“Hey, have you heard about supply chains?”
It wasn’t that long ago that this seemingly innocent question was not part of the mainstream culture and everyday discussions. Supply chain or more specifically shortcomings in our supply chain impacts us all every day in so many ways. Whether it’s my hopeless search for Wildberry Pop Tarts, a replacement for my range cooktop or even the still considerable struggles in the purchase of a new automobile, supply chain issues have become a repeatable and expected part of our everyday acquisition processes.
A Lesson from the Automotive Supply Chain
In the US, automotive shortcomings are the poster child for supply chain issues. It is remarkable how thin the offerings are at dealers whose lots used to be overflowing with new cars. If you don’t like any of the available selections, then a custom order for a particular model or color can be multiple months. At one time the computer chip was the named culprit for all of these issues, and there still may be issues with that component. But let’s be honest. An automobile is a complex assembly with hundreds and hundreds of components and multiple tiers of suppliers. Those silicon chips are not the only long-lead time item in that supply chain.
Even the simplest of products can be challenged with supply chain issues. The manufacturing Bill of Material and routing for a stamping plant could not be simpler. A roll of the desired metal is loaded, the die is set up and the desired parts are stamped and collected. I know of countless stamping plants that have to place orders for rolls of metal six months to a year in advance. That single material is subject to all of the supply chain issues as the silicon chip. There are a limited number of suppliers with finite capacity. Many of these suppliers are in Asia which can make shipping subject to delays and transportation issues. The bulk and weight of rolls of metal actually limit transportation options and expediting tons of metal is just not possible.
A Renewed Focus on Supply Chain Delivery
My peer, Terry Onica, has done incredible work in identifying the critical processes that require attention for optimizing manufacturing supply chains. Terry’s focus is on automotive OEM and tier one suppliers, but the message and the content consistently resonates with the complete range of manufacturers. The presentation has had supply chain leaders from life sciences through industrial and high tech firms nodding their heads in agreement with the concepts.
An insightful e-book is online entitled “Delivering on the Promise of Delivery”. I love the title because it denotes a real change in focus for manufacturing. Manufacturers rightfully have always focused on the “delivery” of a quality product that fits the form and function for their customers. There is a very real transformation that recognizes the criticality of the supply chain and has elevated the importance and focus on the “delivery” of component material and finished goods.
This is actually part one of a two-part series. I feel compelled to warn you that the first portion is automotive through and through. Even though the references to the automotive supply chain may not directly resonate with all manufacturers, the three identified root causes of poor delivery will resonate with every manufacturer.
- Lack of Supply Chain Process Standards – Supply chain-related processes traditionally have been viewed as non-value added activities in manufacturing operations, and therefore tend not to be a focus for standardization and improvement efforts.
- Lack of Supply Chain Competency Tools & Training – A significant competency gap exists across manufacturing related to supply chain issues due to retirements, workforce reductions, as well as diminishing interest among younger generations in pursuing manufacturing / supply chain careers.
- Low Adoption of Automation & Advanced Technologies – The lack of focus on supply chain processes has resulted in efforts to automate supply chain processes that often lead to a patchwork of disconnected systems.
I don’t know of a single manufacturer that would not benefit from pausing and considering their current efforts around these root causes. It would be a rare instance for anyone to grade themselves as fully addressing any or all of these issues. The second part identifies 24 specific supply chain processes that can be evaluated and act as a framework for supply chain initiatives.
Supply chain discussions are here to stay. With any luck and some renewed focus many supply chain issues don’t have to be. QAD helps enterprises to optimize agility and resilience. Does your supply chain have the characteristics of an Adaptive Supply Chain?
