3 Ways to Mitigate Risk and Plan for Supply Chain Disruption in 2022
In recent history, all industries have seen massive supply chain interruptions. Everything from bearings to microchips have suffered massive, even catastrophic shipping and procurement issues. Managing risk and supply chain disruption morphed from a line item on somebody's weekly to-do list into a full-time assignment,
All the usual suspects have been present and accounted for:
- Material scarcity caused by innumerable scenarios
- Increasing freight prices brought on, in part, by higher fuel costs
- Difficult demand forecasting
- Shipping port and route congestion (according to a March 2021 report from BBC News, the Suez Canal blockage spawned an estimated $6.7 million a minute in lost revenue)
- Changing consumer attitudes, flip-flopping almost daily
And of course, we must mention the “elephant in the room” that exacerbated everything: the coronavirus pandemic. Not only did it create labor shortages and workplace disruption, but it changed consumer habits as well, making buying decisions frustratingly unpredictable. For companies using the “push” processing method of manufacturing, it was a logistical nightmare (and still is ... we've not completely emerged from that rabbit hole yet).
In this article, we're going to discuss ways to mitigate some of the risk that's typical in supply chain disruption. Certainly, some manufacturing businesses are more heavily impacted than others by interruption of the flow of goods and supplies. The food and beverage industry, for example, deals with live and/or perishable products, which have a very real and explicitly defined shelf life, unlike bearings, gears, motors, or automobiles.
We're going to investigate three areas of manufacturing practices that, when handled properly, can actually help mitigate the risk associated with inbound supply chain disruption. And these will ultimately affect outbound supply chain fulfillment positively as well.
These three manufacturing practices or approaches are:
- More effective maintenance management through the proper application of IIoT
- Informed versus haphazard control of parts room inventory
- Alternate sourcing of parts and supplies for better supply chain management
By employing these three practices, it may be possible to avoid at least some if not all of the pitfalls of inbound supply chain disruption.
More Effective Maintenance Management Through the Proper Application of IIoT
Historically speaking, there have been two paths to machine and equipment maintenance: reactive and proactive.
Reactive maintenance waits for something to fail, and then fixes it. The good news about a reactive maintenance strategy is you've squeezed every last ounce of value out of a part or a machine or a system. However, there’s also some bad news: A single part or piece of equipment rarely fails quietly or at the most opportune moment. It often fails at the worst possible time.
A catastrophic failure often cascades wildly, sometimes bringing down entire production lines with it. That can cost significantly more than the cost of early replacement or repair. Even a small, seemingly insignificant bearing can take center stage and bring your productivity to its knees. And suddenly that dreaded word looms like a dark cloud over your operation: downtime.
Downtime is expensive. In fact, according to a 2016 report from Aberdeen Research, unplanned downtime in manufacturing can cost a company as much as $260,000 an hour. (Emphasis mine.)
Reactive, knee-jerk maintenance might work for some items in your plant, such as coffee pots and snack machines. But it has no place being used in production areas that affect your profitability.
Proactive maintenance, based on accurate data collection and performance history, is a far better way to work. Proactive maintenance can be broken down further into two similar but distinct categories.
Preventive maintenance is designed to prevent downtime by scheduling maintenance repairs during nonproduction hours. One of the goals is to repair or replace parts and equipment before they fail, not after. Scheduled maintenance is usually established on the equipment manufacturer's recommended time tables. For example, daily/weekly/monthly lubrication, adjustment, and replacement recommendations are based on the manufacturer's historical data, with a particular focus on mean time between failures (MTBFs) data.
The manufacturer may include the option for a spare parts kit. Purchasing the kit is highly recommended so the necessary parts are on hand when needed. Supply chain disruption in today's environment might render them unavailable when you need them most.
Though preventive maintenance is a better option than reactive maintenance, the downside is that some parts or systems may be retired too long before their time. It's a bit of a juggling act, balancing downtime costs with the cost of premature replacement.
Thanks to advancements in IIoT tech, there is an even more cost-effective alternative to preventive maintenance. Predictive maintenance is the second option for proactive machine upkeep. No, this kind of maintenance doesn’t involve gazing into a crystal ball. Predictive maintenance is based on specific real-time and historical data collected through sensors, plugged into a connected analytical system, and manipulated by algorithms to provide a true and accurate picture of machine status.
