The current state of supply chains in the global perspective has never been more challenging and eye-opening than in the midst of this current pandemic. People around the world, both in business and their daily lives, have experienced some level of disruption of services they once took for granted. Whether it’s an extended delivery time from an online marketplace for a household item or waiting on supplies needed to keep a business running, challenge is something all of us are facing. Today, quality of goods and services matters more than ever. Every business needs certain things to keep their day to day operations moving, and the last thing anyone wants is unforeseen disruptions or expenses. When it comes to protecting your supply chain, IMO USA boils this down to three tips to protect your supply chain both now and in the future.
1) Diversification of the Supply Base
According to Jason Sfreddo, VP – Business Development and Engineering at IMO USA, diversification is an important consideration for building and maintaining your company’s supply chain. Although it may be tempting to work with a single source in order to achieve a lower “on paper” price point, this often builds significant risk into your business. Downside risk comes in the form of highly expensive costs tied to rapidly finding and approving a new supplier when your single supplier cannot meet the demands of your business, whether in times of crisis or normal production. Most experienced companies have some diversification built into each area of their supply chain, with a majority of companies targeting an eighty – twenty percentage split between their primary and secondary suppliers. Sub-suppliers and other Tier 2 and Tier 3 suppliers should be reviewed as well. Supply chains tend to be much longer and more complex than one might initially think, thus it’s important to know that a supplier and their suppliers have strong diversification in their supply chains as this actually strengthens your own. At IMO USA, we have incorporated these principles ourselves to develop a strong supply chain, so that in times of challenge and crisis we know we can always provide our customers with the highest level of service.
2) Safety Stock – Just-In-Time
Since the 1980s, a significant number of manufacturing companies have implemented a ‘Just-In-Time’ production model (JIT) in order to reduce production time as well as optimize supplier/customer response times. One of the results of this lean manufacturing was severely reduced work-in-process and inventory. The upside is reduced funds tied-up in stock levels as well as storage costs for that stock. Toyota is well known for using this system while other companies implement certain aspects or levels. Unfortunately, most smaller companies don’t have the resources to implement this production method effectively. Additionally, this approach comes with a major risk in that a single hiccup in the supply chain will stop production resulting in costly downtime, delayed or unfilled orders, and potential damage to your customer relationship. At IMO USA, we believe in a balance between idealistic goals and the real world in thoughtful development of the supply chain. This is a key part of helping any business remain strong and prepared for the potential challenges it may face. When choosing an optimal supply chain partner, there are many questions that need to be considered and explored: is annual versus as-need ordering supported, is resource storage help available, warehouse location, assistance with cutting costs without cutting down on quality? This list can be extensive. At IMO USA we work within our customer’s forecast to manufacture and store drives to achieve reduced costs, shorter lead-times, and a strong supply chain. With IMO as a partner, the goals of JIT (or just safety stock) are achievable by warehousing or storing drives at our facility while eliminating risk in the supply chain.
3) Business to Business (B2B) Understanding Support & Communication
A Supplier’s Logistics support capabilities need to be evaluated, understood, and made an extension of any company’s capabilities. Without that support, a strong supply chain is difficult in good times and impossible during a crisis. In the era of globalization, many companies struggle with their overseas suppliers in achieving simple clear lines of communication which is usually due to language, time zone, or cultural barriers. In the market, we hear horror stories from customers about their overseas supplier where a simple order and delivery date confirmation request (normally 1-2 days) turns into a process of weeks of back-and-forth poorly understood email exchanges. Resolving quality, engineering, or delivery issues becomes a Herculean task. At IMO, our Logistics group is located in the US and can provide shipping support/feedback usually within the same day, either by phone or email. Our US Logistics Group has capabilities to arrange the shipment in a variety of options: airfreight, sea freight, domestic, international, least expensive, optional packaging, etc.. In summary, a supplier’s logistics support, while often overlooked in the selection process, is one of the most vital aspects of a robust supply chain.