The world’s supply chains are broken! Importers are waking up to new kinds of supply chain problems daily.
It’s basically a game of Supply Chain Whack-a-Mole where the Supply Chain Manager works hard to solve a problem, only to face a new problem the next day, or even the next hour.
We have heard about all kinds of challenges recently, but they are not all related to Covid. Some are related to shortages of:
- Labour in ports
- Shipping containers
- Freight liners
There are even reports of shortages of the cargo jets used to air freight products to North America because of another supply chain problem.
The problems have persisted well after the pandemic. In fact, in June of 2022, Stats Can reported that:
- Of all the organizations that expect difficulty acquiring inputs, products or supplies from abroad, 41% are in the manufacturing sector
- Of the businesses expecting difficulty, almost three-fifths (58.2%) expect these challenges to continue for six months or more
- Almost one-third (31.2%) of those businesses are uncertain about how long these challenges will persist
- Of the manufacturing companies that expect maintaining inventory levels to be a challenge, over 60% said they expect it to be a problem for 6 months or longer
The last few years have taught us that North American organizations have grown too dependent on low-cost parts coming from Asia. This is why more organizations are ‘Reshoring’ right now.
The Blended Production Model
Today’s CEOs have learned painful lessons over the last few years and are looking to future-proof their supply chain. According to a recent report from KPMG, 67% of surveyed CEOs said they will increase investment in disruption detection and innovation processes.
What will those innovative processes look like? Many are seeking a model that doesn’t involve duplicating massive investments in tooling and production equipment on multiple continents. They’re also looking for a way to maintain their complex supply chain in Asia, but also have production options available to deal with the disruptions from Asian production.
We believe we have a solution. We call it a Blended Production Model. We also call it an insurance policy.
Think of it this way: When you buy insurance for your car, home, or business, you don’t want to exercise a claim, but it’s nice to know it’s there. At Brotech, we can be viewed as an insurance policy that you know will pay off.
The idea is that if an importer buys a large volume of parts from Asia, it also contracts a small volume of the same parts with a local supplier (like Brotech).
The insurance cost is the premium paid for the parts produced locally. The value of the ‘insurance claim’ actually increases over time. Particularly when the local supplier masters these parts and the importer is able to draw on production with only a few weeks’ notice. They can now receive parts quickly when they’re faced with long supply chain delays.
A lot of companies are already moving in this direction. A recent survey of 500 industrial buyers revealed that 83% of these buyers said they intended to find and place 10-12% more orders with domestic suppliers, when compared to last year.
Instead of losing sleep and hoping something else doesn’t go wrong, a supply chain manager can have reasonable assurance that on-time delivery will not be sacrificed. They can trust that they have a strong blended supply chain program in place, one that is regularly exercised and kept up to date with all high-volume parts.
Imagine the confidence one has when talking with customers about a failsafe program in place for delivery. Or what about being able to talk with bankers, lenders, board members, and shareholders about business continuity plans that include the supply chain?
We believe it’s not just a nice idea. We believe supply chain continuity is a must.
Let’s Talk About Your Needs
Brotech has offered CNC machining services since 1995. We have built our reputation by delivering precision CNC machining where others could not. Excellence is always our target output.
We put machining excellence into every product that leaves our facilities, whether the job calls for exacting tolerances that stretch industry standards, or working with difficult and exotic materials.
What can we do for you? Click here to learn more.