MacroFab Blog
What challenges should you be aware of right now that may affect your own US supply chain, and what strategies should you consider to further cut risk?
Recent data released by Statista Supply Chain Index indicates the US manufacturing supply chain is most at risk to supply chain disruptions. Over the last few years, there has been an immense paradigm shift caused by the pandemic and related issues, catching many businesses off guard as sourcing moved swiftly away from old protectionist measures and toward a new model relying on supply chain agility and speed. Key industries relying on electronics manufacturing ramped up demand so quickly that inventories of necessary components like semiconductors have dropped from a 40-day supply down to 5 days, leaving many scrambling to find new and faster ways to increase supply.
What challenges should you be aware of right now that may affect your own supply chain, and what strategies should you consider to further cut risk? Here are some suggestions.
Rising Shipping Costs, Longer Lead Times
Challenge:
Skyrocketing freight costs from Asian locations created issues for American manufacturers. So too have costs associated with longer lead times caused by port delays on both sides of the Pacific. Shipments often wait for space within cargo holds only to wait again upon arrival off the US coast for a place in port. At the beginning of 2022, delivery time from Asian sources stretched to a record high of 113 days.Opportunity:
Forward-thinking companies are now exploring reshoring options to minimize shipping costs and risks. While removing complicated manufacturing jobs from a long-standing Asian partnership can take months, other SKUs relocate faster and with less difficulty. Working with a cloud manufacturing service can expedite the process by providing access to excess factory capacity across your new partner’s network.Retaining and Retraining Workforce
Challenge:
In recent years, supply chains have embraced newer technologies like automation, robotics, and blockchain. Now, shipping resiliency is inextricably linked with manufacturing productivity and technology investment. While the US has invested in industrial robotics, AI, and other Industry 4.0 technologies, workforce training hasn’t kept pace with the demand. Finding enough skilled workers to fill open positions remains a challenge here and across the world.Opportunity:
As countries invest in technology and additional education programs, local companies will enjoy a ready supply of reliable, local labor. This will drive regional economic growth and prove a win for manufacturers through lowered costs, improved outputs, and shorter supply chains that expedite deliveries.
But working with existing North American contract manufacturers with in-place robust teams can provide the same benefits now. Look for a cloud manufacturing service network to provide diversification and reduce risk further.
Balancing Tech Needs With Cash Flow
Checkpoint
Lost opportunity has a cost too. Consider how to accomplish goals with less risk through symbiotic partnerships.
Challenge:
Supply chain restructuring and technology adoption comes at an economic cost. To successfully achieve any of these goals, companies must have access to readily available cash flow. But in unstable economic times like we’ve seen the last few years the risk-averse or cash-strapped may feel such measures remain outside their reach.Opportunity:
However, lost opportunities have a cost, too, sometimes far greater than the cost of action. Rather than looking at the situation as all-or-nothing, consider what can be done at this time. Opportunities through symbiotic partnerships can achieve goals for less monetary output. As an example, cloud manufacturing service companies can help with reshoring efforts and risk reduction through manufacturing diversification, typically for equal or lower end costs than current Asian options.
We remain far from solving existing supply chain issues. The current hurdles are not going away. But failure to respond will do nothing to reduce risk. Consider how diversification and shortening your supply chain can impact your company’s future, especially as disruption continues through this year or longer.
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