While there are many considerable benefits to using Just In Time management strategies in manufacturing, there’s a major issue managers must contend with. Because of the bare minimum requirements for inventory, it often appears that the company must receive shipments for a part or given material up to several times per day. On a good day, that’s not a big problem. However, that doesn’t necessarily happen often. More frequently, the supplier will hit a snag, or something will go wrong with the shipment. This will cause a production flow interruption, which can have ripple effects down the supply chain to the end consumer.
A disruption is something that companies should do their best to avoid. It’s sometimes inevitable to have a weak supply flow simply because of the global sourcing of raw materials, but that doesn’t mean manufacturers can’t dampen the impact. Here are some suggestions as to what they can do to minimize production interruptions caused by the supply chain:
Identify sources of risk
As Inbound Logistics noted, figuring out where disruption is most likely to occur can be a benefit to manufacturers. That doesn’t always mean the problems come from the suppliers. A good idea is to start with the consumer and gauge risks based on each point in the supply chain. Whether it’s labor action at the logistics level or political instability from the raw material source, a business should know the degree of uncertainty surrounding a particular source. Once a company assesses the situation, it’s best to prioritize risk based on the highest likelihood of a disturbance downward.
Establish possible alternatives
The Wall Street Journal pointed out that the global supply chain’s greatest flaw is also its greatest strength: While a particular source of a material may be troublesome to work with and can cause a disruption, there is often an alternative source that is more reliable. When establishing what sources in the supply chain are most risky, it’s a best practice to also have list of alternatives ready and willing the moment the worst-case scenario happens. That way, while there is a necessary change to the way materials get received, the impact is minimal.
Keep a close eye on suppliers
Since the sources of raw materials or parts are often the least controllable, a company has a vested interest in their outlook. While it cannot directly change anything that’s happening, the manufacturer should still monitor what’s happening with a particular supplier based on key destabilizing factors such as financial future, political stability and exposure to risk.
Ensure flexibility of delivery on both sides
A diverse line of suppliers and distributors are often a great way to minimize the amount of risk involved in the global supply chain. On the supplier side, it’s ideal to have partners that not only have strong primary ports, but also have the ability to distribute to secondary ports. The Ports of Los Angeles and Long Beach labor action last year is a great example of this issue, as manufacturers needed to get supplies from the Port of Oakland and other West Coast ports. On the distribution side, having a different list of logistics providers can be useful as well.
Allow some flexibility into the production process
Even with the greatest preventive measures, sometimes a disruption is inevitable. In this situation, it’s ideal to take a proactive and agile approach to issues, such as sharing key statistics to trading partners and incorporating contingency plans in production. In this way, while the company may not live up to the standard of Just-In-Time parameters, they can still function and compete against other businesses in the field.
For more information on applying Just-In-Time principles to warehouse management and other parts of manufacturing, check out the white paper “Warehouse Management for Microsoft Dynamics NAV” today.