Navigating the Supply Chain Crisis

In light of your experience, what are the major pain points that your clients are facing in the manufacturing technology space, and how is your company taking steps to resolve these issues?

The conflict in Ukraine and the power crisis in Europe are currently affecting the global markets, disrupting the whole supply chain, including material production and logistics, from Asia to Europe and the US. For a majority of original equipment manufacturer (OEM) customers, planning became incredibly difficult. Since everything they produce comprises hundreds or thousands of pieces, missing any piece prevents them from selling or shipping their products. As a result, most manufacturing OEMs have crowded backyards filled with unfinished goods, and the current challenge became synchronizing all the suppliers providing the parts for your vehicles, tanks, and machinery.

Electronic data exchange (EDI), or any collaborative planning tool that allows you the flexibility and reliability to acquire the information required, is the answer to this problem. With accurate and timely EDI, they can see what components are available, say two days from when they check, and if they can physically access your inventory and warehouse. Once this is done, they can at the least create an assembly schedule and have a rough notion of what has been decided upon, invoiced, and how cash flow will be supported.

To summarize, obtaining all the goods on time has become very challenging. Almost every client can only estimate when they will receive their components or products because of supply chain disruptions, the crises we are currently experiencing, political conflicts, power-related challenges, semiconductor shortages, and more. To provide for the consumer when needed, the task is to arrange production and procurement as efficiently as possible. We must be incredibly flexible throughout the whole supply chain, from material suppliers to logistical partners, even though it could be more predictable. Naturally, internal production must also be highly effective and deliver products based on the spiking consumer demands. It all comes down to timing your output with your clients' needs. This is accomplished through the Internet of Things, collaborative pipeline, or another moniker for this information flow.

As the supply chain director at the PPS group, how do you envision the future of the production and supply chain management space?

I'm not sure when the future begins, if it does so tomorrow or if it has already begun, but I do know that after all these battles and crises, we will need some time to heal our wounds, and the future will undoubtedly be influenced in some way by the present. Preventing the transportation and logistical difficulties we are currently experiencing will be crucial. The ability to make quick decisions and changes to your production and provide all necessary support to your customers will cut across the entire supply chain from OEM or the final customer to raw material production and depend heavily on online information sharing and EDI in the future.

Everyone knows its shortcomings, yet I cannot see any other alternatives. 

Either you have a second source so that you don't rely solely on sources in the far east, such as China, Korea, or any other country in Asia, or you have a local warehouse, let's say one in Europe, where you can obtain what you need for at least a few weeks.

To avoid material shortages brought on by natural disasters like the typhoon that hit Korea in September, it will be necessary to spread out local inventories, allowing you an additional three to four weeks for the material you bought. The globalization of supplies or inventories will be one of the trends, and online information sharing, whether EDI or any other kind of organized information sharing, will be pivotal in achieving desired outcomes.

Is there any particular project initiative you have been working on at your company, and how is it making a difference in the supply chain business?

We have several projects, but I'd probably discuss two. The base stabilization of our material sources comes first. Typically, we work with a wide variety of providers. As a result of the conflict in Ukraine and the market disruption we experienced in March and April, we have stabilized contact with fewer suppliers while communicating more frequently. This has allowed us to have better and more stable planning, say, six weeks to six months ahead. Instead of taking, say, four to six weeks, everyone is now generating something to maintain extremely close contact and information exchange with our suppliers, as well as a very skillful and cautious blending of their talents.

“The globalization of supplies or inventories will be one of the trends, and online information sharing, whether EDI or any other kind of organized information sharing, will be pivotal in achieving desired outcomes”

Even if there is an overlap in custom supplies, we made wise choices when choosing a portion of those suppliers, allowing us to lower the size of our warehouse facilities and be confident in their ability to supply and plan logistics.

On the other hand, because they are confident in their ability to sell a specific volume, it is a win-win situation. To be able to bargain based on quantities, you must undoubtedly have some competitive advantages. We have fewer suppliers thanks to our supply chain's redesign or reconstruction, but it is more flexible and predictable than before, with more stable prices and loyalty.

That particular project is now complete, and the results are becoming apparent. We have much more production flexibility due to the improved material availability, and we don't have any missing parts, which is crucial for us. On the other hand, our suppliers are content and steadfast since they are aware that we buy regularly, in regular quantities, and at win-win pricing every month.

The second project we're beginning now concentrates more on our internal planning. I'm referring to the process audit to identify bottlenecks and standardize material flow operations. Although it is not a very novel idea and is a pretty popular tool in the automotive industry, it will significantly increase our production and inventory efficiency, and we anticipate larger volume availability. We want to reduce industrial waste and avoid overproduction by emphasizing our internal efficacy. By doing this, we'll be able to deliver more to the clients while using the same number of employees and machines.

The output will be greater even though the research will likely remain the same or undergo minor changes. Again, the supply chain will benefit significantly from this since, internally, the material will be moved more effectively and predictably.

In the industrial setting, you may either use a push or pull system. We must take these factors into account as well, but for us, whether we push or pull, the goal is to produce with very high production efficacy. Since it focuses more on production efficacy than the supply chain as a whole, it presumably has less of a direct relationship with it. But it gives us better control over internal material flow, which is the supply chain. It improves the customer's access to online information regarding the product's availability.

Before we wrap up, would you like to share a piece of advice from your experience with other senior leaders and CXOs working in the space so that they can extract the full potential of supply chain analytics and can improve in this case?

There are many great concepts all around us. What works for me is having your ears and eyes wide open. It's OK if you're conservative, but you don't make as much progress that way. We live in a busy and dynamic period; things change practically every month. Globally, your circumstance varies based on where you are located. Avoid being overly cautious, and don't be afraid to take a few inventive or daring steps. Although you may exercise extreme caution, there isn't much that can be altered because everything has already been developed.

You need to be creative and have the courage to defy the status quo. Another thing that works for me is when I listen to people from the shop floor that is the doers, not the thinkers. If you ever get the chance, visit a warehouse, dock, loading pad, or any other place where people work. They always have great ideas since they aren't distracted by academics or theories. They're simply pragmatic individuals. So don't be afraid to engage in conversation with workers. They might be full of brilliant ideas.