The coronavirus remains top of everyone’s mind as its impact continues to be felt by more people, countries and economies globally. As travel restrictions tighten and quarantine advisories keep the workforce at home in the most affected areas, various industries reliant on international supply chains are concerned about the long-term impact of the pandemic.
Naturally, manufacturing is at the crux of these concerns. One disruption to the supply chain can impede overall production, productivity, on-time delivery to customers, and worse, the people who rely on that supply chain. Whether it’s a supplier experiencing a delay, trade tensions or a public health event, global uncertainty can have major impacts on the economy and across most industries, especially manufacturing.
In fact, industrial buyers and job shops don’t have to think too far back to understand how global uncertainty can impact their daily and long-term work. The recent trade war between the United States and China has forced several job shops to confront new types of demand and buyers to manage a plethora of challenges: What would happen if all parts produced in China doubled in cost? How would they find another supplier quickly? How would the job shop scale up to handle the demand? Will the border close? Will production completely slow down?
These issues can ultimately drive up the demand for services at U.S. job shops. Therefore, shops need a data-driven, tech-supported strategy to meet demand without disruption.
Strategy in place
Developing a strategy is especially important because buyers procuring from international sources face global uncertainty regularly. Just some of the factors they have to contend with are:
- Inclement weather and natural disasters
- Political and economic unrest such as trade wars and tariffs
- Material cost fluctuations due to economic and political uncertainty, such as steel and oil prices
- Public health emergencies
And those are just the unforeseen factors. Businesses also have to be held accountable for managing suppliers and subcontractors overseas and ensuring the materials and labor they use meet company standards.
However – and it’s a big however – job shops should not despair. Instead, it is more important than ever that they function at peak efficiency. In the current coronavirus climate, the most vulnerable companies are those reliant on factories in other countries for parts and materials. Simultaneously, pressure is building to reduce supply chain costs. If job shops are busy now, they need to focus on improving efficiency because demand is not about to slow down. If they handle jobs and demand at their peak now, when the climate changes, they will have proven their abilities and built credibility as a go-to source.
There is also a growing trend toward localization in manufacturing – one that is now accelerating. With global uncertainty afoot, buyers prefer to work with shops closer to their businesses, which in many cases, means ones in the United States. This trend was already burgeoning in industries that benefit from hyperlocal relationships. Aerospace buyers, for instance, prefer to be located near shops that can build their aerospace parts and, if there is an issue, be on location quickly.
Software has made it easier for engineers to design increasingly complex machines and parts, but producing the components is a different story. When a manufacturer is down the street – versus overseas – companies can remain more agile and build a more resilient supply chain. As time to market becomes more critical than ever to keep business moving, one month of downtime can make all the difference.
Now, in the face of global uncertainty, these stakes are heightened. Just-in-time manufacturing is more valuable than ever – and luckily, technologies such as automation have made it more available to job shops. To support just-in-time manufacturing for their customers, shops should implement automated tools and software to make sure processes such as quoting are as optimized and streamlined as possible. The faster a job shop can provide quotes, the faster it can process jobs in a time where many U.S. companies need support and sustainability.
Expedited quoting can support a variety of manufacturing types, from laser cutting and waterjet cutting to CNC machining and additive manufacturing. With the ability to take on more jobs or more demand – and as manufacturing trends toward localization – job shops are poised to help support U.S. supply chains in today’s climate.
While engineers designing components at national manufacturers have had access to high-end technology and software such as this for a while, many job shops are just now transitioning from pen-and-paper systems and Excel files for quoting and other front-office tasks. As this technology continues to move down the supply chain, it will benefit the industry as a whole – with responsiveness to global uncertainty being one key example.
With technological advancements, it will be easier for buyers to quantify (and possibly defer) the cost of doing business overseas. As supply chains become more digital (using software like Product Lifecycle Management systems), U.S. companies are able to gather more granular, actionable data on the impact of overseas disruptions, such as coronavirus, new tariffs or a trade war.
As a result, they will be able to quantify the cost of this disruption – especially if they were counting on parts from another country – and factor this cost as a risk in sourcing decisions going forward. Ultimately, going overseas for cheaper parts may not save costs on the project long term. In response, U.S. manufacturing may see an even stronger trend toward localization, despite the potential for more expensive upfront cost.
While there may not be a major, immediate shift in supply chains today, job shops must be prepared. As more global unrest occurs, buyers will use more algorithms to determine sourcing risk and make smarter decisions that account for the real cost of going abroad.
If and when more manufacturing jobs come to the United States, job shops must be fully equipped to support them – which means optimizing operations, removing bottlenecks and inefficiencies, and ensuring high-quality customer service and responsiveness. Having the right software is essential in achieving each of these objectives – in the face of global uncertainty and every day.