PANDEMICS AND OTHER global crises can wreak havoc on supply chains. Some products remain plentiful and easy to acquire and others rapidly become limited or nonexistent. Even worse is that it’s difficult, at best, to predict supply-chain dynamics.
The reasons vary. Some materials are depleted due to increased needs, but some disappear when people stock up because of uncertainty, not unlike trades that don’t trust the parts storeroom system. In many cases, the raw materials aren’t in short supply. The demand predictions are off because of erratic buying behavior. Another factor is that people are not available to do the work or workplaces do not/can not adapt to demand changes and/ or safe work practices. Some companies produce more to meet people-caused peak demands, just like storerooms having to replenish a large shortage, when in fact they are just being held by trades elsewhere. What’s needed is a balanced focus on efficiency and resilience to maximize risk avoidance.
Debra Yorkman is Vice President at one of the Reliability & Maintainability Center member companies, SDI, Bristol, PA (sdi.com), a digital supply-chain-solutions firm. She has summarized how supplies should be managed in extended-crisis situations:
- View and manage materials normally considered to be commodities as essential or operations essential. These items include critical machine spares, PPE, and items that are required for employee safety and plant operations, including paper products.
- Accelerate IIoT technology implementation to mitigate risk of future pandemics on plant operations and production.
- Establish or update a risk-management plan related to your MRO supply chain.
- Formally identify and manage critical spares and essential supplies, particularly those manufactured overseas.
- Aggressively manage PPE and essential supplies.
- Develop a full understanding of your tail spend. An extended tail creates additional risk in supply-chain reliability. Tail spends are low-dollar items that are too small for procurement and/or too infrequent to be included in a catalog. Cumulatively they can represent a significant cost.
- Reconsider inventory and safety stock, re-set replenishment points, and re-evaluate min/max triggers, especially as lean/ just-in-time inventories have proven to be a risk multiplier.
- Delegate purchase authority to additional employees, loosening controls and lengthy approval processes, and consider online marketplaces as a source for tail items and spot buys.
- Keep supplies secure and reduce waste by staffing your storeroom at all times, installing cloud-based cameras/monitoring systems, and locking away high-demand items.
- Consider additive manufacturing/3D printing as an alternate source for stockout items with long lead times or where supply is no longer commercially available. Initiate capital projects to retrofit equipment and reduce reliance on customized critical parts.Developing risk-minimizing strategies has never been more important. Maximize quick response and flexibility throughout your tiered suppliers and be able to shift locations quickly, if needed. Crisis situations should trigger a review of where you are outsourced/what should stay in-country and what should never be out of internal control.Based in Knoxville, Klaus M. Blache is director of the Reliability & Maintainability Center at the Univ. of Tennessee and a research professor in the College of Engineering. Contact him at firstname.lastname@example.org.