Supply Chain is the CORE of every company that is involved in the production and distribution of a commodity. No idea, no invention is possible without supplies and the chain it follows. Whether it is raw materials, to components to direct and indirect materials, success of our company depends on getting your product to the market at the right time and at the right price. This of course depends on effective purchasing strategy, which is “to procure at the right price and the right time." Optimizing your portfolio of sources and locations though diversification reduces the risk of catastrophic failures in supply chain.
Hi, this is Hande Meissner, Vice President of Operations at Next Gen Digital. My career has been mainly around Supply Chain from dealing with asphalt, concrete, and storm drains during my lendable win years to now semiconductors. My main role has been about sourcing, securing, and moving product while managing risk globally. I’ve been with Next Gen for 12 years.
Next Gen digital is an independent distributor of semiconductors and passive components. Within its family of companies, it also serves as an authorized distributor to many products as well as in-house lab for parts of authentication and quality control. Our support and services covered the continent 24/7.
Today, I want to talk to you about Supply Chain Excellence. I hope you can find some points in this presentation to start conversations and explore areas for improvement within your organization.
I want to start with a visual of Supply Chain and what it means. Supply Chain is the core of every company that is involved in production and distribution of a commodity. No idea, no [inaudible] is possible without supplies and the chain it follows. Success of your company depends on getting your product to the market at the right time, and the right price. The map obviously represent good times, ordinary times. In these times, we can procure product whenever we need it. Again, in ordinary times, we grind on pricing, logistics, overall bottom line, to get to the right price. However, every so often, we experience pandemics, natural disasters, regulatory challenges, etc.
What I want to focus in my presentation is how we, a Supply Chain, can still reach excellence by working with diverse suppliers and lower tiers. In another way, how we expand our sourcing power by utilizing distribution or buying power is restrained. If you were to find a visual for COVID era Supply Chain, it will not be as smooth as the one on the previous slide. Some distributions affect regions, some the entire globe.
Back in 2011, an earthquake and a tsunami in Japan crippled Manufacturing. 9 years later, COVID pandemic. Two major events in one decade, and we still assume our buying power can withstand these events. You cannot buy what is not there. Size of your company does not guarantee resilience. With each event, we react short-term actions, keep our daily operations going, some better than others. We can implement low-risk, high-return strategies to our Supply Chain by simply diversifying our resources and collaborating with our suppliers. Adaptive mindset is not your company’s knee jerk reaction, but it is a survival skill in post disaster times. It’s not the size of your business, but the mindset of the business that has a fighting chance. An adaptive mindset or anti-rigid model will have the flexibility to maneuver chaos of disrupt markets.
For many companies, the crisis has underlined the importance of having alternative sourcing arrangements in place. In the coming months, some countries will open for business versus others will continue to operate under lockdown conditions. As a result, companies may need to be more vigilant when it comes to sourcing goods or services from suppliers in different geographic locations, and sometimes, geographic locations you have no power, no footprint, no presence at. These will introduce complexities—complexities that you could not have prepared, but yet are faced with.
You all know the theory of six degrees of separation. It suggests that because we are all linked by chains of acquaintance. We’re just six introductions away from any person on the planet. Now, let’s think about that theory in the sense of suppliers. In every major Supply Chain structure, there’s a way to segment suppliers into tiers. Now again, majority of equipment manufacturers are not agile enough to move freely within these segments. In times of disruption, we look up to our leaders to help navigate within and out of our organization charts control processes. With that normalizing the deviance and creatively reach our goals, how do we make sure each of our segments are filled with viable resources? Say, you’re a big manufacturer with deep pockets and have very good contacts in places with material supplies. All costs are negotiated and your contact mandates you have dibs on production volume. In good times, you’re doing well, but when pressed production stops moving, you can’t get anything.
Diversity is an effective defense. Functional diversity is a source of resilience. Buying power is not effective when there are no commodities to buy. Your sourcing power needs to be agile, global, and flexible. Where your company may not be flexible, work with an independent distributor to go beyond your borders into geographic areas that you can reach. Distributors, independent or not, give you a long standing geographic coverage 24/7.
You all know the theory of six degrees separation. It suggests that because we’re all linked by chains of acquaintance. We’re just six introductions away from any other person on the planet. Independent distributors are your one degree connection. They are your gateway to all the segments in the globe. Established partnership with distributors provide for continuity and trust of supply. From a sourcing standpoint, distributors greatly reduce risk-focused customers. As industry continues to expand globally, small and mid-sized customers have to take advantage of global sourcing to realize cost benefits and availability. Some do not have the resources available to visit facilities that are located thousands of miles away to qualify materials, audit plans, manage international logistics, and establish the supply relationship. With solid partnerships, you can bridge this gap through a systematic approach of identifying new sources of product.
Resilience. Characteristics of resilient supply chains are simple. You react to what’s being presented in front of you, you move on to being proactive, and then you continue. By continuing to be reactive and proactive that you cannot avoid is your resilience. Your resilience is within your capabilities of how you react and later make those reactions a part of your system to be a proactive company.
Let’s just face it. Majority of the natural disasters or unforeseen events that are thrown at us do not apply to our previous experiences, and we’ve learned with each new event. Our company’s structure may not be as globally volatile, but who we work with gives us a fighting chance to further our excellence. Disruptions, changes, new technologies, internal and external factors all affect our business. Every new factor forces a change. Excellence comes from our ability to move forward.
Thank you for listening to my presentation. If you have any questions or comments, please type in the comments below. You can reach me at HandeM@NextGenDigital.com. If you have any questions, you can send it to me or send your questions through the web link.
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