Future-Proofing Your Supply Chain Against Disruption
By James Martinelli, Solutions Engineer, Bright Machines
Originally posted on Bright Machines Blog
With coronavirus threatening to reach pandemic status, we’re all increasingly concerned for our personal health and safety, and that of others. Global businesses, though, have been grappling with the virus’ impact on a much broader scale – the global economy, including their own personal businesses and ultimately their revenue streams. And it’s not just pandemics that threaten business – terrorist events, natural disasters and trade shifts can have equally disruptive effects on business operations and supply chains.
Global issues like these present many challenges for manufacturers, and not just in the context of pandemics. Let’s look at what some of these challenges are:
Supply chain disruption
Concentrating your supply chain within one region comes with great risk, as factory closures can shut down production entirely and result in massive delays. With much of manufacturing concentrated in China, coronavirus is putting a major dent in logistics for many electronics manufacturers that rely on the region for component parts. For those manufacturers who already have distributed production centers, but still rely predominantly on one partner, they’ll still lack resilience should that one partner shut down. It is worth noting that lines in different locations should be created and maintained to provide burst capacity for things like seasonality and region-specific spikes, not only global disruptions like the one we’re currently experiencing.
In an industry where labor pools are already shrinking due to an ageing workforce and general discontent for manual, low-skill labor, global disruptions only exacerbate an ongoing issue for today’s manufacturers. Top of mind for business leaders right now is how to keep factory workers safe. In situations like this, that can mean shutting down production entirely in an affected region due to lack of labor to manage assembly lines. If production is limited to one location, that means all production comes to a complete halt; there are no “back-up” facilities to rely on. If enough manufacturers are affected, this can have disastrous consequences for economies worldwide, as we’re seeing now in the stock market.
One of the major negative consequences of supply chain disruption is of course production delays. Production delays mean interruptions in shipping products, resulting in frustrated consumers. Imagine the backlash if all of the shiny new electronics products planned for a pre-Christmas launch were backordered and unable to be delivered by the big day? In fact, it’s a predicament that some experts predict we’ll experience later this year.
Why manufacturing locally matters now (and beyond)
To protect against potentially disastrous global disruptions, manufacturers must take steps to ensure flexibility and resilience of their manufacturing operations. This means shifting your manufacturing strategy from a globalized to a more localized approach. While globalization has been the industry standard for decades, today it’s becoming increasingly difficult to find labor in low-cost regions to build products; and as our earlier examples demonstrate, the reliance on a single partner is inherently risky. Fortunately, advancements in robotics and automation software have again made it possible to build products locally. For example, one of our customers recently automated the final assembly of a cloud security appliance and moved it to a California-based factory, an ocean-closer to where the product is marketed and used. Localized, distributed lines like that create resilience in a supply chain and prevent against global economic disruptions in the wake of catastrophes.
Let’s consider two scenarios:
- In the first one, imagine you have two different lines set up in two different regions, and a massive earthquake strikes in one factory, subsequently shutting down that operation. Through intelligent software, you can switch production to the other line so that product delays are minimalized.
- Now let’s examine a more topical example: You have one facility in China with another in Mexico and both are shut down due to health issues like coronavirus. A microfactory in the US with a safety stock of components can be quickly configured to pick up the production for a period of time.
In both cases, you’re leveraging multiple manufacturing sites to ensure dual protection in the case of an emergency; labor is a non-issue, products ship on time, and risks to a concerned investor and consumer-base are minimized.
No matter how big or small, possible disruptions can impede your manufacturing operation at any time. In order to ensure a healthy supply chain, one that can seamlessly weather uncertain storms, it’s imperative for today’s manufacturers to incorporate local-first strategies.
For more information on coronavirus’ impact on supply chains, be sure to tune in to our upcoming webinar, “Navigating Disruptions to Your Production in 2020” on Thursday, March 12th. Register today for this free webinar.