Recent Shocks Put Vulnerable Manufacturing Supply Chains Under the Spotlight – New Principles Required to Solve the Age-Old Problem of Supply and Demand
“From COVID-19 vaccine production to the graphic pictures of a heavily laden container vessel stuck in the Suez Canal, recent events have really thrown global supply chains under public scrutiny. For example, each of the five leading vaccines have a huge supply chain associated with their production. As many as 280 materials go into making the Pfizer vaccine coming from 86 suppliers from 19 countries around the world—and any shortages or delivery delays have been widely reported. End-consumers are becoming increasingly conscious of the essential part played by supply chains around the products and services they purchase or receive.
“One key lesson learned from the pandemic is that our globalized business environment can be severely disrupted by events on the other side of the world. Our supply chains are much more dynamic than they were in years gone by, and with that new risks need to be factored into continuity plans and that means moving from just-in-time manufacturing to a more dynamic, demand-driven supply chain environment.
“One weak link in the chain can send manufacturers into a tailspin—witness the ripple effect of a recent fire in a Japanese auto-chip factory that instantly wiped 3 percent off the share price of Toyota, Nissan and Honda. Combined with an existing shortage of semi-conductors, this has sparked concerns over global car production, including in the U.S.
“Consequently, one practice is starting to gain credence in the industry—Demand Driven Material Requirements Planning (DDMRP). DDMRP is a planning practice that helps to mitigate disruptions in production when there is an unexpected spike in demand, or a shortage occurs. This method of resource planning sees stock not as waste, but as strategic inventory buffers so manufacturers can plan for uncertain events and increase supply chain and production agility.
“To successfully transfer to a DDMRP supply model, or even a hybrid approach combined with just-in-time delivery on some parts, manufacturers need to deploy a capable enterprise resource planning infrastructure that can use daily inventory metrics and external demand indicators to predict unexpected demand spikes or supplier shortages. This will ensure that disruptions to the supply chain, as manufacturers have experienced during the pandemic, do not have a detrimental impact on production.
Colin Elkins, Vice President, Engineering, Construction & infrastructure, IFS Colin is Vice President of manufacturing industries and has over 25 years’ experience in ERP software solutions for the sector. He has been a professional consultant and senior pre-sales consultant for much of this time and has extensive knowledge of the business issues and requirements faced by manufacturers. This covers many industry sectors, from process manufacturing, Food and Beverage, Chemicals, Life Sciences and Mills and Metals, to discrete manufacturing, Industrial and high tech.
A key member of IFS Product Development, Colin plays an instrumental role in the decisions regarding IFS product strategy.
Colin completed a Mechanical Engineering apprentice and holds a BSC degree in Production Technology and Management with a further endorsement in Metallurgy. He has held senior positions within a large engineering company of Works Manager, Production Director and Global Group Systems Manager.