This article is the first installment of the 2021 Automation supply chain update.
View the rest of the series here.
Suppliers, distributors, system integrators and users alike agree the best way to combat long lead times and other supply chain disruptions is to increase inventories of raw materials, parts and devices ahead of time to soften the blow of future scarcities.
"The global supply chain disruptions we're experiencing are the most severe in our company's history. Never have there been so many large challenges occurring at the same time at both the macro level (transportation delays, component shortages, raw material shortages, labor shortages) and the micro level (plant disruptions, individual shipment disruptions)," says Tim Carroll, purchasing director on AutomationDirect's product availability team. "We're fortunate because we've always viewed inventory as a sound investment to insure against unstable supply or demand, so we entered this period in perhaps a better position than others, and we continue to aggressively fill our supply pipeline. It's also clear that our approach to having long term dependable supply agreements with excellent vendors has been critical. These suppliers have been giving us their best efforts to provide us with stock since the start of the pandemic and going forward. Our customers tell us that consistent high product availability is one of the most important reasons they purchase from AutomationDirect, and so we continue to pursue that goal even more when supply chain times are tough.
"Within the supplier/distributor network, transportation delays have likely triggered the most change specifically. Port congestion alone has caused us and our partners to extend lead times, increase the use of air freight, look for alternate shipping routes, define priority items for production, and increase the size and timeline of orders, among other actions. We've tried to be flexible and creative, depending on the situation. The idea of supplier and customer working together openly on these commercial problems has become essential, and because it has been so constructive, we should expect to see more of that as a permanent practice in the future."
Future tugs on the chain
Carroll adds that AutomationDirect is assuming that supply disruptions will become more common in the future, so it's assessing how resilient the chain is, and determining how to prevent or minimize the impact of disruptions of any type.
"It's clear we also need to continuously build closer communication with our suppliers and diversify our product lines in ways that make sense for our customers, but give us more supply options," says Carroll. "Increasingly, AutomationDirect's customers carry less of their own inventory, and view our warehouse as their warehouse because we've proven we're dependable by having stock that can be rapidly shipped and delivered. This saves space, cost and time. Since web customers typically don’t provide a forecast of their future purchases in advance, we must make sure we're using best practices for planning inventory levels, and developing processes and communications for expedited shipments.
"It's also increasingly important that production and delivery data provided to us by our suppliers is as accurate as possible, so our customers can rely on it as soon as it's received. It's crucial that our suppliers fully understand that high product availability and accurate information affect our business growth, which in turn affects their growth. As a result, sharing useful data and increased transparency between us and our suppliers will continue to increase and improve."