Mark Black, Chief Operating Officer, Filtronic
Throughout the widespread disruption to global supply chains caused by the pandemic and other factors, manufacturers like Filtronic have been finding new ways to build resilience and maintain output. Overcoming the challenges of supply shortages, shipping disruption, logistical complexity and extended lead times has required creative thinking and greater flexibility. It has meant being more proactive in anticipating shortages or disruption, planning further ahead, and working together with partners to secure supplies as circumstances change.
New ways to build supply chain resilience
At Filtronic, we have enjoyed success by flexing our procurement practices and adapting to uncertainty enabling us to fulfil most orders on schedule throughout the pandemic and avoid disruption to customers.
That was no mean feat, and we learned some valuable lessons about building supply chain resilience along the way. Principally, we made a strategic shift away from a classic just-in-time supply chain model approach to what we might call a “just-in-case” approach.
Just-in-time supply chains only work when supply lines are reliable and predictable. A just-in-case approach, however, relies more on planning ahead, developing robust mitigation measures and finding back-up options to cover supply shortages. To make this work, manufacturers need to build close, trusting and transparent working relationships with customers and suppliers.
Embrace long-term forecasting
Adjusting to longer lead times means forecasting further ahead. So instead of working with 6-to-12-month forecasts, we need to be looking ahead 12 to 24 months. If manufacturers are to base their procurement on such long-term client forecasts, those forecasts need to be realistic – based on likely scenarios, rather than best-case scenarios.
That requires manufacturers and customers to work in partnership, and share better insights and data to inform forecasting. For Filtronic, the customised nature of our products means that surplus inventory cannot often be reused or allocated to other products – which is why accuracy in long-term forecasting is so important.
Sharing the risks and benefits
It’s vital that everyone takes ownership in this new supply chain model. A transparent relationship between producers and customers means sharing risks. As a manufacturer, if we are ordering stock 12 months in advance of production, this will usually involve up-front payment. In a long-term supply chain partnership, that cost burden needs to be shared between the manufacturer and the customer.
There are also benefits to be shared, as well as risks. There is an opportunity to share buying power, for example. Large client organisations are likely to have significantly more purchasing clout than the SMEs supplying them. In a supportive supply chain partnership, major clients could use their buying power to procure raw materials or components at favourable rates – helping to unlock savings throughout the supply chain.
Adopt a creative, agile, proactive approach
The new strategic approach to resilient just-in-case supply chains is all about being creative and strategic, and finding new ways to get the best value out of a challenging and uncertain marketplace. As an SME, Filtronic has used its ability to make decisions quickly and be flexible to support the whole supply chain. That’s how we were able to ride out the upheaval caused by the pandemic. We were proactive, we adapted quickly and amended supply routes, so we could maintain our output and keep our promises to customers. As a vertically integrated manufacturer we were agile enough to be able to change components on our own products (where possible) as we have all the resources in house to qualify and track the use of alternative parts.
Supply chain disruption and delay is a fact of life today. The key to success is embracing adaptability, thinking differently about solving problems and collaborating to share information, expertise and resources – for the benefit of the entire supply chain.
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