In this article, John Denslinger explores the extent of the work required to unleash the American supply line, covering causes, flows, and macroeconomic factors.
After many years of excellent operational performance with lean manufacturing and efficient JIT technology, the US supply line collapsed. This is not to say that it is due to lean and JIT, but emphasizes the need to expand the scope of work in order to unleash the US supply line in a short period of time.
The move to globalize the supply chain began in 2001 when China joined the WTO. Subsequent success has outweighed growing concerns and perceived risks in the growing geopolitical world, with positive results for many manufacturers each year. Using Covid as a catalyst, it took less than two years to uncover the inherent vulnerabilities that were always present.
At first glance overnight, manufacturers and their customers experienced unthinkable things. Reliable supply lines were no longer reliable. The quick solution to the bottleneck is simply to create a larger bottleneck downstream, similar to the carnival game “Mogura Hit”. Cumulative impacts have resulted in unpredictable deliveries, past lead times, inventory depletion, and factory outages, emptying shelves and reducing options for consumers.
As the Wall Street Journal recently pointed out, “nothing embodies the promise of globalization more than a humble supply chain.” Are we still a globalized world? Is it possible to revitalize the supply chain? The answer is yes to both questions, but you need to have a clear understanding of the scope of future work to disrupt the US supply line.
Scope — The causative problem falls into three categories: Trend factors that impede early recovery; macroeconomic factors that distort recovery efforts. Let’s take a closer look at each element.
The causal factor has collectively dealt with the repeated destructive blows to the supply line.
• Covid Pandemic — Unexpected Catalyst
• Global economic expansion — demand is significantly undervalued at the start of the pandemic
• Force Majeure — Suspension of supply due to factory fires in Japan, winter storms in Texas, drought in Taiwan, rolling blackouts in China, etc.
• Critical component shortage — realization of constrained capacity and investment lag time to meet demand
• Inventory depletion — panic buying
• Significant raw material surge — growing concern about access and sustainability to core minerals essential to the production of electronic components
Flow factors hindered recovery. These problems tend to surface and become temporary due to the causative factors. Nevertheless, solutions are important for early recovery.
• Post-pandemic restrictions — continued uncertainty about the free movement of people and things
• Global labor shortage / retention of workforce
• West Coast harbor congestion
• Shortage of trucks and truck drivers
• Delayed return to work / conflict of vaccination obligations
• Stop work and strike
Macroeconomic factors (mainly political factors) are distorting recovery efforts. As manufacturers and consumers absorb the financial burden of higher costs, the benefits of activated supply chains can diminish.
• Infrastructure stimulation
• Social spending and climate stimulus
• Tax increase
Mapping solutions are not easy, they are one-off events, and ongoing economic shocks only hinder early recovery. I am confident that we can reconfigure our supply lines to address the factors that cause the industry. I’m just as confident that the industry can address and resolve flow factors. The impact on the macro economy is less certain. Will it support the industry’s ability to roar the US supply line?
https://electronics-sourcing.com/2021/11/25/unsnarling-americas-supply-lines/ Roaring American Supply Line | Editor, John Denslinger, Top Article News