While many are aware that high supply chain performance is instrumental in meeting targets and making consumers happy, most don’t realise just how fragile supply chains are, as even the smallest of inefficiencies or delays can result in added challenges and risks for both manufacturers and consumers.
A look into the challenges
From sourcing raw materials to handling the logistics of production and delivery, supply chains are complex entities comprising different elements and involving several stakeholders, meaning there are millions of supply chain transactions taking place every day.
The issues currently surrounding supply chains involve equipment availability and labour shortages, and with global bottlenecks still having a severe impact due to the challenges introduced by the Covid-19 pandemic, multiple industries are struggling to cope.
In this piece, multidisciplinary engineering firm adi Group speak about how the supply chain crisis is affecting each of its divisions, and the strategies it is adopting to face up to the challenges.
Adrian Gooding, Senior Electrical Manager of adi Electrical, comments: “The main issue we are experiencing at the moment is time delays in obtaining essential parts and components. There are waiting times of around 29 weeks, compared to six to eight weeks prior to the crisis.
“The bottom line is, if we don’t have access to raw materials, we simply can’t build equipment for our customers and move forward with projects within the timescale we originally agreed upon.”
Ultimately, when it comes to material shortages, there is little that can be done to prevent consumers and businesses from suffering the consequences altogether. As sourcing and obtaining raw materials is often the first segment of a supply chain, limited availability means all operations inevitably grind to halt until the necessary resources are obtained.
“It’s important to continue to be honest and upfront with clients, honour price commitments as much as possible, and work with them to create the best possible outcome in spite of the extra challenges,” adds Adrian.
While all businesses operating in the engineering sector are experiencing similar issues, the way businesses deal with the problem to minimise risks for clients and consumers is what sets them apart from others, and what will benefit them long-term.
The root of the problem
While the issues within supply chains at a global level are having knock-on effects on individual countries such as the UK, the microchip shortage has also been identified as one of the main reasons behind these changes, coupled with the EU exit and the Covid-19 pandemic.
And given that the shortage affects many other industries aside from the automotive sector, causing ripples through entire supply chains and disrupting a business’s ability to operate, manufacturers and consumers alike will continue to be affected this year.
“Due to the microchip shortage, waiting for essential parts that would normally be delivered in one to two weeks is currently taking nine to ten months,” says Adrian.
“This is due to increase in demand, a generally restrictive market and other issues in individual countries all contributing to the creating an enormous backlog.
“It is obvious that the problem resides at the very source of the supply chain, so at the moment, we aim to provide transparency to all our clients, make them aware of what the waiting times are and ensure there’s minimum disruption to any projects,” he continues.
And the problems don’t end with delays and backlogs, as supply chain inflation is having an adverse impact on many industries, with price increases causing uncertainty and turmoil.
“Every four to six months we experience price hikes of 1-15%, and as the market accepts orders based on products’ prices at the time they are delivered, if the costs rise in the meantime, we simply have to pay the additional price,” comments Adrian.
Inflation has undoubtedly driven up the prices of a variety of goods across the UK, and with continued uncertainty over the UK’s trading relationship with the EU, as well as energy price increases, supply chain inflation is unlikely to recede any time soon.
To avoid delays, many are placing larger stock orders early to compensate, yet this is likely to result in more supply chain bottlenecks, ultimately making it a self-fulfilling prophecy.
“Stock availability is still limited, so those who place larger orders all at once are unlikely to receive the entirety of their order all at once, so it is not at all an effective way to deal with the problem,” says Adrian.
Acting proactively
Building resilient supply chains should be a priority for businesses and industries if they are to adapt to these circumstances. This should involve modifying processes and procedures to be able to adapt to emergencies and finding new strategies to keep operations running as smoothly as possible, no matter the issue at hand.
While there’s no way to prevent supply chain crises from happening altogether - particularly when they stem from issues that are entirely out of our control - increasing efficiency across the whole of the supply chain will ensure industries and businesses are prepared for the future.
To this end, businesses need to be willing to work on their supply chain management strategies with a proactive, as opposed to a reactive approach.
For more information, or to enlist the help of engineering experts who are actively striving to make a difference within the industry, please get in touch with adi Group.
ENDS