As the pandemic seems to have wound down, many companies looked forward to reduced stress on the global supply chain as manufacturing returned to some semblance of normal. The pandemic had caused many companies to fall farther behind, with problems getting materials or other critical manufacturing inputs on time, or even at all. Workers, including and especially truck drivers were in short supply. There certainly was an expectation that as the number of people stricken with COVID-19 continued to drop, the global supply chain would heal. That has not been the case, and many companies are preparing for conditions to remain bleak well into next year, not just because of the pandemic, but other global issues too.
Global political unrest
A recent survey by SAP SE suggests that nearly 60 percent of the companies surveyed say global political unrest is largely responsible for current supply chain issues, they also cite a lack of raw materials and rising fuel costs as key contributors. It may not be the same reason, but the ways that companies are facing continued pressure on their manufacturing process was the hard lesson taught by the pandemic: To survive, you have to be more prepared.
One of the changes manufacturers instituted during the pandemic was moving their process from Just-In-Time (JIT) inventory control to Just-In-Case (JIC), where parts and materials are stockpiled to hopefully avoid shortages that slow or stop production. In the survey, 64% of companies said they are moving to this model, which means storing more inventory to meet customer demands. While that helps relieve one of the pressures, it was not without repercussions. For example, companies that had previously moved to a lean manufacturing model and found other ways to use inventory storage space, are now challenged with looking for outsourced storage solutions.
In the same survey, a large number of respondents (44%) also saw transportation disruptions, caused by a lack of truck drivers as a continuing issue. The workforce took a hit during the pandemic, from which the recovery is evident, but slower than expected in certain areas including transportation.
Cross Docking is one Solution
The trucking industry is looking for ways to increase the number of truckers on the road, while manufacturers are looking for innovative ways to get their production materials in time and their products to market to meet customer demand. One of those innovations is an increase in the use of cross-docking where a company gathers incoming shipments in one central location and combines those materials and goods into one load heading for their final destination. This has been particularly successful for companies shipping across international borders such as between the U.S. and Canada.
Packaging services is another solution
Both transportation issues and a move to JIT inventory control have also changed the way companies are packaging their parts and products. For some manufacturers, their parts packaging now must take into account more intricate shipping arrangements, and more time being stored before use.
Having a raw materials supplier you can count on is, for small and medium-sized manufacturers, yet another simple solution.
Though many manufacturers are moving to a Just in Case inventory model as referenced in the survey. This requires both more up-front cash for inventory and an investment in space to store the excess material. This is not always possible for small and medium-sized businesses, who still need to balance how they manage inventory, while at the same time managing their cash flow. Having a supplier they can count on for raw materials when they need them, still makes sense to help them meet customer demands while controlling their cost and managing cash flow.
In Summary, while recovery may be on the horizon by the end of 2023, the global economy will continue to be impacted by issues including geo-political unrest, labor shortages and supply challenges. To stay on course and plan for the foreseeable future, businesses can put in place some simple solutions for resiliency to meet customer demand, while managing overall cost and profitability models.
Mayer Alloys Corporation brings together the resources to meet your manufacturing, assembly and supply chain needs. From metal distribution specializing in tin and lead products, to non-ferrous scrap metal recycling, mil-spec and contract and packaging services and supplies, 3PL warehouse, cross docking, and distribution services and electronic recycling. Contact us today to see how we can meet your supply chain needs!