Ferro: Organizations navigate supply chain issues
Last month in this column, I noted how we can all navigate supply chain issues in time for the holidays. Organizations have been navigating and learning how to manage that for years, especially the last two years. The stories offer many lessons in creativity.
Last week, I attended the weekly construction meeting for Weber State University’s new Noorda Engineering, Applied Science & Technology Building. A discussion arose concerning a valve for a shower. That valve’s unavailability had become a sticking point. The solution seemed simple: find another value. But, even that simple solution had layers. The valve needed signoff from the state, university and architects. The valve needed to satisfy the specifications.
With everyone in that meeting onboard, it still took two weeks to make that change. Fortunately, the new valve had a short lead time — the time from order to delivery. The change made sense: The delay was more expensive than the change.
In contrast, long lead times means stockpiling materials has become critical — even on site. One part of the construction project will store 14 pallets of cables for use later in the project. Many panels of insulation sit on the roof because months ago insulation availability looked questionable. Those panels await a certain metal washer. If the wait becomes long enough, specifying a washer alternative, even finding a local producer, might become necessary. Paint has become hard to find, especially black pigment. One subcontractor started warehousing paint up to the supplier’s 100-gallon-per-week limit many months ago in anticipation of the slowdown.
Any large and complex project, any large and complex organization, has many elements. Organizations can do more than simply stockpile. Sometimes, the government can play a positive role. Roads, bridges, railroads, all benefiting the movement of goods, will benefit from the new federal infrastructure bill.
Yet sometimes government entities can run at odds. Likely, you will find the devil in the details and only visible during a crisis. Take the many ships waiting outside of the port of Los Angeles. First, a White House request to move to round-the-clock work helped start things flowing. Then, in what one reporter said “could be the tweetstorm that saves Christmas,” logistics executive Ryan Petersen noted another problem: the port stacked containers only two high. Turns out a zoning regulation enacted to protect the view for locals had slowed things down. With pressure from the president and governor, the city manager temporarily lifted the restriction to allow for stacking five high and subsequently things moved faster.
Meanwhile, a number of nimble companies manufacturing within the United States have benefitted from the shipping slowdown. Faced with tariffs and delayed components from overseas, companies have locally sourced from other companies or from within their own company. New services or products are sometimes created. In a recent tour of Lifetime Products, I was told how the company became a supplier of metal and tubes because of their investment in tooling.
Electronics has become a barrier to navigate around, and some have done it better than others. Traditional automobile manufacturers have run up against computer chip limitations, but Apple, very dependent on chips, isn’t seeing a 50% decline in production — closer to 3%. As a technology company, it has a long tradition of accommodating variable chip availability. Tesla also showed how it more closely resembles a technology company by programming chips it could acquire instead of waiting for the chips it had been using for the Model 3. T3 Motion, an ambulance company, simplified their vehicle design, moving from five to a single circuit board.
Some companies, like Toro, Whirlpool and Alliance Laundry Systems, have simply returned some products to older, pre-chip designs, despite the added cost of production. A “classic washer at grandma’s” is how Alliance Laundry recently described its simpler Speed Queen washer. Some companies, like Polaris, have shipped products without electronics and promised to install them later.
Dell and HP swapped production from desktops to laptops to accommodate more work from home. Nike purchased a predictive analytics company to better manage inventories of everything from raw materials to finished goods. Many organizations have triumphed.
But the future holds no escape from managing the supply chain. A recent McKinsey report anticipates a supply chain disruption every three to four years. My college will see it when we move into that new building next year. Among other things, all the extra cereal Americans have been eating since the winter of 2020 has limited cardboard supplies for moving boxes. I’ve started stockpiling any reasonably sized boxes I can find.
Dr. David Ferro is the dean of the College of Engineering, Applied Science & Technology at Weber State University: Twitter David Ferro9