Companies that fail to provide necessary supply chain visibility into design and sourcing processes often discover too late that delays, scrap, risk exposure and quality failures were due to a dangerous reliance on manual, disparate or non-existent systems.
A recent IndustryWeek webinar sponsored by Arena Solutions discussed the following topics:
The webinar speakers included Nutanix’s Sr. VP of Operations David Sangster, CIMdata’s VP of Research Stan Przybylinski and Arena’s own Director of Product Marketing Scott Reedy.
The webinar included a lot of active audience participation. Below are a few questions the audience asked David Sangster, who brings more than 20 years of product development, manufacturing and operations experience to Nutanix.
Attendee Question: While I agree that preventing issues is less expensive than recovering from issues after the fact, it is time consuming to try to manage all these risks. Do you believe the cost of having someone manage supply chain risks outweighs the costs?
Sangster: The impact of severe supply chain disruptions on publicly traded companies is well documented. I cited several in my presentation. They were fortunate enough to have large businesses that can absorb the revenue miss and stock price hit, and still recover over time. But how many small, 1-product companies can say the same? There are probably several we’ve never heard of who simply vanish when they run out of cash. Yes, I agree that preventing issues is a genuine cost in terms of personnel, time and money. But would you rather be out of business?
Attendee Question: Can you share more about inventory best practices and how they can ironically increase exposure to possible supply chain risks?
Sangster Sure, here are a couple. Supplier Consolidation: You don’t want your spend distributed among too many average suppliers, but if you concentrate your business with just one or two, then what happens if they themselves have a severe disruption? Outsourcing/offshoring: In the chase for lower costs, companies have made a mad dash to Asia, but how many companies honestly understand their key suppliers 2nd, 3rd or 4th tier relationships? There’s plenty of risk there, believe me.
Our other presenter Stan Przybylinski has over 30 years of experience in the development of business-enabling IT solutions for research, engineering, and manufacturing organizations worldwide. He has worked in R&D, marketing, and communications with both Fortune 100 companies and small organizations. Przybylinski is responsible for CIMdata’s research agenda, including the CIMdata PLM Market Analysis Report series. Here are a few attendee questions asked of Stan.
Attendee Question: Stan talked about compliance initiatives in his presentation. How effectively are companies addressing so many complex regulations (like RoHS, Conflict Minerals, REACH and others)?
Przybylinski: Not well so far, at least in the US when it comes to conflict minerals. The conflict mineral requirements in the Dodd-Frank bill just require public reporting; there are no punishments for non-compliance right now, other than public shaming. The other standards have been around longer, and companies have more experience with them and more success. But it will always be a challenge with such complex supply and value chains.
Attendee Question: What should companies attack first? Should they consider implementing “big bang” for bill of material (BOM), quality and project management or just try to manage their product and change processes?
Przybylinski: It really depends on the company. Each will have their own “pain” that will cause them to act. Wherever you start, it is important to have the right level of sponsorship to gain support across functions and deep enough into the organization to make a real difference. Of course, funding is crucial as well.
Many companies are unable to successfully navigate the increasing complexity of the supply chain ecosystem that must work together seamlessly to design, plan, produce and ship products on-time. The costs of failure are high, ranging from missed revenue targets to managing a social media tempest.