News coverage of a potential strike in the U.S. automotive industry has been getting steadily louder as the United Auto Workers of America is in the midst of negotiating various requests to support the automotive workforce of the big three U.S. automakers. The auto industry is keenly aware of the business magnitude a strike could bring – in 2019, a 40-day strike against one automaker led to a production loss of 300,000 vehicles and cost the automaker $3.6 billion in earnings. But this impending event should serve as a warning call to manufacturers in every industry that they all operate in a disruption economy, and it’s just a matter of time before the next disruption impacts them directly.
Whether it’s workforce talent, inventory shortages, or logistics complications, manufacturers face very real business implications when they are blindsided by unplanned disruptions. And like what has been seen in past automotive industry strikes, those implications have ripple effects through the supply chain all the way back to raw material commitments.
In the new disruption economy, how should manufacturers be thinking about and preparing for potential disruption?
First and foremost, speed is key for supply chain inventory management and optimization. It can be the difference between cash on hand to stay in business or the inability to stay solvent.
Manufacturers smartly obsess over planning, but no plan ever goes perfectly. Having the ability to assess, optimize, and execute based on real-time situational inventory needs is critical to reduce risk and increase ready to build capability. The outdated approach of relying on tribal knowledge, manual inventory management and siloed communication between corporate planning and individual factory operations is no longer an option. It’s now the known path for ultimate failure.
While having a plan for every part (PFEP) is important, having a methodical way of executing the plan is equally, if not more, important. Standardizing a way to create real-time inventory visibility and optimization has to become the new normal for manufacturers to connect ever-changing dynamics of supply and demand with supply chain inventory management. Companies who take command of inventory optimization future-proof their ability to execute. Even in the face of disruption, they can more seamlessly rebalance what’s already in place.
What are the bigger implications of the potential UAW strike, and how can manufacturers across the globe smartly shine a light for their own organizations?
The UAW strike is yet another example of one of the many disruptions facing manufacturers in today’s modern business world. Most manufacturers have been painfully aware of raw material, product and part shortages - along with transportation challenges and large scale disruptions over the past 3 years. But it’s also a reminder that talent underpins each of those. All manufacturers are vulnerable, and no industry is protected from the challenges and shortcomings across the supply chain. But every manufacturer can future proof against disruptions small and large.
The time to decide what products, services, and mitigation plans are key to your business is before disruption strikes. A readiness strategy protects your supply chain from disruptions and future-proofs against unexpected fluctuations. This encompasses everything from the top down at corporate and bottom up on the factory floor. A thorough plan for every part in your supply chain pays dividends, even when those plans are not being strained or outright broken.
How robust is your company’s continuity plan and plan for every part? Start by assessing if you have existing solutions, or even the data quality, to:
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Identify what products and services are key to your business, and specifically what products will be a priority to protect in case of disruptions
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Determine single points of failure and develop plans to mitigate those risks that are documented and monitored
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Equip your teams at the factory level with visibility to understand and optimize inventory management in real time Develop what-if scenarios after previous threats have emerged and new supply chains are established, and a process to develop new scenarios when new risks emerge in the future
Business continuity solutions need to be maintained and shared across the entire organization. Alignment and proactivity will create businesses resiliency in the face of supply chain intricacies in the future.
Author: Harrison Wells, Vice President at LeanDNA
Harrison Wells has more than 25 years of experience in engineering and supply chain. He is a thought leader in the practical application of advanced supply chain theory. His Professional Services team partners with LeanDNA’s customers to help them leverage the advanced features LeanDNA has to offer.
Harrison has significant experience in industries managing complex builds including aerospace, automotive, and commercial vehicles. He was previously a Corporate Supply Chain Director at Triumph Group, now a LeanDNA aerospace customer, and he has expertise in value stream mapping, value engineering, and product development gained at Ford Motor Company, Lockheed Martin, and Bendix Commercial Vehicle Systems.
