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GSCMI Conference Speakers Share Insights on Managing Supply Chain Disruption

Friday, February 18, 2022

On a Friday evening last summer, BraunAbility, the Winamac-based manufacturer of wheelchair accessible vans and wheelchair lifts, received an urgent call from one of its suppliers. The company didn’t have enough workers to assemble the actuators for the vans.

BraunAbility offered to send help and three workers were soon on their way to the supplier’s plant in Minnesota, where they worked an entire week. After returning home for the weekend, they drove back for another week of assembling actuators—integral components that lower the rear suspensions of vans, reducing the slope of ramps.

“Without that effort and teamwork, we would have lost an entire week of vehicle production over all of our brands, so we’re really thankful for their efforts,” said Sheila Beutel, BraunAbility’s associate director of sales and operations planning.

Short-term measures such as assisting suppliers during a labor crunch are often necessary to keep supply chains moving, as Beutel and other speakers noted at the 2022 spring conference of the Global Supply Chain Management Initiative (GSCMI) in Krannert School of Management.

A wide range of unexpected events, from a worldwide pandemic to a warehouse fire, can potentially disrupt a supply chain, making temporary solutions inevitable—and perhaps even part of a company’s long-term plan to create a resilient supply chain.

“Supply chain resilience is the foundation,” said Susan Krystek, supply chain managing director at Accenture Consulting. “That’s where you want to start. Once you have the foundation, you can take strategic risk. You can determine where you want to have buffers. You can determine where you want to have multi-sourcing.”

More than 120 people attended the virtual conference on Feb. 18, gaining insight from nine industry leaders and experts on the topic of “Managing Supply Chain Disruption.”

For many companies, the Covid pandemic created an unprecedented disruption to their supply chains.

Charles “Buddy” Penquite, senior manager, supplier management department, at Subaru of Indiana Automotive, shared some of the challenges that the auto industry has faced, including the semiconductor chip shortage.

To manage supply chain disruption, it’s important to have multiple sources for parts and to develop good relationships with suppliers, so they feel comfortable bringing up potential problems, Penquite said.

“Two-way communication with a phone or going and seeing your supplier is always superior to emails and text,” he said.

Because of the pandemic, the last two years have been “the most challenging and the most character-building,” said Barry Greenhouse, senior VP and President, global supply chain and customer experience, at W.W. Grainger.

A leading distributor of MRO (maintenance, repair and operations) products and services, Grainger imports many of its products from Asia.

“We did see extremely high surges in pricing to move containers over the ocean from Asia to the United States,” Greenhouse said.

To maintain service for customers, the company had to find other carriers for its products.

“We’ve been aggressive with procuring capacity on the spot markets, even though spot market rates are five to six times traditional rates,” he said.

Among the strategies that Grainger used in 2020 to ensure a reliable supply of products during the pandemic: issuing purchase orders of about $200 million in non-cancelable deals.

“It was a way to assure a supplier that they weren’t going to be left hung out essentially, producing a lot of product and not having an outlet for the product,” Greenhouse said.

Building strong relationships with suppliers is important, said Richard J. Mansilla, vice president of global procurement at Lafayette-based Wabash.

The company, which makes semi-trailers and other products, is moving from short-term, transactional connections to suppliers toward long-term, strategic relationships that focus on mutual benefits.

“It shows a commitment with a supplier and it makes them come forward with their technology, with their innovation,” Mansilla said.

Discussing the company’s multi-faceted sourcing strategies, he underscored the importance of planning.

“Success is going to rely on good planning—good planning on the materials side, being able to plan for six months ahead of time, accurate forecasts that you can provide and communicate to your suppliers, logistic providers, stakeholders, even customers, but also long-term planning, three to five years,” he said.

James (Rusty) Baldwin, global solution manager for SAP’s Manufacturing Suite (ME) and Digital Manufacturing Cloud for Execution, echoed the importance of planning, while stressing the need to collect as much data as possible to ensure that a supply chain is resilient, not reactive.

“Connect everything,” he said. “Every single resource that you connect means that you’re getting the information all the way upstream, either on a vertical integration or a horizontal integration. … Once you connect everything, you get more real-time information for your logistics as well as your operations.”

If a factory is producing 200 parts ready for delivery, the delivery department needs to have that information as soon as possible, so it can ensure that it has enough labor, he said.

“Your data and being able to see that data is going to be the future,” he said. “How it’s presented to you and how you use that is completely up to you, but it will make you more efficient. It will also make you more resilient.”

Ananth Iyer, director of GSCMI, shared shipping data to illustrate the challenges that companies face as they import goods. He highlighted the strategies of FexEx Logistics and WalMart in handling congestion at major ports during the pandemic. FedEx used smaller ships that were able to dock in small ports, while WalMart chartered its own vessels and unloaded them at less-congested ports.

“While everybody was stuck with these bottlenecks, the places that had logistics managers who were flexible, who were thinking about overall cost of operation, rather than cost of each individual step—they somehow managed to improve and run the system,” said Iyer, the Susan Bulkeley Butler Chair in operations management at Krannert.

Having more suppliers in America can help companies avoid cargo port backups and other disruptions.

“If you have local suppliers, it’s much easier to go and see what they’re doing, make sure they’re complying with quality standards,” said Roy Vasher, assistant professor of management at Purdue and a former Toyota executive.

Vasher shared some of the benefits of reshoring, including shorter lead times, lower risk of intellectual property theft, and elimination of import tariffs.

But domestic suppliers are not always available. That’s the case for electric car makers and other companies needing lithium-ion batteries, whose supply chain is dominated by China.

“The supply chain from the United States is almost non-existent,” said Bob Galyen, owner of Galyen Energy, who has been working with battery technology for more than 40 years.

Reviewing the growth of the lithium battery supply chain, Galyen expressed his “disgruntlement” that a good battery supply chain was not developed in America during the early years.

“This is quite disappointing, fully knowing that we had two of the Nobel laureates in the United States that worked on the lithium-ion battery,” he said.

While the U.S. is far behind the curve, it can take advantage of new battery technologies to compete with China and other Asian countries, Galyen said.

“We need to make it cheaper, better and faster than what China is doing, and one of the ways of doing that is new technologies,” he said.