With the worst of the coronavirus pandemic seemingly in the rearview mirror, a shift to growth mode in the industrial sector is welcome news for manufacturers.
But with the boost in business comes a host of challenges, especially for manufacturers with multilayered supply chains. This has left production vulnerable to disruption due to shortages ranging from labor to raw materials.
“Demand is fairly strong and that’s a good problem, but it’s a problem nonetheless when it comes to a company’s ability to flex up,” said Bill Byrkit, principal of Byrkit Point Supply Chain Advisors, a strategic partner of WMEP Manufacturing Solutions. “We’re seeing very robust demand that’s on the heels of this global pandemic that was highly disruptive.”
Manufacturers have been struggling with labor issues, a problem exacerbated by the pandemic. Many companies have been scrambling to find employees to fill open positions. Even if they find solutions to their employment difficulties, many are faced with supply chain disruptions that can cause production shortfalls or shutdowns and, in extreme cases, a temporary or permanent business shutdown.
“In this return, recover and thrive perspective, we are still in recovery mode. We are still trying to recover,” Byrkit said. “It wasn’t like just one particular industry was in a bad place. There was a global pandemic and now there has been a global restart.”
Transportation challenges in the supply chain have been especially troublesome for manufacturers as they rebound.
“Products are getting stranded, and it is adding a lot of lead time to the supply chain,” Byrkit said.
The ability to manage supply chain uncertainty and risk is more critical than ever, Byrkit explained. Increased supplier transparency and collaboration and an ability to pivot are key for manufacturers in managing their supply chains and creating more resiliency.
When analyzing whether your organization’s supply chain can withstand a crisis, it needs to be assessed from not only an operational perspective but from multiple angles – capability, capacity, competency, and transparency.
“In that lens, companies are spending a lot more time connecting with suppliers,” Byrkit said.
He likened the situation to a game of whack-a-mole.
“You’re spending time fixing your suppliers, then you are spending time fixing your labor and then you are spending time with customers because you’ve overcommitted and underdelivered,” he said. “Supply chain right now is still in recovery mode. It will be some time before we get to a steady state.
A “bullwhip” effect is also affecting supply chains, where there are periods of traction followed by a slowdown.
“This continues to happen through the various stages of the supply chain,” Byrkit said.
There’s some urgency to getting supply chain issues sorted out, especially with a busy holiday retail season on the horizon.
“We are now coming into the busiest time for the supply chains, specifically for retailers and global sourcing and emerging market sourcing,” Byrkit said. “All that product needs to be on North America shores and in the stores by the end of October, so it needs to be shipped over the summer.”
This will add even more stress to the supply chain, he said.
The challenges don’t end there.
“Further up the supply chain, we have inflationary factors happening,” Byrkit said. “Basically, all manufacturers and producers are adding costs to their business to support the customer. Whether it’s increased demand or raw materials or expediting orders just to keep the shelves full and keep product flowing to the customer.”
Companies are investing in managing supply chain risk by continuing to identify new sources while, at the same time, investing more into stronger relationships with their existing suppliers, Byrkit said.
“Manufacturers can’t solve these problems alone. They need their supply partners,” he said.
Many companies have begun focusing on sales, inventory and operations (SIOP).
“Knowing that the supply chain is fragmented and fragile, it’s important that companies devise and execute an appropriate plan,” Byrkit said.
Byrkit, through his work with WMEP Manufacturing Solution, is assisting manufacturers with the SIOP process.
“I’m helping companies with risk mitigation and management,” he said. “The other piece has to do with strategic sourcing, where we look at nearshoring, reshoring and alternative sources.”
For more information on WMEP Manufacturing Solutions’ supply chain services, go to www.wmep.org/supply-chain-advisor/