What to Know About Virtual Warehousing

While many companies search for insurance plans to protect against future supply chain issues, virtual warehousing is one solution that is gaining increasing popularity.

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With the recent supply chain disruptions, reliable access to parts is critical. This is a challenging task given events such as the record-breaking heat waves in China, massive labor strikes in the U.S. and sky-high shipping costs around the world. While many companies search for insurance plans to protect against future supply chain issues, virtual warehousing is one solution that is gaining increasing popularity.

Getting Started with Virtual Warehousing

Virtual warehousing is the digital documentation and storage of all information needed to produce a part. This data includes digital part files, drawings, qualification requirements, manufacturing notes and instructions. In the event of delivery delays or supply chain hurdles with a primary supplier, a partner can quickly manufacture parts using the information stored in the virtual warehouse, minimizing or eliminating supply downtime.

Companies such as Shell and Porsche have relied on virtual warehousing for years to reduce lead times and meet consumer demand, respectively. The first step in virtual warehousing is to identify the right partner. Currently, the virtual warehousing documentation is specific to the contract manufacturer due to numerous factory-specific nuances, such as machine brands, available tools, and operational routines. Although sharing information across manufacturers might be possible, it is likely that each manufacturer has unique processes and will need to adapt the instructions accordingly.

Which Parts Work Best for Virtual Warehousing?

Not all parts or manufacturing processes benefit from the full potential of virtual warehousing. The amount of realized benefit can be approximated by the amount of digital content that naturally exists for the manufacturing process. Additively manufactured parts are excellent candidates due to the digital and toolless nature of the manufacturing process. Everything necessary to manufacture the part can be stored electronically and accessed on demand.

Similarly, many CNC parts are also good candidates for the virtual warehouse. CAM programming can require a large amount of upfront labor, but once the program is refined, it can be saved in the cloud for future use. Completing CAM programming before a supply chain disruption can reduce on-demand manufacturing lead times by days or weeks.

However, parts that require special tooling or jigs, such as injection molded parts, might not be a good fit for virtual warehousing. Though the instructions and design files for tooling can be stored digitally, these parts observe lower relative benefits from virtual warehousing because the tools either need to be manufactured on demand along with the ordered parts or stored in a physical warehouse. In these cases, it might be advantageous to modify parts specifically for virtual warehousing. For example, additive manufacturing could be used to address temporary shortages of injection molded parts.

3 Advantages of Virtual Warehousing

After identifying a partner and investing in virtual warehousing, it is only a matter of time before you begin to experience its advantages. Here are three benefits you can expect:

1. A Resilient Backup Plan

During a supply chain disruption, the last thing you should worry about is finding a new manufacturing partner. Downtime and delays negatively affect your bottom line and your customers’ experiences.

Virtual warehousing eliminates the need to quickly identify a new supplier, a process that can take several months. Instead, you will have identified a partner manufacturer before their services are needed. This will minimize the amount of downtime your customers experience.

Although virtual warehousing does not necessarily protect against global material shortages, identifying multiple suppliers, manufacturing methods, and materials can help mitigate supply chain risk. In addition, maintaining regular contact with your virtual warehousing partner can ensure a smooth on-demand manufacturing experience.

2. Peace of Mind

Insurance provides people with peace of mind. An investment in virtual warehousing could be marketed toward end customers, explaining to audiences that you have consistent, reliable sources for your products in the event of supply chain disruptions.

On-demand manufacturing can sometimes be more expensive per part, but it is ultimately cheaper than navigating supply chain disruptions without a backup plan in place.

3. Reliable Quality

Additionally, virtual warehousing enables quality, on-demand manufacturing to fill supply chain gaps. Instead of sacrificing quality for speed, populating a virtual warehouse allows you to discover and resolve manufacturing and quality issues in advance. Putting in the work ahead of a supply chain disruption ensures that quality parts can be produced quickly.

Preparing for Future Supply Chain Disruption

Like any insurance plan, virtual warehousing only works if it is initiated before there is an urgent demand. Engage with on-demand manufacturers proactively, and work with them to populate a virtual warehouse that meets your needs. As a result, you will be able to navigate future supply chain disruptions more confidently and reap the benefits of on-demand manufacturing.