Roundtable on Supply Chain Disruption
Why is transparency important, and can suppliers have too much of it?
Brown: Increasing transparency results in clear economic, quality and reputational benefits. Manufacturers typically lack visibility though all layers of their suppliers. Lacking that visibility, manufacturers don’t have enough lead time to mitigate disruptions when they occur. It may not be possible for an OEM to become familiar with its tier three suppliers through traditional methods—this is where applying new technologies for data and analysis becomes essential.
Garg: In an environment of unpredictability, the more predictable a business can be, the better outcome it will have with its customers. Companies that can provide good, dependable and consistent information to customers are able to manage challenges better. A supplier should share critical information that can help a customer plan their business better, but it’s also important to realize that more information doesn’t guarantee a better outcome. The amount of information shared should be under the criteria “will this help the customer be successful?”
Burgess: There’s no such thing as too much transparency, and it’s critical that you give accurate information because information is the one thing that suppliers can control. Even if the news is bad—for example, “your order will be pushed back an additional two months”—it’s important to share that. Now the customer can plan for their next course of action instead of sitting around waiting for the order. Setting proper expectations is essential; it’s better to be proactive than reactive.
What advice do you have for manufacturers to ensure their supply chain team is strong enough to weather future disruptions?
Ruhl: Manufacturers and retailers may need to investigate more robust inventory and storage allocation options within their purview. At an aggregated scale, recent events may alter existing views on warehousing, and even future development of more inland-related port options. The advancement of digitization, and blockchain technologies in particular, is another promising area for consideration that may redefine supply chain transactions for the global suppliers to better respond to the needs of the consumer.
Burgess: Manufacturers should be flexible and always keep their eyes open to other options. They should think worst case scenario and plan for that. While we’re all hopeful that everything will go back to normal one day, the reality is that it’s unlikely to happen. Everyone needs to keep their head on a swivel, looking at all of the options out there. Those who focus too much on one element with “this is how we’ve always done it” unyielding thinking won’t be prepared for an alternate. It’s important to be open to new ways of thinking, and possibly unearthing even better processes as a result.
Garg: Focus on reducing lead times and ensuring supplier alignment. Investments in supply chains should include dual sourcing for core products, domestic and foreign supply, and evaluating vertical integration. Have conversations with your suppliers about your expectations so that they can prepare to meet your needs. Uncertainty will continue to create surprises, and being able to react quickly will separate winners and losers.
Brown: Look for ways to bring more data and digitization into the manufacturing supply chain to address crises of the future—before they happen. Manufacturers also need to keep in mind the digital literacy and other skills necessary in their workforce to effectively manage these tools. The digital manufacturing and cybersecurity skills gap is an enormous and growing challenge. Apprenticeships and other training programs can help; I encourage manufacturers to look outside their companies for ideas and resources—and to do it now.
What can business leaders and officials in the supply chain industry do to prevent future problems?
Garg: It’s important for business leaders and officials to provide transparency on the issues and remain flexible so that we can solve them. Recently, Ryan Petersen, CEO of Flexport, tweeted about the container shortages at the ports and the traffic jam that was occurring due to existing processes. Within days, local regulators changed the rules to allow for stacking containers higher to create more room to process existing containers. We’ll never be able to prevent future problems, but staying flexible will allow us to solve them.
Brown: Public-private partnerships—the combination of government leadership and investment with the ingenuity and practical experience of industry—is a tried-and-true method to tackle systemic problems. Implementing cybersecurity practices is also essential. As manufacturing shifts to a digital paradigm, the risk of cyberattacks against physical and digital assets increases. The manufacturing supply chain is protected when all its parts are protected.
Burgess: Leaders should take a deep look at their businesses and figure out what products and/or components they need to be successful. Once they determine this, they should over-invest. Even if they have to be flexible and call an audible on other product, they’ll at least have their core need. The benefit of being able to continue shipping product to customers in a timely fashion greatly outweighs the risk of having too much inventory up front. It’s important to never run low on essentials.
Ruhl: With the current drag on the economy, the supply chain disruptions are a problem of national significance to solve. The public and private sectors need to come together to critically assess vulnerabilities and strengthen the resilience of supply chains, including the development of a more cohesive and flexible multimodal transportation infrastructure plan.