Supply chain problems plagued 2021, and these troubles are predicted to continue in 2022. A mix of coronavirus lockdowns, labor shortages and poor logistics has created the perfect storm for global supply chains. For years leading up to the pandemic, lean manufacturing and just-in-time strategies were implemented to improve production efficiency and reduce inventory. This allowed companies to spend less on warehousing and storage, and invest elsewhere in their businesses.
Unfortunately, these practices have led to inventory shortages and production delays as suppliers struggle to meet demand for required components and materials. This reality has left the world feeling the effects of a major disruption for nearly two years. Many are asking how to solve supply chain problems, but the answer will differ depending on the industry, and will look different for each company.
So, How Can We Solve Supply Chain Problems?
This global supply chain crisis won’t be solved overnight, but companies can and should be taking steps to mitigate these issues. Doing the work now to identify problems and put new strategies into practice will help businesses avoid another pandemic-level disruption.
Homegrown Manufacturing
For decades, American companies have been outsourcing manufacturing to China and other Asian countries that have a cheaper, larger labor force. Even before COVID-19, there was a push to bring manufacturing plants and factories back to America. With the onset of the pandemic, larger organizations are accelerating this process.
Major corporations like GM and Samsung are planning to invest billions to create new plants throughout the United States. In the coming years, companies will be able to source electric vehicle batteries, semiconductors and memory chips from factories only a few states away, instead of having to deal with delivery logistics from offshore companies.
Improved Supply Chain Management
One reason businesses were so unprepared for the supply chain crisis is the lack of supply chain monitoring and risk management. Trusting suppliers to always deliver the right quantity of products on time meant managers were blind to any potential supply chain issues. Improving supplier relations and forming a partnership with suppliers will help companies better understand their supply chains and allow them to prepare for slowdowns.
Recently, smart manufacturing technologies have helped some businesses better manage this constant need to monitor supply chains. Intelligent technologies such as artificial intelligence (AI) and IoT sensors are being used to create the smart supply chain.
Manufacturers who have digitized operations and have a comprehensive virtual view of their processes are able to implement a smart supply chain, allowing them to gain visibility throughout the whole chain. Partnering with these manufacturers gives companies the right information to better anticipate and prepare for supply chain disruptions and keep business going despite them.
Vendor Diversity
Historically, having a limited number of suppliers helped companies negotiate better terms and simplified vendor management. This methodology worked well pre-COVID-19 because there were fewer supply chain issues. However, having only one supplier for a specific component or material is risky now. Any disruption in the supply chain ecosystem can lead to shortages in inventory — especially if a company is relying on just one vendor for materials or parts.
Diversifying suppliers helps combat this. Even if a business uses a primary supplier for 90% of inventory and a secondary supplier for only 10%, having that back-up option allows the company to stay one step ahead of supply chain issues.
To discover new manufacturers or learn more about smart manufacturing technologies, attend the Smart Manufacturing Experience.