The global business and commerce fallout from the coronavirus continues. As news has reported, supply chain for companies large and small are being dramatically disrupted – from toys and Teslas to stranded lobsters and missing wedding dresses. The damaging economic and market impact is also a stunning reminder of China’s worldwide reach.
There’s also the ongoing challenge of unforeseen downtime. A study by Information Technology Intelligence Consulting reported that a single hour of downtime can equate to $100,000 in losses in a manufacturing environment. The study said that this number is likely higher, potentially exceeding $300,000.
Given all of these issues, this might be a good time to look at a supply chain risk contingency plan, or, better yet, consider a major overhaul and reboot.
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Supply chain emergency
Director of MIT’s Center for Transportation and Logistics Yossi Sheffi wrote that hoping for the best while preparing for the worst might not seem like a rigorous business approach to the current coronavirus crisis. But given our lack of knowledge, it is the most prudent strategy for managing risk. Sheffi urged companies to act quickly to minimise short- and long-term impact on their operations. Among a long list of items, he recommends:
- Setting up a central emergency management center
- Planning for operating to maximize cash flow rather than profits in the short term
- Reviewing company’s product portfolio and customer base in order to set priorities
- Reviewing suppliers to figure out who makes critical parts and are there alternate sources
Beyond this short-term strategy if you are considering a supply chain reboot, here are some brief points on how digital manufacturing suppliers can tame supply chain disruption with rapid manufacturing, regional sourcing, on-demand production, and customisation.
Reliable, fast lead times aid supply chains
As Sheffi recommends, acting quickly can help minimise disruptions. Accordingly, turning to a digital manufacturer that can pair manufacturing scales with reliable, fast lead times enables companies to quickly adapt to market demands and unforeseen forces in the supply chain. Indeed, under a fully digitised process, accurate price quotes can be provided in hours, if not instantly, and the manufacturing can be completed often in a matter of days, sometimes even the same day. This speed can make a difference especially when supply chain leaders factor in the total cost of ownership all along the supply chain, from concept to distribution. For example, if your product is sitting on a container ship for three months, that’s all a part of your total cost.
Regional suppliers mitigate risk
Using regional suppliers can be an effective way for companies to not be as blocked by global disruptions, especially if those regional suppliers use regional suppliers. There is an increased number of customers turning to localised and on-demand manufacturing alternatives to off-shoring. Manufacturing locally, or closer to the point of consumption, has been made more economically feasible with the proliferation of digital manufacturing.
On-demand production can tame demand volatility
On-demand manufacturing can help supply chain companies tame demand volatility, gain greater control of inventory cost, and deliver the right products at the right time at the right total cost. Manufacturing on demand helps companies navigate market volatility so that they’re not tied to massive production forecasts. When demand spikes, the business can get parts quickly. On-demand sourcing can also lower overall inventory costs and warehousing expenses because business owners no longer focus on mass producing products with high minimum order quantities. Instead, business owners opt for on-demand production in low volumes, thereby creating a supply chain that is truly driven by customer demand, not by (and dependent on) a supplier’s lead time.
Mass customisation supports supply chains
Finally, another way to tame supply chain disruption is to deploy a mass customisation approach. Today’s market demands are more customised. This low-volume and high-mix ratio of products is not the supply chain of the past where mass production was the normal way of doing business. Indeed, customisation is changing how manufacturing needs to react and on-demand manufacturing has the digital capacity and rapid capability to meet those mass customisation needs.
Read also: Expert Formula to Combat Omnichannel Supply Chain Complexity