Clients are growing quickly. No matter the industry and company size, clients and colleagues are seeing growth. The only question is how quickly and whether they can keep up. Capacity constraints are popping up everywhere. On the logistics front, Southern California has no available space; the ports are backlogged, prices are rising and 3PLs are maxed out. On the manufacturing front, having enough capacity (machines, people, specific skillsets, technology, supply etc.) is quite the battle and disruptions abound. What are you doing to get in front of this situation?
What Should We Consider and/or What Impacts Could Arise?
If you aren’t already increasing capacity rapidly, do NOT wait any longer! Customers are seeing hefty increases across-the-board. These facts sum up the situation:
- E-commerce and drop ships continue to increase at a rapid pace, and every expert believes it will continue to do so.
- Industries/ business segments that boomed during the pandemic continue at a robust pace – volumes remain high and customers are replenishing inventory levels.
- Customers caught without inventory in the pandemic are more likely to increase safety stock to minimize customer risk. Others are over ordering as an over-reaction.
- Previously depressed business segments in the U.S. are starting to take off as almost all states are starting to open up and vaccinated people gain confidence.
What should you do?
- Bring on excess capacity in critical areas
- Supplement your internal capacity with external capacity to address surges
- Develop relationships and partnerships BEFORE you need the capacity. This requires you start ordering from your partner even when you don’t need the capacity so that your partner will be available when you need to cover surge capacity.
- Check in with your suppliers and alliance partners – are they ready to surge? By 20%? 50%? Where is the limit?
- Do your suppliers and trusted advisors see you as a preferred customer? Would they choose you if they have more options than they can serve?
- Have you preordered critical raw materials?
- Do you have cross-training programs in place?
- Do you need to supplement your teams with external expertise?
- Do you have metrics in place to alert you to changing conditions and trends?
- Are you forecasting demand, planning capacity and aligning the team on changing conditions? If not, think about implementing sales, inventory & operations planning programs (SIOP).
Read more about these types of topics in my eBook, Emerging Above & Beyond: 21 Insights for 2021 from Manufacturing, Supply Chain & Technology Experts. Gain ideas and strategies to scale successfully. If you are interested in gaining an expert assessment and path forward tailored to your company, please contact us.
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