The world has all sorts of complications and challenges going on simultaneously. Thus, those with manufacturing capabilities are more resilient and able to take advantage of opportunities when they arise.
The list of complications is long. For example:
- The Russia-Ukraine war is heating up, driving a severe energy shortage in Europe as Russia turned off the gas pipeline.
- The China-Taiwan tensions continue to gain steam with advanced computer chips at the crux of the conflict.
- The baby formula challenges carry on with flights from Europe and Australia supplementing US production.
- Hurricane Ida just destroyed sections of Florida and is eyeing South Carolina. Unbelievably, as insane as the fertilizer story was already, it is further threatened with one of the largest plants in the US in the line of the storm.
- Although the port and rail strikes have been postponed thus far, they haven’t been averted.
- The economy is starting to experience stagflation or simultaneous inflation and recession.
To learn more about these complications and to hear about the latest global challenges and opportunities, refer to our video series, Supply Chain Chats.
The pandemic showed that manufacturing of essential products was more important than the general population realized. After all, toilet paper, hand sanitizer and food items proved extremely hard to find during the early days of the pandemic. The wars and supply chain disruptions that continue to plague the world has proven that the successful will have greater control over their essential products such as healthcare products, pharmaceuticals, food, energy, aerospace and defense, and the like. Control over manufacturing creates resiliency.
How are the Best of the Best Responding?
The best of the best are quietly taking control. If an essential product can simply disappear because of a zero COVID policy, a strike, global tensions, or a hurricane, the situation will become dire very quickly. Thus, the best aren’t waiting for the government to do something; they are acting.
Unfortunately, the “fix” isn’t simple or quick. What can we do to gain control?
- Reshore/ nearshore: Move your manufacturing capabilities closer to your customers in friendly locations with the appropriate levels of talent, energy and infrastructure.
- Reevaluate your partners: Since you are dependent on your partners, you should ensure you are comfortable with that and adjust as needed. Beyond comfort, will your partners take you to the next decade?
- Backup to the backup: As a big believer in having backup plans, we feel strongly about the need for backups. Better yet is having a backup to your backup. In the last few months, I have been happy that I had a backup to my backup as they came in handy. Do you?
- Use of Advanced Technologies: Sitting in a Ford Pinto will not cut it in today’s environment. Get on top of the latest technologies that can support you. Automate, digitize, leverage analytics.
- Strategic inventory & capacity: The pandemic proved that taking just-in-time (JIT) literally wasn’t appropriate. Over-ordering is also not appropriate as you’ll inevitably have the wrong products in the wrong place at the wrong time. Instead, think about having just the “right” products or capacity in the “right” place at the “right” time. Implementing a SIOP (Sales, Inventory and Operations planning) process will be a great place to start.
- Cash is king: If you have the resources to invest when everyone else panics, you will leapfrog the rest. It is the time for smart investments.
Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, download a complimentary copy of our book, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue & EBITDA Growth.