This analytical data allows your maintenance department to schedule “just in time” maintenance tasks, similar in concept to “pull” processing in the Six Sigma methodology of production. This technology paves the way for your facility to become a truly Smart Factory in every respect.
Understand, however, that not all IIoT solutions are created equal. There are pros and cons to any implementation. The only way to find out which solution for predictive maintenance monitoring technology works best for you is to compare the options for yourself.
Imagine a world without unplanned, unscheduled downtime. Predictive maintenance, powered by IIoT can make this happen. Take this excerpt from a Feb. 26, 2021 Forbes article written by Naresh Shanker:
The concept of predictive maintenance is not new, but the Industrial Internet of Things (IIoT) provides advanced predictive maintenance that combines sensors and machine learning to better predict when equipment may fail. ... The next step in that evolution is newly advanced sensors and algorithms that enable manufacturers to predict future equipment faults more accurately and with more lead time. We are seeing the introduction of sensors that can detect different phenomena that can inform prognostics.
The future of predictive maintenance is today.
Informed vs. Haphazard Control of Parts Room Inventory
This strategy should be logical, given the information presented about predictive maintenance. These two strategies for mitigating risk and thwarting inbound supply chain disruption are intertwined.
Here's how that works.
Manufacturing companies worldwide are adopting lean manufacturing, Six Sigma practices, or the somewhat new “Lean Six Sigma” format of operation. In all cases, an effort is made to reduce waste and unnecessary overhead. This leads to annual reduction demands in parts and supply inventory, often by large percentages per year.
That's probably a good idea, but it must be handled properly or problems can ensue. Inventory must not be “trashed” based on cost alone. The ability to acquire a critical part when necessary is vital. If it's not already stocked in the parts room, procurement may be hampered by current supply chain disruptions.
An article by Deloitte Global Operate Leader Doug Gish makes the dilemma clear:
Spare-parts management presents a similar challenge that can feel like a constant balancing act. With limited budgets, maintenance professionals must evaluate which parts they’ll need and when to procure them. If the spare is not on hand or on order when it’s needed, the downtime of an asset can be anywhere from days to weeks—or even months—while waiting for the replacement part.
Enter Industry 4.0, IIoT, and Smart Factory predictive maintenance. The benefit of IIoT companies like Worximity is insightful data for predictive maintenance and machine operational excellence. This allows the maintenance or parts room manager to make smart choices with regard to inventory control.
Armed with facts, not conjecture, managers can make decisions as to what parts to keep on the shelf to avoid extended and costly downtime. You can use a downtime monitoring software that keeps you informed of the type and frequency of failing parts. By running historical data analytics reports, you know exactly what to keep stocked to prevent catastrophic failure. Real-time, software-generated Pareto charts pinpoint the most likely failure points.
All of this is good to have, but there's one more strategy that's important.
Alternate Sourcing of Parts and Supplies for Better Supply Chain Management
It's a given that some parts, such as specialty components or proprietary systems, need to be sourced from the OEM. However, for other parts, aftermarket items are available.
One of the best sources for expedient delivery may be a local vendor. The caveat is that they may have limited on-hand inventory. You may be able to work with them to keep supplies you need in stock. By the way, armed with the information and hard data gleaned from the solution above, you stand a better chance of persuading them to add to their inventory.
Start evaluating your supply chain source. Put them under the microscope and ask the hard questions. To paraphrase an old adage, "Don't put all your parts in one shopping basket." Be firm about getting your questions answered about lead time and availability. Many companies tie themselves to a single national vendor. Make sure you give yourself the permission and ability to go off the board if necessary.
Improve your supply chain visibility using tools available to you. A recent PwC article makes this recommendation:
Deploy supply chain visibility tools that provide line of sight to capacity constraints into first-, second- and third-tier suppliers. By going further into their supply chains, global manufacturers can get a more complete profile of where components are coming from for their sourced sub-assemblies.
Although this article refers specifically to supply chain disruption resulting from the pandemic, it is good advice to follow all the time, given the potential for instability in the world in which we live.
Work Through Supply Chain Disruption
These three strategies can help alleviate problems caused by local, national and global supply chain disruption. Through technology and accurate reporting, you can transform your business into a Smart Factory and move toward achieving the world-class goal of 85 percent OEE.
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