Supply Chains Disruptions Have Defined 2021 — Time for Solutions
2021 is not even half over, but already we have seen several glaring examples of just how fragile the modern supply chain really is. Irrespective of company size, product, or industry, one or more supply chain disruptions have the potential for disastrous consequences for manufacturers and other businesses.
One example was recently seen with the blockage of the Suez Canal, and another was just experienced in the oil and gas industry in the form of a ransomware attack on Colonial Pipeline Co. The end result was a disruption of oil output that stretched across the U.S. east coast, which immediately led to spiking gas prices and long lines at the pumps. The disruption only lasted a few days and normality resumed in about a week, but only after Colonial paid a nearly $5 million ransom in cryptocurrency to the hackers.
But these are only the large-scale examples. Supply chains have shown a great deal of vulnerability on a smaller scale, too. At various stages of the COVID-19 pandemic, a variety of issues including geopolitical tensions and workplace safety concerns led to shortages in items ranging from toilet paper and hand sanitizer, to advanced medical devices such as respirators, to personal protective equipment (PPE) such as n95 masks and gloves.
Each of these examples had their own unique reasons for becoming a shortage, but the one thing they collectively illustrate is that the only certainty in the supply chain is that there is always some degree of uncertainty. A secure, successful supply not only can be proactive in minimizing supply chain disruptions before they occur, but being reactive when a disruption manages to slip through the cracks.
Key to both of these points for manufacturers is a sound inventory ownership solution which considers how the inventory is acquired, when it is acquired, and how such inventory will be stored. While many OEMs have evolved to use a just-in-time inventory model that necessitates regular inventory purchases and last time buys, this significantly increases the chances of unexpected delays. Instead, it is worth considering a solution that purchases inventory early in the manufacturing process while taking advantage of either onsite facilities or a trusted third party for secure long-term storage.
This is the model for the modern supply chain, and recent disruptions throughout 2021 have only confirmed this. The less dependent the manufacturer needs to be on a supply chain’s ability to deliver, the more secure the business model will be. Inventory on hand will always be preferred over promised inventory — as long as the inventory on hand is properly stored.