From material shortages to altered shipping routes, it’s no secret that manufacturers in every sector are experiencing the pain of the global supply chain chaos. This, along with inflation and soaring prices, is making it harder for businesses to maintain profits. With so much upheaval impacting manufacturers throughout the world, at APIAMS, a machine shop in Portland, we are asking ourselves this important question: How can we meet the challenges of the current supply chain crisis?
The following is an overview on the global supply chain, how we got to where we are, and where we go from here. Read on to learn more.
What, you may ask, is the global supply chain?
In a nutshell, the global supply chain is the network of companies and individuals that are involved in creating a product as well as getting that product into the hands of the consumer.
With the current supply chain crisis, there are a variety of ongoing issues that are making it more difficult to move products along the path from one producer or retailer to another. Like something is blocking the flow of materials down a river. Not only is it taking longer for companies to get the parts they need to produce but it’s also taking longer for retailers to receive finished products. And that results in consumers not seeing items they want or need on store shelves.
How did supply chain issues start?
The current crisis started with the COVID-19 pandemic. In early 2020, manufacturers and shipments were forced to slow down drastically due to workers becoming sick as well as new health and safety precautions. Challenges in 2021 included the Delta variant and reduced access to the vaccine in developing countries. Another issue economists point to is a production method known as lean manufacturing, or just-in-time manufacturing, a system which relies on production facilities obtaining the raw materials only as needed to produce a finished good. This minimizes the number of products stored in warehouses. While it saves money on overhead costs, it’s very susceptible to unexpected shifts in demand.
How can supply chain issues be improved?
- Localize and diversify. An over-reliance on just a few international suppliers has made the global supply chain very susceptible to disruption. To combat this, many companies are looking to build up supply chains with multiple vendors as well as relocate closer to where their customers are. This way sourcing, production, and distribution can all occur in the same region. This minimizes risk of disruption during shipping and reduces carbon emissions.
- Less consolidation. Over the last several decades, the routes through which products and raw material move across the world have consolidated as well. Many international shipping companies have unified. According to data from Alphaliner, the top eight liner companies now control over 80% of global capacity. Another example is overland shipments. In the past, there were dozens of rail companies that handled overland shipments in North America. Now, it’s less than ten. While this can cut down on costs, it leaves shipments vulnerable to disruption.
- More technology. Because labor shortages are still ongoing throughout the world, fully automated and collaborative machinery is now more essential than ever. Businesses should look to invest in a variety of technologies, including cloud computing and artificial intelligence. This is important not only to stay relevant as technology and industries evolve, but also to help businesses recover more quickly from losses due to the pandemic.
- Reduce waste. Inflation, fluctuating material prices, supply shortages, shipping delays –all these factors make it imperative to control costs in all aspects of the manufacturing process. This includes procedures followed on the shop floor, such as equipment maintenance and fluid management. Every reduction in waste, no matter how small, can have a major impact on a business.
When will the supply chain issues end?
While no one knows for sure when the global supply chain will return to any semblance of normal, it’s become crystal clear that the systems put in place before the COVID-19 pandemic aren’t as resilient as we originally thought. On the positive side, while shortages are still widespread, they are temporary. APIAMS is dedicated to meeting the current supply chain challenges – as well as any future ones – by continuing to invest in state-of-the-art equipment to increase capacity, improve productivity, and offer competitive pricing.