In the past ten years, there has been significant change in the business environment for life science and advanced technology manufacturers. Globalization of supply, increased outsourcing, a strong push for lean initiatives and heightened regulation have increased the reliance on supply chains in meeting corporate objectives. At the same time, there is mounting pressure on supply chains from multiple directions:
- Exposure to Risk Globally: An event that happens in the Middle East or North Africa could affect your supply chain though you do not do business in either region.
- Suppliers Pressured to Streamline Operations: Chemical manufacturers require large capital investments to build and maintain plants. With the uncertainties surrounding the financial industry, chemical manufacturers are reluctant to invest significant capital in new facilities and are seeking to streamline operations and lower production costs by running fewer, larger batches.
- Customer Limited Resources: Companies in the Life Sciences and Advanced Technology industries are demanding leaner, more efficient supply chains and are required to do this with fewer people and investments.
Each of these factors reduces the flexibility of the supply chain. So, given the mounting pressures on supply chains, how do we achieve important supply chain goals, such as improving transparency, streamlining supply, minimizing risk and lowering costs? I see several options for Doe & Ingalls’ customers and manufacturers like them:
- Increase headcount to handle the additional workload.
- Invest considerable capital in technology.
- Outsource more of the supply chain.
Increasing headcount could help, but companies would need to convince their management teams of the value of additional personnel. Investment in technology could also help, but what technologies are needed? Technology investment can be significant and take substantial time and effort to implement. So, how can we meet our goals now?
My thought—and I admit to some bias—is that the most efficient and timely way for manufacturers to achieve these supply chain goals is to outsource more of their supply chains. Innovative supply chain managers who are experts in the industry can accommodate the needs of both suppliers and customers from a logistics, warehousing and operational perspective. Such supply chain managers can monitor markets, build proactive mitigation strategies, navigate crises, negotiate pricing, share market intelligence and reduce touches throughout the supply chain by bundling services.
Innovative supply chain partners are not the complete answer—meeting all of your supply chain goals requires contributions from many areas inside and outside of your company. However, for most, innovative supply chain managers promise better market intelligence, more buying power and the opportunity to build a more robust risk mitigation strategy without ballooning inventory levels, and while minimizing significant capital in technology and infrastructure. This can all be accomplished and reduce the total cost of ownership for customers if it is done right.
This is the direction that Doe & Ingalls is moving; to be the innovative supply chain manager who helps customers solve problems and build a more secure and robust supply chain.