Oliver Wight: do these supply chain issues sound familiar?
The primary issues that bring supply chains to a grinding halt sound like a broken record: inventory creep, ballooning costs, ‘where is the bottleneck?’. And often they are discovered too late, at the end of the month, and just as the situation has spiralled out of control.
Michael Snape, Partner at Oliver Wight, has shared his thoughts and solutions to resolving the most common headaches in supply chain - or, as Snape so vivdly equates it, the “massive pimple on your forehead” that emerges hours before a social event.
Five pain points
In a blog titled 'Five supply chain problems you are likely to miss', Snape delves into the most common sticking poi nts for supply chain managers, and pinpoints where things go wrong - and how a quick solution is always at hand with foresight.
Take inventory creep. “You haven’t noticed that actual demand isn’t matching what was planned, but production keep ploughing product into the distribution centre,” Snape says. And when do most supply chain managers hear about this? “Through a phone call at the end of the month asking you for an explanation as to why inventory is so high, or your distribution manager calling you up to say that they can’t fit anymore product into the warehouse”.
The blog post provides insight into a bevy of other common issues that are easily overlooked during the busy and complex day-to-day commitments and changes along the value chain - particularly those often out of the hands of supply chain executives. Running into customer dissatisfaction when inventory levels are high can often be explained by external forces of misalignment in product rollouts or promotions, for instance.
The solution: little and often
Snape plots a two-point plan of performance indicators and a regular daily, weekly, monthly evaluation structure to cut these obstacles down to size early, before they grow into major blockages to the flow of goods. Often attacking the issues head on can mitigate their impact on the supply chain. Snape likens this little and often approach to checking the lights of a car, filling it with oil when necessary, and rolling similar small maintenance tasks to keep the wheels turning.
“Looking for the failure points in your processes by using good measures and then fixing these is a sure-fire way to close the loop and reduce the number of surprises throughout your supply chain,” Snape explains.
Read the full blog post for further insights HERE.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.