MINI CASE STUDY
6 TIPS FOR MITIGATING SUPPLY CHAIN RISK
Prepare for and reduce the risk of supply chain interruptions
Supply chain risk can be fatal to your company. That means that extensive planning for every realistic scenario is essential.
A 2014 study found that 75% of companies surveyed had reported at least one supply chain disruption in the last 12 months. Nearly one in five were no longer in business within 18 months.* While causality is always in question, the point remains that if you can't deliver mission-critical goods to your customers, they'll certainly look elsewhere before long.
Here are 6 tips for mitigating supply chain risk that we routinely follow, as we plan out the supply chain details for the products we build at AMtec. While there's a lot more detail we could hang on this list, and myriad nuances, here's the big picture:
(1) Identify supplier risks, diversify supply, and buy from your country of origin
- Look for risky links in the supply chain where parts are sourced from countries with high geopolitical risk, or transportation complexity and risk. Think about risks that your suppliers are facing, and what they would do if they faced economic turmoil, political situations, or natural disasters, where they are located.
- Price means very little if you can't take delivery. Have a secondary supplier ready to go, or on low-volume purchase agreements that you can ramp quickly if you need to.
- With shipping delays due to COVID, Suez Canal, etc. it may be beneficial to source at least some of your critical items locally. Have local backup vendors, even if pricing is not as good.
(2) Release orders early
- When shipping delays are commonplace don't wait for the MRP signal
- Some of AMtec's best customers have been releasing well in advance -- Smart!
(3) Buy spares, especially for "achilles heel" components
- Make an educated decision based on historical demand.
- Review your product design for "achilles heel" items, and plan for interruptions in supply
- Forecasts are always wrong, don't let that stop you.
- Forecasts don't have to be formal. Talk to your suppliers!
- Some of the best forecasts we receive are in speaking with our customers' Engineers
(5) Be open to alternative raw material
- A rigid design could impact deliveries
- FFF alternatives may be worth considering if only as a one-time deviation
(6) Work with trusted Supply Chain Partners
- While we've had our fair share of COVID-related late material from suppliers, AMtec's OTD to customers has been 100%!
AMtec places extensive emphasis on helping its customers create a robust supply chain design - - especially with the mission-critical products we manufacture for our clients. Talk to us about how you can take your product strategy to the next level.
* Business Continuity Institute and Zurich Insurance Group, 2014 Supply.