Surviving Industry Supply Chain Disruptions
Written By Rob Kirkbride, Editor-in-chief, OI Publications • February 12, 2024
The pandemic taught us many lessons including this one that is especially important to the office furniture industry: Supply chains are fragile and when they break down, they seriously affect our business.
Ernst & Young research shows severe disruption during the pandemic is driving companies to make their supply chains more resilient, collaborative and networked. In its survey, they found serious supply chain disruptions affected 57% of companies, with 72% reporting a negative effect (17% reported a significant negative effect, and 55% mostly negative).
Prior to the pandemic, few executives (outside those in the supply chain) gave it much thought. It simply worked. Since the pandemic, supply chain finally got a voice, and much-needed investment in technical capabilities such as real-time visibility and resilience, according to Ernst & Young. The pandemic also forced supply chains to develop new agility to carry forward – for example, many organizations are building advanced analytics to do dynamic SKU rationalization rather than doing one off spreadsheet exercises when inventory gets too high or the next crisis requires optimization. And as a result, a high-performing supply chain is now perceived as a competitive necessity.
Supply chain issues in the office furniture industry resulted in more than just headaches — it cost companies serious money. One company had lead times stretch out more than a year during the pandemic because of supply chain issues. I visited another company shortly after the pandemic and noticed a pile of chairs waiting to be shipped to a customer. The delay? The arm caps of the chairs were stuck somewhere in the supply chain and the company had to wait to deliver them to the customer.
You probably had similar stories at your own company of components that were delayed because of shuttered Chinese manufacturing plants during the pandemic.
Since the end of the pandemic, many in the industry are working to change their systems from a linear supply chain to more integrated networks connecting many companies. Manufacturers are finding alternative suppliers for key components, often much closer to home. A company might have, for example, caster suppliers in China, Europe, Mexico and the U.S. instead of relying on only one.
Companies in every industry have been working to relocate suppliers and production facilities closer to home or geographically spreading them out so that they’re not so dependent on one country or region with the goal to ensure they can withstand disruptions and maintain business continuity.
According to Fortune, the pace of reshoring – the process of shifting production and manufacturing to domestic locations from overseas factories – has surged in recent years. More than 60% of European and U.S. manufacturing companies expect to reshore part of their Asia production in the next three years. A more recent survey found that U.S. transport and manufacturing reshored about 350,000 jobs in 2022, up 25% from the previous year.
What is your company doing to move to a supply web instead of a linear chain? I still believe in globalization, but I also believe companies need to protect themselves from future shocks. Like the Scouting motto says, “Be Prepared.”
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