he pandemic has made people question some of the basic assumptions of their lives: Whom do I need around me? Where do I want to live? Can I keep working from home? In a similar way, the supply chain disruptions we’ve seen emerge from this crisis have forced some companies to re-examine how they operate at the enterprise level: What should we manufacture ourselves and what should we buy? Which products and customers deserve the most support? What should our distribution network look like? Here are some of the hard-won lessons they’ve learned to ensure they won’t be fooled again.
why should we introduce competition that doesn’t have to exist?”
Along with materials, components, and nished products, supply chain disruptions around the world also make it hard for companies to obtain production machinery. “Companies are having major lead-time issues,” says Nick Taylor, head of the industrial division at Liquidity Services, a provider of reverse supply chain and liquidation solutions in Bethesda, Maryland. A company that needed a new machine for a production line used to wait about three months to receive it. “Now, across the board, we’re looking at nine months, or even up to 12 months,” says Taylor. To overcome that obstacle, companies are buying used equipment instead; some nd what they need on the global market on an electronic marketplace that Liquidity Services runs. “Used machinery will move from the United States to Asia, and from Asia back to the United States, increasingly so now, even despite the higher shipping costs,” Taylor says. Many companies consider it better to pay sky-high ocean rates to ship used equipment than to go without. Other manufacturers are simply holding on to aging equipment. When one facility needs to replace a machine, rather than buy one, a company might redeploy a piece of equipment from another location. Liquidity Services supports that activity with its technology, too.
meet demand, some are glad to have Copper State turn to other sources for certain products. Collaboration among trusted trading partners has grown especially important since early 2020, given ongoing supply chain disruptions. At the start of the pandemic, Copper State took specic steps to keep that trust intact. “We made it a point not to cancel orders during the rst part of the pandemic,” Cates says. Strategic make-or-buy decisions will remain important at Copper State even after the supply chain stress has calmed down. “Our goals are to grow at a pace faster than macroeconomic growth,” Cates says. Investing in production lines to make products that Copper State could easily procure instead won’t help
Copper State Bolt and Nut in Phoenix is mainly a distributor, selling fasteners, construction products, safety products and industrial supplies. But 10 to 15% of its revenue comes from products it manufactures in-house, potentially putting Copper State in competition with many of its suppliers. Along with thousands of other companies in its market, Copper State saw demand for its products collapse at the start of the pandemic and then rebound. But supplies of both raw materials and nished goods have stayed tight. Rather than simply ght for access to those scarce commodities, Copper State has been talking with other manufacturers about how best to serve mutual customers. “We feel there’s a lot more opportunity to cooperate and collaborate with others than there is to compete,” says Brian Cates, the rm’s chief operating ofcer. For example, Copper State could manufacture certain bolts for its heavy industrial customers. But maybe it’s better to make only some of those items and procure others from third parties. “By buying from some of those other manufacturers, while also making parts for different customers, we’re expanding the supply scope,” Cates says. While rethinking which products to make and which to buy, Copper State also talks with suppliers about how best to procure the products its customers need. As those suppliers also struggle to provide enough volume to
the company reach those goals. “If one of these collaborative
companies has made that investment, they had good reason,” Cates says. “So
WDS recently purchased new racking that adds space for 20,000 more pallets at its newest 480,000-square-foot facility in Linden, New Jersey. The 3PL filled the facility on customer demand in about 60 days.
January 2022 • Inbound Logistics 105
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