One of the biggest recent developments in supply chain management is the desire for increased visibility across the tiers of the supply chain. Aside from pricing, manufacturers traditionally have not had to be concerned with forces upstream or downstream. The manufacturing ecosystem also has closely guarded proprietary information about supplies and partners. But now, firms need to ensure their entire supply chain is reliable, secure and resilient. Transparency is key.

Visibility into the Supply Chain Is Coming

If you have visibility to accurate information on supplier inventory and lead time, you can better identify the supplies where you are at risk of running out of stock.

Changes are coming in supply-chain visibility. The food industry has been at the forefront of this issue as it is under pressure to ensure its supply chain is visible and secure in order to be able to trace and respond to foodborne illness outbreaks. Ultimately, this traceability will benefit all manufacturers.

A number of resources and online marketplaces are being developed to help manufacturers improve their visibility into their supply chain. Many different technologies are under consideration to help address these issues. In fact, the National Institute of Standards and Technology (NIST) recently released a report that looks at how blockchain and related technologies may be able to play a role in improving traceability in the increasingly complex supply chain.

Self Assessments: Knowing Your Current State Can Be a Strength

Before firms can address supply chain issues, they must be aware of current business realities. One surefire way to begin documenting a current state is by identifying risks. That information can then be used to create a business continuity and recovery plan.

There are a growing number of assessments available to help drill down into ways to improve resilience, including:

  • SWOT: In the fast evolving supply chain world, threats may have changed a lot since the last analysis. Can the company still meet turnaround times? But disruptions can also bring opportunities. Are there opportunities from the struggles of key competitors? Are there emerging markets to pursue?
  • Business continuity: This goes beyond disaster preparedness to include scenarios such as a disruption of a key supplier. How might the firm respond? How will this impact cash flow?
  • Current supplier accountability: Establishing scoring mechanisms or key performance indicators (KPIs) for suppliers is key to understanding how well they are working the business or if its time to search for a new partner.

Assessments can help you understand how and where to be proactive versus reactive. For example, categorizing components and materials into categories that require different procurement strategies may lead to establishing more long-term agreements for critical materials. For components where at risk of bottlenecks, multiple suppliers or potentially redesigning how the parts are made should be considered.

Scouting for New or Additional Suppliers

When it comes time to vet and qualify potential suppliers, the material, product, or service is just a starting point. Think about what a potential customer demands before signing on. Is this just a transaction or a relationship? Look into a supplier’s record for:

  • Quality
  • Security
  • Technology
  • Workforce
  • Availability/Deliverability

In real life, firms are often making decisions with incomplete or inconsistent information. Small companies, especially, often don’t have a lot of clout so they often have to take the information they can glean from interactions with prospective suppliers or customers and do the best they can.

Be sure to assess how capabilities fit with your potential suppliers’ capabilities. For example, if one company relies on 3D CAD drawings while the other insists on physical drawings, that could be a sign of different overall approaches and a poor fit.

Embrace the Mindsets of Continuous Improvement and Flexibility

Many smaller manufacturers have been running on tight margins for inventory and lead time. Being flexible could mean going outside purchasing norms to ensure a “safety stock” of a particularly hard-to-source material. All inventory is not created equal.

Likewise, a team or a partner might be able to find a way to do something that costs a little bit less, such as using different materials or changing the order of assembly. The mindset of continuous improvement begins with dialogue and listening. It could include:

  • Engaging the team to review internal aspects and external considerations
  • Meeting customers where they are and what is appropriate in their environment
  • Leveraging relationships because good partners will work together

Supply Chain Risk Management Gives You More Control

Supply chain risk management is a process of putting in time to evaluate, tinker and adjust. Nothing happens overnight. But in the spirit of continuous improvement, small actions can combine to move the needle. 

Source: Industry Week