Current Supply Chain Management Issues

At the height of the Covid-19 Pandemic, supply chains were significantly affected. Products destined for every corner of the world had come to a halt at various ports with no way to reach their intended destination. Manufacturing companies throughout the UK and Europe either shut up shop and had staff on furlough or were operating at a significantly reduced capacity.

Manufacturers and OEMs continue to address their current supply chain management systems to overcome the issues presented in the movement of goods as a result of Covid-19. Some companies may take the decision to refocus on suppliers closer to home and re-shore manufacturing, rather than using suppliers further afield.

However, there are many components and parts that cannot be sourced or produced locally in the short or medium term as some of these supply chains are long and complex. And then cost is most definitely a consideration also. Especially for the likes of small and medium-sized businesses it is unrealistic and uneconomical to assume the re-shoring of the manufacturing of components and parts to the UK and Europe is possible.

Instead, these SMEs will look for reassurances from suppliers that they can still deliver the required quantities without any major supply chain issues in the long term.

 Finding Reassurances In The Supply Chain

As countries began to restrict movement and places of work were closed, it wasn’t long before the impact of the lockdown was felt on integrated and intricate manufacturing supply chains globally.

As the impact of Covid-19 continued to unfold, supply chains and shipping networks slowed to a halt. Supplier lead-in times dramatically increased, and freight costs became significantly more expensive. De-synchronised supply chains meant that manufacturers, especially those involved in critical manufacturing and services that were able to maintain a workforce with the capacity to produce, soon found that some or all of their suppliers had closed or reduced output and could therefore not ensure the supply of key components for the manufacture of their products.

If outsourcing aspects of your manufacturing process, seeking out a manufacturing partner that has a well-established Supply Chain Management system in place is vital.

Furthermore, you should look for reassurances based on the experience and track records of the manufacturing company. If they can show that they have a proven track record managing scheduling and logistics over the longer term, this is a major boost of confidence.

It should also be noted that in today’s globally connected supply chains, everybody has the systems in place or at least say they do. However, it is how these supply chain systems are utilised and the execution that matters.

Achieving Security Of Supply Out Of The Far East, Is It Still Possible?

In short, yes.

Re-shoring as a concept definitely solves a problem and does offer some level of security in the current pandemic but it is easier said than done and the process of re-shoring will most definitely cause more issues for companies in the long run.

One thing that this pandemic has thought the world is that we are all actually a lot more connected than we think and there is huge interdependence between all nations of the world.

Unravelling this interdependence is surely an impossible task in the short to medium term given the way global business has evolved over the last few years. While many of the consumer items we are surrounded by come from the far East today there is equally a considerable flow of goods to the far east from Europe and the USA in the opposite direction whether its food or ore, the success of the world is built on global trade. The initial knee jerk reaction to the global pandemic was to re-shore but this is proving harder than first thought.

According to a report from Make UK, “31% of small manufacturers sourced component parts directly from China or other countries affected by Covid-19”. Also, “40% of all manufacturers said they had experienced difficulties in sourcing components; and a further 49% anticipate difficulties in the weeks and months ahead”.

Small and medium-sized manufacturers rely heavily on having component parts manufactured in China as there are significant cost savings to be had. Also, sourcing parts in China has become more reliable for companies in recent times due to the established supply chain management systems in place.

A Reliable Supply Chain That Can Deliver Without Fail

Many companies may have been forced to diversify their supply bases to ensure that they will always have a range of options available to them in times of uncertainty. During the height of the pandemic, the cost of air freight increased significantly due to global demand for PPE.

What continues to be a reliable mode of transport is rail freighting. The average rail freight takes 21 days to arrive in the UK from China, which is significantly faster than ocean freighting and much less expensive than air freight.

It is evident that the supply chain has been impeded but ultimately the manufacturing sector must continue to churn out products for the sectors that need it. OEM’s will now be looking at ways they can not only save money in the long run but ensure that they also have a reliable supply chain that can deliver without fail. Continuing or to even start having parts manufactured in the Far East is one such way to achieve cost and quality targets, safe in the knowledge that security of supply can still be achieved in the short, medium and long run.

About Donlouco

Donlouco Ireland has been manufacturing components and parts for European OEMs for over 15 years. With its head office in Cork Ireland, Donlouco oversees the entire process from volume production right through to quality inspections and delivery to client’s doorsteps.

Donlouco are experts in Supply Chain Security and has always ensured that customers receive their orders on time and without any unforeseen issues such as customs delays or additional costs. 

Donlouco are experts in managing part costs, eliminating indirect sourcing costs and the cost of poor quality.