Fix A Supply Chain Disaster

When it comes to product development, there are a lot of areas where things can go wrong quickly. Most of these problems pale in comparison to supply chain issues that can impact revenue streams and cash flow.

Properly managing the supply chain is key to delivering a product that has the quality, cost, and innovation that a proprietor set out to accomplish from the beginning. If the supply chain management is off kilter by any degree, one or more of these objectives now becomes prone to failure, possibly affecting all other areas of the supply chain and remaining product development lifecycle.

When a supply chain becomes corrupt, it is time for an intervention to correct issues quickly. When we are called in to fix a supply chain problem, the most common areas of failure are the following:

1) Communication

The Problem: Communication between teams and individuals is absolutely critical to a supply chain. Often, most supply chain issues stem from a communication breakdown between parties. Identifying a communication issue is first and foremost because with poor communication all other problems cannot be rectified.

Our Advice: If project/program management is not your core competency, attempting to fix supply chain issues could cause more harm than good by introducing even more confusion. Find a competent individual or team that has experience with supply chain management to help work the kinks out. This is especially true with overseas management. Someone familiar with the culture, business ethics and customs of your suppliers area will have a tremendous advantage.

2) Quality

The Problem: Shipments of product are showing up at your front door on time and at the right cost, but quality of the product is sub-par and customers are sending the item back after a short time. You can’t figure out if it’s your design, materials, factory or a combination of all three causing the issues

Our Advice: Collect data on what parts are failing and when, revisit the design with your engineering team to find the root cause of the failure and find a resolution, then look to your supply chain vendors to implement the fix. It may be necessary send a qualified engineer / manager to the vendors location to examine factory issues and propose resolutions. Remember that most manufacturers and factories do not have engineering as their core competency (though they may try to sell it that way).  Talk to your local team about performing a factory or vendor audit since they know your product best.

3) Cost

The Problem: You have selected suppliers and vendors, you are ready for product, all tooling has been built and paid for but your cost per unit is still far above what you expected and what the market will bare. You have no transparency with your vendors so you are not exactly sure what you are paying for other than the unit price itself.

Our Advice: If we had a penny for every time we have seen this problem, well……….

You need to pierce the black curtain and see what’s really going on behind the scenes with your vendors. Request a B.O.M. (bill of materials) to get an idea of what they are paying for parts and labor. It’s ok for the vendor / supplier to reasonably markup items because they need to make money as well, but to not provide a B.O.M. is unacceptable and a sure sign that you do not have a relationship that is scalable with your business and product needs.

4) Time

The Problem: Every time you place an order for more product with your vendors / suppliers, it’s a process of deciphering their excuses to uncover what the delivery date of that product order will actually be.

Our Advice: Help eliminate some of the guess work by keeping an eye on the supply chain and looking for trouble spots where slow downs may occur. These could be problems such as factory labor shortages, low global supply of core components, poor communications between the factory and component suppliers, shipping delays, regional holidays. The right experienced person on your team can address any of these issues.

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