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Electronics Production | November 29, 2011

Manufacturing industry needs 'supply chain house' in order

"Manufacturing industry needs to get its ‘supply chain house’ in order", says Steven Healings, Group Supply Chain Director, eXception, in a guest comment.
Still recovering from the impact of Japan’s Tsunami disaster earlier this year, the manufacturing industry has been dealt another blow as Thailand recently suffered its worst floods for more than 50 years. Driven by government incentives, and opportunities to lower costs, and reap tax rewards, manufacturing companies were lured to Thailand and the provinces bordering Bangkok. The result of which is the area has become the Silicon Valley of the Far East with automotive and high-tech companies now conducting most of their manufacturing processes there. Sadly, seven of the industrial estates bordering Bangkok are now under water, thousands of people are out of work and global supply chains for some of the world’s biggest manufacturers are under threat yet again. Whether we like it or not, disruption to the supply chain is becoming a common occurrence, and with the changing climate and natural disasters affecting the globe more regularly, businesses need to review their supply chains and risk management approach. Original Equipment Manufacturers (OEMs) are constantly looking for their supply chain to offer solutions to reduce lead times and lower costs. Senior procurement staff who have historically been challenged with increasing the number of suppliers from single sourcing to offset the risk, have more recently started focusing on reducing the number of suppliers they work with to consolidate spend with a handful of key ones. This process is far from uncommon, and has inherent issues related to everything from quality to on time delivery. A supply chain that offers flexibility in its site of production, without any of the risk to quality is the only sure way for manufacturers to remain operational during times of disaster or crisis. This may not be the low cost option they’re hoping for, but in the long term the robustness of such of model will certainly deliver financial benefits to those prepared to take supply chain risk management more seriously.
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