The US manufacturing sector is trying to bounce back after COVID-19 disruptions that caused it to experience its greatest contraction since the Great Recession.

Manufacturers entered 2020 with a sense that the sector was stabilizing, but as the virus began to spread, they quickly realized their expectations were wrong. One of the earliest ways the US economy felt the impact of the pandemic was when supply chains were disrupted due to factory shutdowns in Wuhan, China.

Disruptions force manufacturers to assess their supply chains

Manufacturers scrambled to find new suppliers and stockpiled items they felt may become scarce. They faced issues they had never faced before, such as having to figure out how to transport inventory to areas away from quarantine zones for access to shipping.

Sometimes they had to substitute raw materials where primary suppliers were impacted. They had to find new suppliers and, in some cases, shuffle production schedules based on available materials and components. It was necessary to update customers about delays and adjust customer allocations where necessary.

The ability to monitor and manage all supply chain components is an essential part of supplying quality products and maintaining a good brand reputation. Visit https://www.etq.com/supply-chain-quality/ to find out more about a software application set composed of four apps to use for the production part approval process, receiving and inspection, supplier corrective action and supplier rating.

Disruptions have been continuous and inconsistent

As factories started to open, it became easier to obtain materials and components, but prices for some products increased substantially. Disruptions to logistics networks plus ongoing shipping delays and erratic shortages of parts meant manufacturers battled to recover.

A strong demand for shipping due to increased ecommerce activity also resulted in increases in freight costs and lead times. More and more products were also out of stock due to worker quarantines and unmet production schedules.

What manufacturers need to do 

As manufacturers slowly begin to recover, they have to address some of the wider implications of the disruptions to their supply chains. They are likely to need to take some of the following actions:

  • Create supply chain transparency and establish a list of critical components. Determine the origin of supply and identify ones that are sourced from high-risk areas and do not have ready substitutes. Identify alternative sources. Assess critical supply chain data to properly determine damage and run stress tests to understand where supply-chain issues are having the most financial impact.
  • Work with sales and operation planning to get demand signals that determine required supply. A crisis could increase or decrease demand for particular products, which makes the realistic estimation of final customer demand more difficult but more important.
  • Communicate with key supply chain stakeholders about changes to supply volume and demand volume.
  • Estimate available inventory, including after-sales stock and spare parts, and use it to keep production running.
  • Optimize production and distribution capacity. This begins with ensuring employee safety and determining which products offer the highest strategic value.
  • Approach logistics management in such as way as to adapt rapidly to any situational or environmental changes.

As the pandemic continues to impact the global economy, it is likely that supply chain disruptions will keep happening into the foreseeable future. Constrained supply chains will put pressure on earnings and liquidity.

However, processes and tools that proved invaluable in managing the crisis may become a permanent fixture to monitor supply chain vulnerabilities. Reliable and continuous monitoring and management of the supply chain is essential to make them more resilient in the future.

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