The shortage economy impacts

Dealing with employment and resource shortages presents several challenges. With the current market dynamics, manufacturers have been forced to adopt processes that deal with the symptoms of shortages instead of addressing the root problem.

While there are approaches manufacturers can take to be adaptable in the face of whatever supply chain challenges will come, the reality is that many of the easy, instinctive solutions are short-sighted stop gaps. Here are a few ways manufacturers are dealing with shortage disruptions today and how they are creating sustainable strategies to build supply chain resilience.

5 Common Challenges: Short Term vs Long Term Solutions

1. Logistics Issues

Stop Gap: Attempting to overcome delivery obstacles by expediting materials

Without visibility into which parts are impacting production, manufacturers are paying high expedite fees to reduce lead time for the wrong parts. Supply chain disruptions—a dearth of ocean containers, port and seaway congestions, truck driver shortages, economic sanctions, etc.—are making business extremely difficult for manufacturers right now. Shipping costs have increased 5-fold, air freight has grown 400%, and fees to expedite transportation can run in the millions. With no clear end in sight to these ongoing challenges, logistics issues are turning into time-consuming and very expensive distractions. Delayed shipments are a substantial roadblock and may not even contain the most critical parts for manufacturers at that exact moment.

Alternative Sustainable Solution

For manufacturers to gain full-scope visibility, adequate prioritization of shortages based on criticality needs to be implemented. Rank severity will help procurement teams spend time on the most impactful tasks and key materials to keep production going. Manufacturers need visibility into critical parts and paths to expedite the right parts and achieve on-time delivery for customer orders.

2. Stale Data without Collaborative Capabilities

Stop Gap: Rolling out Intelligent & Predictive Planning Tools to Manage Demand Volatility

The three silos between buyers, planners, and suppliers are divided with a lack of collaboration and knowledge sharing. These crucial groups need visibility into the most up-to-date information with standardized processes to work more efficiently towards the same goal. Manufacturers need to go beyond traditional planning tools and implement an execution tool in order to provide the supply visibility and insights they need to view the real-time status of material inventory and customer orders.

Alternative Sustainable Solution

Manufacturers need a way to see, prioritize and collaborate on dynamic material timelines and availability, and critical shortages, both internally within their organization, and with their suppliers.

3. In-house Reporting Without Flexibility for Highly Fluctuating Supply Chains

Stop Gap: Building More Homegrown Analytics Reports to Solve for Visibility & Collaboration Challenges

Homegrown reports are costly to create and maintain and don’t enable collaboration or prescriptive action. If visibility is the key to improving operations, shouldn’t another homegrown report or a Business Intelligence tool provide that? Spreadsheets cannot be fully collaborative with stale analytics that don’t focus on priorities, recommendations and decisions. While these tools provide great ad-hoc reporting and visualization, they are not actionable for adaptable, sustainable strategies. To remain competitive in this environment, companies must maintain continuous alignment on production priorities among buyers, planners, and suppliers — something that simply cannot be accomplished using an asynchronous approach with siloed, on-premises technology solutions and spreadsheets.

Alternative Sustainable Solution

Leveraging a solution with real-time information, intelligent interpretation and prioritization of data, and purpose-built collaboration workflows can help supply chain teams overcome analysis paralysis for more efficient processes.

4. Shortage Economy Impacts with Unpredictable Challenges

Stop Gap: Implementing a Shortage War Room to Combat the Shortage Economy

Without real-time, actionable analytics, the reactive ad-hoc approach will continue, not giving you the chance to get ahead. This reactive approach uses data that is difficult to collect and becomes outdated almost as soon as it is collected. Employees end up overworked, shortages continue to plague the company, and no one has time to dig out of the hole they were buried in.

Alternative Sustainable Solution

Taking a proactive management approach and handling shortages in a real time can provide visibility into both current and future inventory and shortages 24/7. Prioritizing and automating the data that matters, analysts can focus on the information that matters for better decision making.

5. Excess Inventory

Stop Gap: Increasing Inventory to Prevent Future Shortages

Building up stock eats up working capital and further amplifies the strain on suppliers to produce the right materials. Many manufacturers, especially privately-held companies that are not subjected to public shareholder scrutiny, are deciding to throw working capital at building up additional materials stock, taking a hit on cash flow to prevent shortages. Even for private companies, this does have a limit. Excess stock puts additional strain on suppliers, limiting their capacity to produce materials and sub-assemblies that are truly required for production of backlog and future customer orders. This approach can spiral into a bullwhip effect that amplifies the problem. Manufacturers need a better way to collaborate on production priorities, otherwise shortages and inventory can go up simultaneously.

Alternative Sustainable Solution

Manufacturers need to find a way to remain resilient with whatever is coming their way, whether it’s material shortages, inventory excesses, inflation, or risk to their supply chain.

Leveraging Technology for Sustainable Shortage Management

Technology can automatically retrieve real-time, actionable shortage management insights and tools for long-term solutions to replace stop-gaps. Under a unified platform, you can:

• View update analytics
• Prioritize shortages
• Manage Inventory
• Improve on-time delivery
• Enable collaboration
• Retrieve proactive insights

Automating processes helps workforces leverage the same number of workers by allowing them to shift their focus to the information that matters. Saving time and valuable resources, proactive planning can help organizations during the unpredictable impacts of the shortage economy. Gain a competitive edge against your rivals by getting unmatched insights to create more efficient workflows for sustainable results.

Learn how LeanDNA can help reduce shortages by 32% on average in the first year.

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