As equipment manufacturers start to get back to business in the aftermath of the tragic events of Sept. 11, they must look very closely at how security issues will affect the supply chain. Heightened security measures at commercial airlines and cargo carriers, along with border delays for vehicles entering and leaving the United States, mean companies need to prepare for future supply disruptions, supply-chain management specialists say .
Whether they are minor or major, these disruptions will cause shortages and delay shipments.
Jeff Flammer, director of strategic consulting for the high-tech industry at Manugistics, told me this potential problem is compounded by the fact that many OEMs buy components and boards outside the United States and run on very lean inventories. Add to that mix a major trend surfacing among communications equipment manufacturers, which are aggressively outsourcing full box build overseas. The result is that now those companies can't get their final product into the country.
There are a couple of things that OEMs can do immediately to head off potential supply disruptions, said Flammer. Companies can revisit their safety-stock calculations to deal with demand and supply-side variability and to update lead-time information. For example, if it previously took seven days to receive a shipment from overseas, it may now take longer, and that new delivery schedule needs to be input into a company's MRP system.
There are more steps companies can take to ensure a steady supply. Manugistics advocates that companies take a closer look at their collaborative supply-planning processes and tools to identify materials shortages or capacity constraints. Next, they need to determine a course of action that may entail parts substitution or synchronized allocation (allocating supply to an order that can be fulfilled and shipped on time).
Companies may also want to set up supply-side private trading networks that provide visibility into a multitiered supply chain. This can establish visibility into their suppliers' inventories, shipment schedules and shipment status among all the different players in the supply chain, Flammer said.
What it comes down to is that OEMs need to continually evaluate their supply-and-demand environment with whatever tools are available to them to proactively manage these potential disruptions in the supply chain.