Intelligent Agility: A Measured Response to Supply Chain Disruptions

Originally posted on TTI MarketEye Blog

By Tom Vanderheyden, Sr. Vice President, Supply Chain, TTI Americas

In the face of the many supply chain and logistics challenges of the COVID-19 pandemic, we’ve seen numerous headlines proclaiming a new era of reshoring, and the end of lean production and just-in-time manufacturing strategies.

It’s understandable that the challenges of the last 18 months have manufacturers and consumers of electronics concerned about the future. Even so, this is a situation that demands not reflex reactions or dramatic changes, but long-term strategic thinking.

Just as there’s no singular cause of the present supply chain woes impacting electronic components suppliers as well as OEMs and ODMs, there is no single “magic wand” to end this challenge and prevent future disruptions.

Case in point: short-term experiences with high demand for raw materials, shipping disruptions, labor shortages and price increases have many experts saying you can’t have just-in-time manufacturing and confidence in your supply chain. In reality, franchised electronic components distributors have been delivering both for decades.

In good times and in challenging times, supply chains can run best when all the stakeholders involved stay keenly focused on their core competencies. That won’t eliminate uncertainty, but it can definitely help the entire supply chain emerge from those rough waters more quickly, and with more benefits to all concerned.

For our part, electronic components distributors help manufacturers reduce their inventory expenses. We also help them deliver the benefits of our material management expertise in addition to those near-term cost savings. Those are our core competencies, and we put them into practice with a team of supply chain consultants who have deep industry knowledge as well as supply-chain acumen.

“Supply chain resiliency” doesn’t need to take the form of additional inventory at manufacturing locations. While that may be a short-term solution, in the long term this would mean a move away from lean principles that have made manufacturers more competitive.

As an end-equipment manufacturer, when you have the right strategic partner in distribution, your company doesn’t have to carry capital-intensive inventory. In this case, the component lead time becomes a matter of transit time.

Another reason that agile manufacturing will continue to be the norm is that we work in a more data-driven, communicative time where rapid exchange of information allows for better, faster business decisions. Throughout the supply chain, API implementation and rapid communications provide a higher level of speed and visibility into the supply chain. Your distributor partner can help you make the most of these capabilities as a manufacturer – or, if you’ve yet to implement API connections, we can help you find the right solution.

All of these partnerships and connections drive agility and resiliency in the supply chain. The more we communicate and share accurate and timely data, the more quickly we can reduce lead times and improve performance.

This data can also show the value of sometimes making tough decisions, like knowing when to adjust your manufacturing lead times. It’s true that doing so can lead to unintended consequences, such as increased buying patterns – and the risk of a self-fulfilling prophecy – but, again, having access to market data and insights from a distributor partner can give you knowledge or information to make those decisions and the assurance of knowing that you’ll be putting your business on a firmer footing.

The pandemic has accelerated digital transformation and automation. B2C expectations are driving B2B behaviors and the adoption of machine-to-machine (M2M) communications. But, at the heart of all decision-making, there is still no match for human knowledge and insight. As a distributor, our model allows us to be more flexible and to take a longer-term strategic view informed by industry data and knowledge.

When you choose a distribution partner with specialized knowledge and a proven model, you gain subject matter expertise that can illuminate your decision-making process – right down to the impact of raw material pricing on manufacturing at the component level.

When there’s more uncertainty in market conditions, the more certain you have to be of your partners and your strategy. While it’s tempting to look for short-term solutions in the face of real and potential disruptions, now is the time to strengthen your relationships throughout the supply chain and look beyond the present quarter to the next two or three quarters. The right partnerships, especially with a components distributor, gives you the intelligence you need to maintain an agile strategy in the face of a “perfect storm” of challenges.