Building Resilient Supply Chains

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Globalization and offshoring have shaped the supply chains of large manufacturing businesses for the past three to four decades. The main goal has been the relentless pursuit of cost control to minimize expenditure and outlay and thus maximize returns and profitability.

Since the COVID pandemic and the associated disruption to manufacturing, with subsequent turmoil in labour markets and shipping, more companies see the value of resilience in their supply chains. Arguably, we had all become accustomed to everything fitting together neatly with minimal complications, which encouraged setting up increasingly complex and extended supply chains. Until, suddenly, everything stopped.

The drive that powered offshoring is now enthusiastically advocating reshoring to protect against uncertainties and reduce the environmental impact of business activities. However, keeping everything close to home is often not an option. Manufacturing requires appropriate skills, as well as supporting industries, and these, too, have migrated away or simply folded up. I can comment directly on the printed circuit business, where the proportion of boards fabricated in Europe and the U.S. has dwindled to just 2% and 4%, respectively. In the 1980s, there were over 20 suppliers of substrate base materials in Europe. Currently, there are two. Similarly, the number of suppliers of glass and copper foil has fallen from a dozen to just one. Re-establishing local supply chains will take time.

Ensuring the security and integrity of the supply chains we already have is vital. This includes increasing agility to work around external issues such as shipping difficulties and to handle customers’ changing demands.

The key to this is finding out as much as we can about our customers’ manufacturing plans. Of course, some confidential information cannot be shared, so historical data could be used to drive predictive models. Overall, the clearer the knowledge and understanding between supplier and customer, the better each party can plan their activities to fulfill the needs of each.

Companies can greatly improve on-time delivery performance in end-user markets by trusting each other enough to share ERP data that lets suppliers understand exactly where materials need to be at any time. Equipped with even basic information of this type, suppliers can position themselves to ensure the required components are delivered at the time they are needed, minimizing the potential for mistakes, and avoiding expensive emergency deliveries.

To read this entire article, which appeared in the June 2024 issue of PCB007 Magazine, click here.