Supply chain optimization named key manufacturing booster

     

Manufacturers cannot afford to count on a strong or stable market. After suffering through a global recession, many organizations remain cautious and are ordering fewer products, which has made, making manufacturing a risky field. In a recent report that highlighted steps manufacturers can take to stay strong in uncertain times, audit firm Grant Thornton specified the strong effects that good supply chain management can have.

The report mentioned a specific problem that manufacturers' supply chains suffered during the recession - the collapse of suppliers. The report also specified that, taking careful steps, manufacturers can both improve their own results and protect weak or vulnerable suppliers, ensuring future cooperation and success.

According to Grant Thornton, one of the major factors in supply chain optimization brought to greater national attention by the Japan earthquake and Tsunami is the importance of maintaining multiple suppliers for each component needed in a manufacturing process. Doing so will prevent a disruption in one geographic region from affecting the entire operation.

Industry expert Brian Larsh told the researchers that the best use of this method is strategic and well-targeted. Companies should avoid spending too much on redundant suppliers and, ideally, promote competition and a resultant drop in prices.

"Ideally the development and placement of redundant tools and processes should take supply chain risk into account - and help you take advantage of nearshoring trends by placing production close to both your raw material suppliers and your customers," Larsh said, according to the report.

Other suggestions offered by Grant Thornton are also concerned with deepening relationships with suppliers. Companies can do this by paying for new material development in advance to strengthen small supporters and leveraging large manufacturers' discount bulk procurement power in the service of smaller links in the supply chain. These actions both benefit the small company itself and shore up parts of the manufacturing process that can easily break down in a weak economy.

According to SupplyChainBrain, ChainLink Research's Ann Grackin agrees with the Grant Thornton researchers that close collaboration between supply chain partners ensures success. Grackin stated that modern technology has changed business relationships, making them less structured, but can be leveraged for effective and efficient connections between partners. Young employees currently on the rise through the corporate ranks are used to social networking and eager to be constantly in touch. These tendencies are leading to rapid growth in internet-based communication between corporate partners.