How to Be Proactive Instead of Reactive with Your Supply Chain
Human beings are practically wired to misjudge risk. We tend to believe that the worst-case scenario won’t happen: the result of factors like optimism, confirmation bias, and a false sense of control over our lives.
This mindset can make it difficult to adequately prepare for what’s ahead, leading us down the path toward disaster if we aren’t careful. In most situations, it pays to think ahead and anticipate potential problems. That’s certainly the case when we talk about the global supply chain.
If you’ve been a little too optimistic about the state of your manufacturing supply chain, it’s time to be realistic instead. There are ways to prevent a major disruption from halting your manufacturing services, but only if you’re ready and willing to be proactive about supply chain management.
Proactive Supply Chain Management: Where to Begin
When taking steps to protect your supply chain, a good place to start is by gathering all the data and documentation you need for each of your parts and products.
Ideally, you can find this information in the engineering files you’ve created. These files should include a bill of materials (BOM) that labels and identifies each component and detailed, up-to-date drawings.
Inventory tracking is another essential starting point, as it can help you assess the level of concern for each component. Do you have a year’s supply of one critical component and only a month’s supply of another? In that case, the latter component likely requires more immediate attention.
Make a Plan B (And Maybe a Plan C) For Manufacturing Services
Once you’ve compiled your product and inventory data, the next step to proactively managing your supply chain is creating a plan for disruption, which breaks down into a few simple steps:
1. Analyze your risk factors
To determine if a component is at risk, consider how hard it would be to replace. Is it only made in one country or by one supplier? Does it have tightly defined specifications that make it difficult to find a substitution? If you answered yes to one of those questions, the component is at risk. If you answered yes to both of those questions, the risk is even higher.
Other sources of risk may involve outsourced manufacturing problems such as labor law violations and equipment malfunctions or global issues like geopolitical tensions or—as we’ve all experienced in the last couple of years—a pandemic.
2. Imagine the worst-case scenario
Ask yourself what would happen if your at-risk components were unavailable or delayed. What costs would you incur? How would the overall project timeline shift?
This exercise can help you assess how severely a supply chain disruption would impact you and your customers. Remember, you’re planning for the exception, not the rule. You want to be as prepared for the unexpected as possible.
3. Create flexibility
Knowing where your supply chain is at risk and how those risks can manifest enables you to prepare a mitigation strategy and create flexibility in your supply chain.
For example, if your outsourced manufacturing partner couldn’t ship your component, what would need to happen? What components would need to be redesigned to make your alternative solutions viable? The answers to those questions give you a plan B and even a plan C in the event that the worst-case scenario actually occurs.
4. Cover all your bases
These steps give you a playbook to follow in the event of a supply chain disruption, but your supply chain involves other key players, too. While you may not have control over your outsourced manufacturing partners’ levels of preparation, you can start building a mutually beneficial relationship to leverage during a crisis.
Maintaining close ties with the suppliers of your riskiest components will likely make them more responsive and willing to put in the effort to support you during a supply chain disruption.
Misjudging risk is part of human nature, and at Alchemy Industrial, we design manufacturing strategies with humans in mind. We know how to help you overcome supply chain reactivity and turn it into supply chain proactivity. Contact us today to begin mitigating your supply chain risk!