The Society of Manufacturing Engineers (SME) published a simple punch list for bringing risk management into Supply Chain Management. Karen Haywood Queen, Contributing Editor at SME Media put the article together.
Quoting Dave Chesebrough, VP of divisions at the National Defense Industries Association (NDIA), “Prior to COVID-19, manufacturers focused on being lean, efficient, just in time. When that introduced, unwittingly, was a great degree of fragility. Manufacturers didn’t have the ability to work through the disruption. Just-in-time manufacturing depends on production scheduling where materials or parts are delivered to the assembly line just when they are needed. If that supplier is unable to do that, it shuts the whole assembly line down.”
True enough, buy what should organizations do to temper JIT excesses?Using that as a launch point, Karen develops a checklist to manage risk. Cost is a discriminator but relying on low cost items when they may not show up is not a winning approach. Karen outlines nine principles.
• Avoid the single-source supplier trap – my father always taught me to hedge my bets.
• Build more risk awareness – buying from Asia is not the same as sourcing from the job shop across town.
• Plan for hard-to-find replacement parts – know where to get them and lay in an emergency stock.
• Do more vetting – there is no substitute for on-site visits.
• Consider just in time for just some parts – JIT is workable in many cases, but it is no panacea.
• Review contractual arrangements – details matter.
• Use mapping tools to go deep and rate partners – and going deep means cascading through the tiers.
• Use care when investing abroad – there are many shades of offshore, and every nation has its quirks.
• Understand value of resilience – can your supply chain “take a licking and keep on ticking?”
You can find the full article on the SME website, https://www.sme.org/technologies/articles/2020/october/ways-to-effectively-address-supply-chain-risk-laid-bare-by-covid-19/ .