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A Three-Step Strategy to Handle the Supply Chain Crisis

    
Author: Jason Zenger
Published On: Dec 8, 2021 12:00:00 PM

A Three-Step Strategy to Handle the Supply Chain Crisis-1

There likely isn’t a single business that hasn’t been impacted by the supply chain crisis. The impact trickles down to customers, which creates further problems. In a recent episode of Making Chips, we talked about some of the causes of the chaos as well as three things you can do to mitigate the impact on your business. 

What’s led to the supply chain crisis?

According to an article on the Verge (Clean Energy Faces its Own Supply Chain Crisis), the supply chain for things like solar panels, wind turbines, lithium-ion batteries, etc. are concentrated overseas in China. An easy solution? The US needs to shift manufacturing to the United States.

A lot of the blame has also been focused on the widespread use of “just in time” inventory. But in the article, “What Everyone Gets Wrong About the Never-Ending COVID-19 Supply Chain Crisis,” Yossi Sheffi points out that inventory management was never the problem. What is?

  1. The pandemic effect: the demand shift with people working from home, labor shortages, plants closing, plummeting car sales, etc. When people stop buying suits and start buying sweatpants, it creates a problem. 
  2. Manufacturing issues: shortages in microchips, the surge in demand for electronics, etc. 
  3. Media-driven consumer fears: This has led to actions such as people hoarding supplies. 
  4. The government’s disruptive influence: Some of the policies in place seemed to exasperate the existing problems. 

These are what has contributed to the supply-chain crisis. So how can manufacturers work to overcome the supply chain issues they’re facing? 

Tom Hilaris—the President & CEO of Ergoseal—shares the three things they have implemented to combat the challenges they’ve faced:

  1. Risk mitigation
  2. Better partnerships through communication
  3. A focus on culture 

Step #1: Risk Mitigation

Tom emphasized that you want to mitigate the risk for your customers. How can you accomplish that? Reshoring efforts, utilizing domestic and local sources, redundancy, etc.

Ergoseal has been in business since 1989. They machine the metal components of magnetic seals (and also sell O-rings, springs, carbon, graphite, etc.). To mitigate risk for their customers, they utilize multiple sources for components. 

They always have a primary source—built through relationships—that they use first to source their parts. But to reduce risk, you need multiple sources to complete manufacturing by agreed-upon deadlines. Tom notes that they will often offer their clients trade-offs. If a client wants a specific part made from materials from a specific supplier, then their lead-time is extended. Or, Ergoseal can offer to source materials from a different vendor for a faster lead-time. 

Step #2: Raise your level of communication

Communicating with your customers and your vendors is imperative. But it doesn’t just have to be about your struggles with the supply chain. Instead, focus on them: 

  • What is holding your customers back? 
  • What are their lead times on other components? 
  • How can you support them and reduce costs where possible? 

Ergoseal implements quarterly business reviews with their customers to walk through some of these issues. Part of it is learning the customer and their company better. It helps their customers and the relationship(s) they’ve built because they truly care helps their business grow. 

You also want to stay in continuous communication with your supply chain as well. You can set up weekly meetings with your vendors and find out where your product is in their process. Can you find ways to support them?

If they’re dealing with a shortage of a component, Tom may even offer to make something locally and ship it to them at a shared cost. It may shorten lead-time and help serve all of their customers faster. 

Many products may be legacy and they don’t know what the original design intent was. So sometimes Tom will take a product to a client to find out what’s necessary and what isn’t. It helps to reduce internal scrap and in some cases external processes that can reduce costs for everyone

Step #3: Improve outcomes through culture

Tom points out that they’re always very open about what’s happening in the company with their team members, anything from financials to making improvements. They have a strong focus on their values and their culture. At the end of the day it’s about serving the customer and each other, right? Because of this, they’ve seen a lot of growth in their employees. They’re all willing to go above and beyond. They are doing their best to be resourceful. 

Tom also invests in increasing employees’ skills. Everyone should do it, but not everyone cares that much. They ask their employees what they’d like to improve upon. As a leader, it’s your job to help them accomplish their goals and aspirations. It’s the small things you do in leading your team that can make a huge difference. When you invest in your team as people, they really step up to take care of problems. It all comes back to culture. Because of this, they’ve been awarded “The Best and Brightest Companies to Work For®” in Chicago for the last two years.

It all comes down to this: find ways to serve your customers, employees, and each other. Be open and honest about difficulties and challenges. Celebrate the wins along the way. 

 

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