What to do When Major Suppliers Come Up Short
In August 2021, Toyota cut production by 40% because of parts shortages — and they’re not the only automaker to do so. Ford and GM have also scaled back, and Volkswagen is likely to follow. It’s a persisting pandemic-related problem. Lack of parts — namely semiconductor chips — threatens to put a major dent in one of the largest manufacturing sectors. It has producers in other industries asking, “How can I stop this from happening to me?”
It’s likely already happening. Supply chains continue to suffer, and seems it’s up to manufacturers to adapt to the disruption. Here’s a look at four avenues for restabilizing, restocking, and restarting production when major suppliers come up short.
Lean on ancillary suppliers
While one primary supplier may have been enough in past years, it’s crucial for manufacturers to have multiple at-scale suppliers today. While multiple suppliers add complexity to the value stream, it’s better than unanticipated shutdowns due to lack of accessible parts.
Multiple suppliers also provide manufacturers with additional flexibility. According to Harry Hough, President and CEO of the American Purchasing Society, “Multiple sources are necessary when one supplier does not have the capacity to furnish the total requirements of the buying organization.” The situation is increasingly prevalent.
In this day and age, when relying on one supplier can leave a manufacturer empty-handed and unable to meet production demands, relying on ancillary suppliers helps manufacturers lower the risk of losing out on critical supplies.
Adjust workflows and follow JIT
As supplies remain limited, manufacturers must make the most of what they’ve got. One of the best ways to maximize resources is to follow a just-in-time (JIT) manufacturing schedule. With a JIT schedule, production supervisors focus on finishing already-placed orders and avoid creating a surplus that may sit idle. This is especially important in manufacturing facilities offering customization options.
Adjusting workflows is another simple way to minimize the effects of supplier shortages. There are many ways to adjust workflows for increased productivity. Often, it’s as simple as prioritizing the most important orders and/or using current supplies to fill as many orders as possible. Managing resource scarcity requires smarter use of the materials on-hand.
Network with other producers
It never hurts to be part of a network of local manufacturers. If they aren’t direct competitors, they may be willing to sell surplus supplies. And while they may sell supplies at a higher cost, it’s usually better than waiting for supply chains to catch up. Buying from other local producers also helps form a bond that can lead to future synergies — especially if they ever come to you in need.
Explore new supply chains
Many manufacturers avoid establishing new supply chains because it is complicated and time-consuming. Requesting bids, making new connections, establishing terms, creating processes — it’s all costly and protracted — and worth it for added stability. Some supply chains show no signs of improving any time soon, meaning many manufacturers may be dealing with material shortages far into the future. Forming relationships with more suppliers increases the chances of reliable material delivery and helps avoid production and delivery delays.
Don’t do nothing!
Too many manufacturers are jaded by the ongoing effects of the pandemic. They’re waiting for supply chains to work themselves out and for materials to flow readily into their factories again. And while this might happen for some, the reality for many manufacturers is problems likely to persist far into the future. Supplier deliveries may improve, but doing nothing puts manufacturers at the mercy of circumstance. Taking action now ensures more control over supply chains — and the certainty that comes with solid contingency plans.