Creating strategies to manage supply chain disruption is part of business – but how do you find the right combination of strategies for your organization? The following strategies help maintain supply, protect margin, and build resiliency:
These success stories are proof that putting the right supply chain strategies into action can produce real results.
A large global manufacturer paid for several major supply chain disruptions in both lost sales and excessive expediting costs. The manufacturer did not have visibility that several of its tier one suppliers were sourcing from the same tier two supplier, which was causing shortages and delays. The company also was not aware of the amount of parts supplied to its key tier one suppliers and the upstream effect a shortage would have on its main operations, both in the U.S. and globally. Customer relationships were strained, volume requirements were missed, and deadlines were delayed.
Our team conducted a proactive assessment of the manufacturer’s larger supply chain to identify and prioritize potential and future issues. A thorough review of its most critical suppliers revealed numerous overlaps and gaps in supplier management practices that subsequently were addressed by the company’s leadership team. Since this process, the company has not experienced a similar supply chain disruption, and it has taken even more steps to proactively mitigate the most critical risks, including the key step of proactively obtaining data.
A multimillion-dollar equipment manufacturer had multiple catastrophic, supplier-driven shortages that greatly impacted sales and resulted in lost production and expediting fees. Much of the supply base was in best-cost countries, was single-sourced, or involved tooling, which added more complexities to an already fraught situation.
To prevent this in the future, our team worked to risk-rate the supply base and implement viability monitoring best practices. First, we mobilized an executive-led team to prepare for a rapid response. We evaluated the supply base to identify and monitor the most critical suppliers and classified 300 of 2,500-plus suppliers as critical and at risk. Following deeper review, we worked with the company to implement sustainable supplier management and related governance structures. For the riskiest suppliers, we also developed detailed supplier contingency plans. Based on this review, the company proactively circumvented multiple supply-based failures every year and built detailed contingency plans for an additional 60-plus suppliers.
This four-step guide can help you manage the current uncertainties and enable proactive decision-making.
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