Supply-managed lead times continue to rise to record highs, and this trend will continue in the…
Supply-managed lead times continue to rise to record highs, and this trend will continue in the years ahead
From port congestion and transportation bottlenecks to raw material shortages and labour restrictions at the vendor or manufacturer, businesses and their suppliers have encountered months of problems that have resulted in prolonged order-to-delivery timeframes. The newest data from the Institute of Supply Management (ISM) shows a drop in the Supplier Deliveries Index. Slower deliveries are indicated by a value above 50%; the index for June was 75.1 percent.
Lengthened lead times and delayed supplier delivery aren’t limited to a single industry. In June, 17 industries experienced slower supplier deliveries, according to the ISM survey. When a Texas hurricane shut down refineries and petrochemical factories, packaging makers faced lengthier lead times for supplies. The storm-related freight bottlenecks only exacerbated the situation. In comparison to the normal four to six weeks, La-Z-Boy reported lead times ranging from four to nine months.
The solutions are as diverse as the reasons that contribute to extended lead times. Brands have dealt with port congestion by looking for alternate seaports for import and export, or shifting certain cargo to air freight. Walmart and other big-box retailers are navigating around greater lead times by including them into their supply chain strategy.
The availability of supplies to satisfy increased demand is an issue for automotive and electronics supply chains. Experts estimate that semiconductor providers will not be able to begin reducing their backlogs until 2022. Even when supply is available, electronic component lead times are three times longer than typical, according to one ISM survey respondent. Due to supply chain issues, Ford has limited or halted production at numerous facilities this month.
The most significant problem, according to Fiore, remains labour recruiting and retention for manufacturers and their suppliers. “If you don’t have the labour, it’s hard to raise capacity,” Fiore added. However, he said that many firms are hesitant to boost salaries in case future demand falls. Seasonally adjusted manufacturing employment is roughly 400,000 lower than pre-pandemic levels.
Many suppliers have raised prices as a result of a mix of labour difficulties, supply constraints, increasing demand, and shipping expenses. It’s a confluence of issues that means supply chain managers will have to contend with not only lengthier lead times and maybe greater inventory carrying costs, but also higher material costs.
Answer the following questions using evidence from papers, journals, and textbooks while referring to the case study. At the conclusion of the responses, write the reference/s for all citations.
The case covers a number of concerns related to getting supply in order to fulfil rising demand. Discuss the possible techniques used by manufacturing businesses to reduce the effects of the five (5) potential areas of operations management on the firm’s operations performance. (10 points)