Building Flexibility in Your Organization’s Supply Chain

Supply chain managers are always tasked with the challenge of building flexibility into your organization’s supply chain. In years past it seemed that this task could be satisfied rather easily when your organization was responsible and performing the in house assembly, production and shipment of your products from one or multiple facilities. The solution to provide flexibility in your supply chain for supply, production and shipment was more like defined as developing a contingency plan.

In building a contingency plan with an in house assembly and manufacturing supply chain required having duplicate tooling as well as additional manufacturing or shipping capacity with having redundant capabilities at other manufacturing and distribution sites. Typically, the supply chain could test the ability of the contingency plan by have another site or multiple sites build and ship the same product. An organization could test this strategy for effectiveness several times a year to ensure that the flexibility, additional capacity was working properly and be the viable solution for the flexibility in your supply chain. Another solution was aligning with a contract manufacturer and third party logistics provider using the same principles as the in house multiple site model. The outsource solution would have added complexity to be able to have orders and invoices executed with compatible ERP and WMS systems or through an EDI solution with separate ERP and WMS systems. In either solution, your organization would need to invest in some capital equipment, such as tooling, process equipment or assembly lines however the ability for your supply chain continue to fulfill product to your customer’s is worth the small price for having the flexibility built into your organizations supply chain.

Today, maintaining flexibility in your company’s supply chain has the same challenge however the globalization and outsourcing employed today in the supply chain makes this challenge more complex and challenging. In addition, since outsourcing usually means off shoring in Asia that also equals longer supply chain and lead times ,so this is a more challenging task to add the flexibility to meet the customer’s demands.

One of the more challenging scenarios for an organization’s supply chain using an outsource supply chain is protecting the Intellectual Property or Base Technology where these commodities, components or processes that can be provided by one supplier. In these situations, my recommendation is to require your selected outsource partner or the sole source supplier to develop a solution that will accommodate able to handle the flexibility that your organization requires for your customer base. These suppliers are an integral part of your supply chain, so placing the responsibility with your partners and suppliers should be an expected requirement. One of the solutions that have been employed in my experience is to agree to a level of inventory that the supplier or partner must carry on a single source/base technology that will be readily available for deployment to your satisfy your supply chain needs for a limited time frame. In my recent supply chain experience, it was a common occurrence that there was some type of commodity that was in constrained supply and on WW Allocation, so planning and designing flexibility in your organizations supply chain is an absolutely critical strategic step in managing your organizations supply chain.

Considering the downstream portion of the supply chain, the assembly and production phase, the same critical thinking and planning must take place in your supply chain development. Where there is no Intellectual Property or technology issue than the challenge of adding flexibility becomes more of a business decision. Do you add more capacity by selecting another ODM/CM partner or require the current ODM/CM add capacity at another site or would your organization consider building in house assembly capability? In any event, there are so many variables and solutions in building “flexibility” in your supply chain; these are just a couple of possible solutions.