In October 2021, roughly 90% of manufacturers reported that supply disturbances were slowing down business activity, but fortunately, this figure went down to 43% in May 2024 according to the Federal Reserve Bank of New York report. However, the numbers are still of concern. In addition to the pandemic and natural disasters that created a ripple effect through the entire production process, interruptions and delays, rising prices, quality control issues, and customer dissatisfaction also affected the supply chain. To mitigate the repercussions, manufacturers and companies continuously aim to develop supply chain strategies that will make them resilient to interruptions..
Challenges Affecting Supply Chains
Supply chains in the manufacturing sector face significant challenges, which makes them vulnerable to disruptions. To illustrate, safety and technology are vital in the modern manufacturing sector. A safe working environment is essential for the well-being of staff and to protect them from accidents, injuries, and property damage. Falls, falling objects, chemical burns, machine or vehicle related injuries are some main types of accidents in manufacturing facilities. These hazards often cause production disruptions due to illnesses, long-term injuries, and even death of staff. Hence, companies must improve safety in the manufacturing sector and adhere to safety standards to safeguard the health and well-being of employees. Safety protocols and technology can contribute in creating a resilient supply chain by minimizing interruptions caused by accidents and injuries. To illustrate, automation of certain manufacturing processes such as automated palletizers and overhead lifts not only improves worker health and safety, but also streamlines production.
Enhancing Adaptability
Diversification is a key strategy in building resilient supply chains capable of adapting to interferences. To diversify, companies should spread their suppliers across different countries and regions, and reduce reliance on a single location. For instance, Apple used to count heavily on Chinese manufacturers for assembling iPhones and iPads. Today, they’ve expanded their operations by opening new facilities in India and Vietnam.
Nearshoring and reshoring can improve control as well. Ford and General Electric (GE) reshored production of some of their lines to the US for batteries/assembly and appliance production, respectively. Ford also brought back 3,250 jobs from overseas to Ohio and Michigan says a report on the Reshoring Initiative. Apart from geographical diversification, spreading suppliers eases reliance on one partner. In other words, it makes sense to use multiple suppliers for each critical component or raw material to reduce dependency. For instance, Toyota has also diversified its sources for critical components. Aisin Seike Co Ltd provides transmissions to the company while companies like Denso Corporation and Bosch supply automotive electronics.
Use of Technology
Not to be forgotten is the crucial role of technology in enabling resilient supply chains. For instance, blockchain offers transparency, traceability, and security for transactions to mitigate risks such as product recalls or defects, fraud, and vulnerabilities. Automation is again a major strategy for safety and efficiency. In September 2023, Adidas and Geek+ announced the grand opening of their automated warehousing and distribution center in Suzhou, China last year. The facility can process more than a million pieces per day and stock 10 million pieces of products.
On the other hand, artificial intelligence (AI) supports predictive analytics, demand projections, and optimization of supply chain operations. Walmart, Maersk, Siemens, and Unilever use AI tools to look for alternative suppliers and pre-qualify sellers according to a Harvard Business Review (HBR) article. Equally, the Internet of Things (IoT) sensors permit monitoring in real-time the status of shipments, inventory levels, and equipment performance. It is possible, too, to identify unusual patterns or aberrations from normal operations indicating potential problems. According to a DHL and Cisco report, IOT will boost the supply chain and logistics operations by $1.9 trillion.
An understanding of the challenges faced by the supply chains in the manufacturing is essential so that effective and efficient strategies can be formulated. Diversification of suppliers and geographical coverage and leveraging technology can boost supply chain resilience and soften the impact of future disruptions.
About the Author
Nina C. S. is a writer with a knack for turning complex ideas into enjoyable reads. She’s constantly looking to broaden her reach and contribute to platforms in various niches. When she’s not working on her writing projects, she likes to explore seaside towns and enjoy the company of her family and friends.
