The past 15 months have presented manufacturers with an unprecedented series of challenges. These challenges exposed companies’ supply chain weaknesses like never before.
According to a study by Capgemini Research Institute, more than 80% of organizations’ supply chains were negatively impacted by the COVID-19 pandemic. Especially vulnerable were organizations with very lean inventory, just-in-time or supply-on-demand systems.
And the pandemic-related challenges aren’t over yet: Companies worldwide expect supply-chain constraints resulting from raw materials shortages and logistics backlogs to continue throughout this year.
Semiconductor shortages and copper prices are dominating the news, but supply chain challenges are much more complex. Manufacturers are experiencing restricted manufacturing capacity, component shortages, rising raw material costs, transportation delays, and limited labor availability.
In many ways, 2021 presents even more challenges to manufacturing than 2020 did. Supply chain challenges persist, while we are seeing a significant increase in consumer demand. To withstand this demanding market and ensure production stability, it’s vital to upgrade your supply chain.
Here are the 5 important trends we’re seeing and managing with our customers here at Macrotech:
The past year has accelerated the adoption of strategies that support how well a supply chain responds to uncertainties by quickly adjusting operations. Ideally, a supply chain should be flexible enough to absorb the shock of unforeseen events, from natural disasters to unpredicted swings in demand.
Our customers are streamlining operations to ensure the right inventory is available at the right time. At times, this means helping them quickly pivot production to a different factory or country. In less extreme circumstances, it means implementing practices like warehouse automation to improve operational efficiency by giving them real-time inventory tracking and better inventory management.
2. Risk Management
Supply chains have traditionally been driven by the cost of procurement and production. But now, the importance of mitigating risk is on par with profitability. The right suppliers will give a company a competitive edge, while poor choices can lead to unmet orders and a serious threat to an organization’s bottom line.
Outsourcing with Macrotech can help mitigate your risk. We put our extensive supply chain to work for you, using our expertise to ensure you have the right factories by your side.
3. Supplier Relationships
Over the last year, organizations have become acutely aware of blind spots in their supply chain. Manufacturers are insisting on more visibility across the entire chain, and becoming partners with their suppliers gives them greater visibility in their production schedules.
Partnering with your suppliers to develop mutually beneficial relationships over the long-term is an important way to lessen your risk and develop a more robust supply chain. Macrotech manages these relationships for our customers.
We are also taking a hard look at re-shoring at least some production for our customers, and sourcing more materials domestically. The trend toward re-shoring was beginning to gain traction before the pandemic hit, but is now gathering even more momentum as companies seek ways to stabilize production and avoid future disruptions.
The cost of domestic manufacturing may be higher, but the ability to reduce lead times and meet delivery targets can offset those cost variances and is key to avoiding a repeat of the inventory disruptions we have seen over the past year.
5. Raw Material Inventory
Our customers are now realizing the benefits of holding more inventory, particularly raw materials. We handle this on their behalf through an assortment of stocking programs suited for each customer. The severe raw materials shortages we have been seeing are causing significant price increases across the industry. This will hopefully level off by year’s end, but in the meantime our customers have reaped the benefit of Macrotech’s collective buying power and inventory stocking support.
Upgrade Your Supply Chain With Macrotech
Macrotech’s purchasing clout and financing options are hugely beneficial to our customers, especially during this challenging period. Schedule a call with us to learn more about how working with Macrotech can benefit your supply chain and your organization as a whole.