Don’t Let a Business Boom Be a Supply Chain Bust

Retailers, suppliers, and manufacturers scaled back business and production over the past three years to meet the declining demand brought on by the recession. However, since the turn of the year, global manufacturing has been rising steadily — and, in many places, aggressively. Resources that were superfluous just six months ago are now in high demand, and businesses are struggling to keep up.

The electronics sector has always battled the boom/bust business cycle, but this time it’s on a larger scale. New customer bases are growing around the world, creating logistical challenges for manufacturers on a global scale. At the same time, the rate of product obsolescence continues to rise as the latest models of a wide range of high-tech products come into the marketplace with amazing speed.

From a logistical standpoint, business booms can create almost as many challenges as downturns. It's essential that companies are prepared from a supply chain standpoint to handle increases in demand and meet evolving customer needs. Adding to the challenge, some of the supply chain changes companies made during the downturn are affecting their ability to meet customer needs today. Whether companies scaled down facility size, made inventory planning decisions that affected supply, or made changes to sourcing strategies and transportation modes, all of these factors play a role in their ability to execute in the future.

With the logistical challenges faced by post-recession suppliers, manufacturers, and retailers, the next few months may be a struggle as they prepare to ramp up for increased demand. Below are some areas companies can focus on to streamline their operations and prepare for what’s ahead.

Supply chain check-up: As business demand changes, so do supply chain needs. Companies should perform a post-recession supply chain check-up to ensure that their supply chain is set up to meet the evolving needs of their customers. This includes every aspect of the supply chain, from sourcing manufacturing and distribution locations to managing inventory and transportation, and everything in between. Third-party logistics providers can assist with a supply chain analysis and help manufacturers turn resulting data into useful information for their businesses.

Facility factors: Through facility redesign alone, UPS has seen customers' facility capacity increase by up to 70 percent. Whether your company downsized to a smaller facility or kept facility size the same during the downturn, now is the time to reassess your use of distribution space. Optimizing facility space helps companies prepare for changes in demand.

There is also an opportunity to take advantage of third-party facilities in areas where companies need distribution locations but don't want to invest in their own assets. These facilities often are multi-client facilities, meaning that companies can take advantage of only the space they need at any given time and ramp up and down according to demand.

Technology tune-up: The future of business lies in speed and sustainability, as does the future of your supply chain. There are two key aspects of technology that companies should focus on today. One is automation of processes for functions such as order processing and invoicing. Manual paperwork is time consuming, error prone, and environmentally unsustainable, and it’s quickly being replaced by greener options.

Unnecessary technical errors are one of the top reasons for customer delays, a key consideration for global companies. The other key aspect of technology is supply chain visibility. Having an up-to-the-minute inside view of your product at each stage of its supply chain journey helps keep inventory moving and speeds processes. Tracking also helps maintain customer satisfaction, allowing you to update your customers on the progress of their shipments and to identify and correct potential issues before they occur.

Expanded horizons: Electronics companies have to think further than ever before for supply chain decisions. When it comes to global trade, companies do not have to do it all on their own. From global assets planning to customs brokerage and compliance initiatives, third parties can play a valuable role in global supply chain design and execution. Meanwhile, you can focus on growing and maintaining your business — and getting ready for more boom times ahead.

4 comments on “Don’t Let a Business Boom Be a Supply Chain Bust

  1. AnalyzeThis
    May 23, 2011

    Thanks for the tips, Alan, I think this is good advice. Also nice to read an optimistic article such as this for a change!

    My main takeaway from this article was your tips regarding facilities: this is something I'm going to have to give more thought to. Many of us did indeed downsize and once business starts swinging in the other direction, we're certainly going to need to reassess how we use our space. Now that's not to say that we'll need to get MORE space as hopefully we've figured out ways to make better use of existing assets, but that's just one of the many factors we'll need to think about.

    I hadn't really given much thought to third-party facilities. You mention the advantages, but of course there are some disadvantages as well… security would be my main concern at the moment. But, again, this is a topic I really need to devote more thought to.

    Thanks again!

  2. Taimoor Zubar
    May 24, 2011

    I think all of these are good tips that businesses should consider as they are coming out of the recession and looking to expand. Amongst these points, I would give highest ratings to 'technology tune-up'. In order to increase competitiveness, technological innovation plays the greatest role. While reorganizing the supply chain, companies should seek to analyze the supply chain and identify which areas/processes can be optimized through the use of technology.

  3. prabhakar_deosthali
    May 25, 2011

    Very nice tips on the measures to take to bring back your facilities, supply chain and technology to meet the incresed demand. I would like to add one more tip to this list, i.e. Bring back your old hands , those whom you laid off during the recession. Those are the hands that know the best about your product, your manufacturing process, your supply chain and your managment style.  Welcome them back with a smile and see how raidly they are able to bring back your company to the full steam ahead!

  4. stochastic excursion
    May 25, 2011

    Improvements in software technology have been important in enabling organizations to operate intelligently and respond quickly to changes in the business climate.  Advances in interchangeable and easily extensible software modules have allowed companies to keep enterprise logistics systems current with the needs of their business.  Agile and flexible software design can go a long way in providing the ability to anticipate changes in market conditions and regulatory compliance requirements.

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