Find out how you can return your operations to levels of maximum efficiency and productivity post the coronavirus pandemic.
In this report, we look at how to respond to urgent new challenges that have come about due to the coronavirus pandemic, such as raw material and component shortages and lengthy shipping delays, as well as how to address ongoing manufacturing challenges that have become more formidable due to Covid.
Address The New Logistics, Procurement, And Inventory Control Challenges Arising From Today’s Changing Global Trading Environment.
It’s hard to escape the recent news reports that chip shortages have disrupted manufacturing operations at major auto companies, forcing many to shut down production lines entirely.
But as we all know, while chip shortages have been getting all the headlines, widespread shortages are affecting manufacturers across the board, from sourcing raw materials and components to difficulties in booking transportation to bring goods to market.
Economists probably aren’t exaggerating when they compare the current worldwide economic conditions with those of the immediate post-WW II demobilization period when manufacturers also faced debilitating material and labor shortages, price inflation, and transportation logistics challenges as they resumed producing consumer goods after years of supplying war materiel for the allied forces.
(Hopefully, this time, however, we won’t have to resort to the raw material rationing and price controls instituted by the Truman administration after WW II.)
So what can be done today?
We’ll break the problem into short-term and longer-term issues.
Over the short term, manufacturing supply chain and logistics managers may need to:
– Quickly identify and engage with multiple supply sources for materials or components that are in short supply.
– Where possible, change up production lines to substitute more readily available raw material alternatives or components/part designs available from new suppliers.
– In extreme cases, it may be necessary to ship products to end-users without some accessory parts included (which could be delivered and installed after initial delivery).
– Double down on reducing material waste in production (see next section for more ideas on this).
– Consider working with regional shipping companies if national transportation companies, freight forwarders, etc. cannot meet your deadline requirements.
– Merge smaller LTL shipments into full truckloads (FTL) when purchasing raw materials or components or shipping your products to market.
– Consider partnering with other local manufacturers to consolidate FTL shipments if you cannot meet FTL minimums on your own.
– Use more expensive shipping methods, such as air cargo, if no alternatives exist.
Over the long term, manufacturing supply chain and logistics managers may want to investigate:
– Move offshore manufacturing operations back to the US or engage with US-based suppliers.
– Cultivate deeper relationships with local suppliers to ensure a long-term stable source of raw materials, parts, and components.
– Redesign products and production methods to support efficient switchover to use different raw materials or part components from different suppliers to reduce the procurement risk of being dependent on single sources – or fragile overseas supply chains (more on product re-engineering later).
Increase the on-hand inventory of at-risk parts and materials, such as computer chips, to avoid production shutdowns (more on this topic in the next section).
– If transport issues continue, consider setting an in-house shipping operation or virtual network of transport operators.
Apply The Lessons Of Japanese Manufacturing To Make Your Facility Safer And More Efficient
Perhaps you’ve been reading news headlines in the popular press that one of the foundational tenets of the Toyota Production System – Just in Time (JIT) inventory control – is dead, thanks to Covid.
What’s the basis for this claim?
Like many sensational headlines, there is a kernel of truth in it. To date, Toyota has avoided the worst effects of the current microchip shortages by stocking up on chips to create a four-month inventory buffer that’s helped them evade the devastating production shutdowns that have plagued their competitors, such as GM and Ford.
Does this mean that JIT is dead, as some writers at Bloomberg and the WSJ have speculated?
No, not at all.
A closer read of the situation reveals that the Toyota parts procurement teams acted prudently by stocking up, some say as a defensive “lessons learned” response to the supply chain shortages caused by the magnitude-9.0 Great Sendai Earthquake and tsunami that took place ten years ago.
In our view, rather than dismiss JIT and the other production innovations introduced by Toyota, now is the time to revisit and embrace them.
For example, now is the perfect time to perform a 5S analysis on your material handling and production line operations.
If you need a quick refresher, here are the key 5S elements:
– 整理 Seiri (Sort)
Decide what you need to get the job done and remove the rest by disposing of it or putting it in storage.
– 整頓 Seiton (Streamline)
Organize your workspace and tools in a way that each task can flow smoothly into the next one.
– 清潔 Seiso (Shine)
Keep your workspace and tools tidy and neat.
– 清潔 Seiketsu (Standardize)
Make uniform procedures for your tasks. This helps others to step in and help when needed or simplifies shift work changeovers.
– 躾 Shitsuke (Strive)
Try hard to complete these tasks each day.
Why is now the perfect time to create or re-engage with a 5S program at your manufacturing facility?
Here are five good reasons:
1. Minimize Material Wastage
In a time of raw material and parts shortages, make the most of your existing inventories by uncovering hidden inventory supplies that have built up in warehouses and storage areas.
2. Facilitate Adding Suppliers
Use 5S methods to keep track of material and parts inventories by keeping everything visible and close to hand; this is especially important when adding new vendors/suppliers in the post-pandemic period.