If any element of your business relies on sending or receiving goods, you’re still working through a lot of the problems 2020 dumped on the supply chain. Last year, you had to fight for the few deliveries you received, and when 2021 came around, you probably didn’t have the inventory to keep up with the influx of orders.
For manufacturers, it means lead times 4-5 times longer than we’ve ever prepared for; it means planning based on forecasts that can’t be relied on; it means a complete rethinking of our reputation for “just-in-time” manufacturing. It means reassessing the way we do business. The entire supply chain is stuck in the same boat (maybe literally), so how can those of us who survived 2020 even consider 2022 and the long term?
While the manufacturing and logistics industries adapt for the long term, here are seven best practices to help manage the chaos, prepare for the future and stay focused on customers.
- Don’t sweat the small stuff. Suppliers are going to keep passing the cost on to you. Evaluate each across-the-board price increase as it comes in. What is the annual impact of that hike? Is it worth your time to fight it? If so, discuss it with the supplier to find the point of compromise. Is the percentage increase in line with their cost drivers? Can they extend the start date of the increase? Can you start ordering at a higher price break with all new orders?
- Choose the right communication tool. Sending an email and waiting for a response doesn’t cut it anymore. Even when so much else slowed down, the past 18 months have increased the pace of communication all along the supply chain. With demand picking back up, it’s more important now than ever to stay in touch the right way and that means meeting suppliers where they are.
- Define roles on each project with RACI. There’s an extra level of scrutiny on every move you make with every partner today, and at the same time, there’s more room for confusion between you, your team and your suppliers than ever. A RACI (responsible, accountable, consulted, informed) chart has helped us manage projects and close the loop on to-dos.
A RACI chart (or RACI matrix) is an organizational chart that details various roles on a project, and it’s very easy to create and manage. The Responsible person does the task; the Accountable person escalates when something needs more attention; the Consulted person provides expertise when needed; and the Informed person is told when a decision is made. The benefit of a RACI chart is that it ensures everyone knows the scope of their responsibilities with an action log, assigned dates, and key names associated with each step – which leaves nothing up to assumption.
- Be ready to look for alternatives and back-up options. It’s bound to happen, the supplier falls through for one reason or another. When that happens – not if – work with your team to find another supplier and qualify materials. This is easier said than done, but with the right communication and RACI task orientation, you can turn roadblocks that could halt your supply chain into surmountable speed bumps.
- Be an example of the visibility you want to see in the world. When lead times are already through the roof, the last thing you need is a notification that the shipment you thought was coming on one vessel is now on another vessel with – surprise! – an entirely new delivery date. Nobody in logistics is a stranger to rolled shipments, but it’s more important than ever to demand the greatest amount of visibility from your partners so you can make the right choice for your customers.
The bit of good news is that there are a lot of interesting technologies and tools being tested to get deeper visibility across the supply chain, and we’re keeping our eye on all of them. In the meantime, customers are counting on you to be their eyes and ears when they need a heads up.
- Meet the future of work with digital solutions. The pandemic had a huge effect on where, when and if we do business. Parents stayed home to take care of their kids; boomers are retiring altogether, draining the workforce across the entire supply chain. Meanwhile, adoption of digital technology went from a crawl to a sprint in just a year. The supply chain of tomorrow will still rely on human effort, but today’s digital quoting, order management, project management, automation, and forecasting tools will be vital for meeting the future of work head-on.
- Look outside the U.S. Material shortages tend to ebb and flow in different parts of the world at different times. When it’s available in one region, there might be a shortage in another. Taking advantage of these market aberrations isn’t just smart business anymore – it’s a requirement to keep your supply chain moving. Even if you’re used to dealing in the United States, keep your options open. Instead of taking what’s closest to you, calculate duties, tariffs and freight against your constraints to qualify all your options.
Nobody can say just how long current supply chain challenges will last, but shortages, interruptions and turnover will likely remain part of your everyday life for the foreseeable future. In the meantime, it’s more important to find ways to adapt now so that no matter what’s in store, you have the tools and plan to manage it.Click here to hear more about the disruptions: