and outages of stock.
Across the board, long term supply shock effects are likely to be felt for at least the next 18 months or perhaps even more as production delays at impacted sites, material shortages, and issues with logistics are brought to the surface. Latest statistics show that 57% of companies here in the US are experiencing doubled lead times for materials sourced from their tier- 1 suppliers in China. This does not take into account the impact from their “invisible” lower-tier suppliers with whom they do not directly deal. A survey by the Institute for Supply Management says that 75% of companies report supply chain disruptions, and more than 80% have been impacted by COVID-19 disruptions. Further, it states that “for a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled.” In fact, a recent Bloomberg article described this as the worst supply chain crisis outside wartime.
“The world’s supply chains are facing a root-to-branch shutdown unlike any seen in modern peacetime.” – Bloomberg
We know the supply chain is suffering. So, the question is, what can be done to alleviate the stress and strain and get the supply chain operational again? Let’s explore the top scenarios the supply chain is experiencing, as well as ways in which it can be triaged.
1. Stockouts – Shortages of employees, protective gear, logistics, and materials have all led to outages of stock. Assembling a team to reallocate inventory to balance against demand spikes can help resolve stock outages more effectively.
2. Materials shortage – Extreme supplier issues are causing material shortages across the board. It is crucial to build a team to handle incident management and collaboration in which production planners and purchasing analysts are able to redistribute demands by finding and using alternate suppliers. Pricing management is also extremely important, as rising costs of replacement materials is rampant.
3. Shortage of indirect materials – Operating during COVID-19 means that running out of cleaning supplies and personal protective equipment can bring your business to a hard stop. Having a team in place to monitor supply stores and finding alternate sources for the materials ensures that your business can continue to operate.
4. Delays in Production – Production delays can be triggered by multiple issues. Two of the biggest are staffing shortages due to stay at home orders and material shortages. Fortunately, companies are adapting quickly to working and collaborating remotely. Having a team in place to assess materials on hand, make adjustments and organize work shifts is imperative.
Flexibility and communication are key as we begin the process of re-opening. New paths need to be forged to keep our supply chains operational. Today’s digital technologies afford companies the opportunity to manage the complex web of moving parts, enabling them to capitalize and benefit from the changes. Now is the time to get ahead of the curve and catapult your competitive edge.
In Part 2 of Automation and the Supply Chain, we will discuss how the digital technologies of today enable us to manage the complexity of all moving parts more quickly, more affordably, and with less manual labor than ever before.
For more information or to find out how Godlan can help you to increase your competitive edge, give us a call today! 586-464-4400