How to Survive during Supply Chain Disruption

Supply Chain Disruption has become more frequent due to environmental and geopolitical reasons
Supply Chain Disruption has become more frequent recently

The supply chain is in turmoil all over the world now.

Inflation and production capacity shortages are particularly significant in Europe and North America. Even if you want to make something, you can’t make it, or you can’t make a reservation for shipment, so it’s often delayed, especially in Europe and North America.

Currently, various manufacturing and investment plans are strong in each country. The situation is close to fighting over raw materials. Thus, the raw materials are scarce and their prices are increasing drastically.

Under such circumstances, You can consider the following counter-measurement.

The most effective method is to make a plan with sufficient supply lead time and to make an order decision earlier. However, since sudden supply concerns tend to occur, we are implementing the following measures.

Small lot

If you try to make a lot at once, the manufacturer will increase the quota for new customers. For manufacturers who are busy with existing customers, they are worried that they will be able to meet delivery dates properly. By carving it into small lots, it is possible to consider starting supply at an early stage. We can also collect and supply multiple such small lots at once.

Purchase Price Increase

The last resort is to raise the purchase price. It is not desirable for both the manufacturer and the purchasing manufacturer to advance the delivery date by raising the purchase price. This is because the buyer needs to increase the cost, while seller (manufacture) faces a risk of delay in delivery to existing customers. Seller also has a risk of quality problem due to sudden production plan change. Still some sellers are able to respond to such emergencies, so it is a good idea to keep in mind that there is a means.

Raw Material Price Increase Counter-measurement

It is important to create competitive environment among your suppliers. This leads reasonable competition among suppliers and stable supply. There are two steps, finding an alternative supplier and evaluating it.

Securing other suppliers

If you are sourcing to a or a few fixed suppliers, finding an alternative supplier benefits you both cost perspective and stable supply perspective. To begin with, it is necessary to visualize what kind of function, shape, and quality should be guaranteed for the material or part currently purchased. It is also effective to prioritize aspects from “absolutely necessary” to “nice to have”.

Remark on securing other suppliers

When looking for other suppliers, quality must be taken into consideration. Reducing costs can reduce quality to a certain extent. Therefore, it is better to find an alternative supplier after clarifying the application and the required quality level at the beginning. Sometimes, you don’t know what the quality level you are looking for. In that case, it is easier to start with by looking back on the intended use and the period of use.

Lastly, as your busy partner, Enserve is specialized in Metals (Strip, Bars, Coils NearNet of Steel, Copper and other Alloys) and help you solving your Supply Chain headache of quality, cost and delivery. If you have any questions or consultations, please feel free to contact us and we would be happy to support you.

Leave a Reply

Your email address will not be published. Required fields are marked *