💡Check out Michael Knight's advice on worst-case scenario supply chain insurance💡
The tailwinds for U.S. #manufacturing are strengthening as the funds from the Infrastructure Investment and Jobs Act passed the end of 2021 begin to be deployed, the inventory buildup from the last few years is resolved, #reshoring picks up speed, and the threat of rampant inflation diminishes. Sounds great, but (there is always a “but”) the state of the supply chains that feed OEM manufacturers are a headwind that will blunt forward progress, if not outright halt it. This was the subject of a talk I gave at a recent industry conference, a snippet of which is attached to this post. Supply chains for manufacturers of everything from industrial equipment and automobiles to furniture and pharmaceuticals are optimized for efficiency and cost. Further, they are highly dependent on a “best-case” environmental scenarios… weather, geopolitical, regulatory, etc. More and more, worst-case environmental scenarios have become the norm. Extreme weather, the trend toward nationalism (which cranks up trade tensions), global pandemics, etc. are all a big problem for supply chains that are remote (often offshore) and centralized. The “worst-case” scenario is prevailing as evidenced by the increasing amplitude of the classic supply chain bullwhip. The technology exists today to reconfigure supply chains in ways that support the optimization of efficiencies and cost, and support resilience and agility. Simply put, digitally connecting all the links significantly strengths the entire chain, no matter the configuration. But legacy incentives, plus underappreciated concerns about the proprietary nature of most corporate supply chains, are blocking digitization. Prioritizing cost over all other factors and cementing that priority in place with comp plans that reward purchase-price-variance over total-cost-of-ownership further hinders supply chain transformation. Inventory de-stocking and normalization of material lead times put OEM manufacturing in the U.S. in a recessionary mindset/mode which relieved a lot of pressure in the supply chain. This won’t last. When the reset/re-calibration is complete, and the tailwinds start to blow in earnest, manufacturing in the U.S. could easily have a supply chain crisis déjà vu the likes of 2021/2022, or worse. For the time being, the best insurance is inventory. No one likes buying insurance, but when something goes wrong, which it too often does in today's supply chains, you are sure glad you have it. #supplychain EDS Women in Electronics Electronics Representatives Association (ERA)