Bracing for OEM Supply Shocks
When manufacturers maintain an in-house stock of parts and components, they often find it a struggle to balance inventory. Overstocking leaves budget tied up in stock, and lean inventory practices leave little room for error. To make matters worse, OEM supply shocks introduce cost, availability, and quality concerns. As economic uncertainty mounts around the world, manufacturers must be wary of impending supply shocks and take steps to avoid the problems they bring.
What is a supply shock?
A “supply shock” refers to an unexpected event and its immediate impact on the supply of a commodity or product. Shocks are often accompanied by an unforeseen price change. Supply shocks can be negative, such as supply falling short of demand, or positive, as when supply outpaces demand. Negative supply shocks cause prices to skyrocket, and positive shocks often result in lower prices.
Negative supply shocks and the manufacturing industry
Manufacturing facilities need a steady supply of OEM parts to keep machines running safely and at optimal efficiency. With an OEM supply shock on the horizon, manufacturers must be proactive and secure OEM parts in a timely manner. Otherwise, they run the risk of downtime or, even worse, costly equipment damage.
Avoiding OEM supply shocks
An OEM supply shock could hit at any moment. Manufacturers should stay agile and proactive to keep equipment running. Follow these quick tips to navigate supply shock challenges and create resilient inventory and maintenance practices:
- Overstock critical and frequently used components. Resist the urge to go lean with inventory practices. Buy more than you think you need to keep critical components on hand in case of a supply shock.
- Order parts well in advance of scheduled service. Follow equipment service schedules and know what parts are needed to stay current with routine maintenance. Order parts in advance of regular maintenance to avoid costly downtime.
- Maintain clear communication with OEM suppliers. Keep an open line of communication with OEM suppliers to stay up to date on inventory levels and get the necessary parts before they run out.
- Diversify supply channels whenever possible. With more supplier relationships in place, your chances of finding the specific parts you need to keep your equipment running improve — even during OEM supply shocks.
- Outsource stock management to maintenance partners. When you outsource equipment maintenance to a trusted partner, you can rest assured the parts you need are always in stock.
Brace for supply shocks in 2023
Uncertainty will persist for manufacturing and supply chains in 2023, reminiscent of 2020 conditions at the height of the pandemic, and supply shocks will only add to the instability. Proactive thinking and a trusted maintenance partner give manufacturers an edge for staving off the consequences of more impending supply problems.