In today's global economy, supply chain disruptions can damage a company's operations, reputation and financial health, which is why a resilient supply chain is critical for any manufacturing business’s success. To remain competitive, manufacturers must strengthen their supply chain to prepare for disruptions and the challenges they bring, such as transportation slowdowns, unreliable suppliers, demand fluctuations and market uncertainty. This article explores supply chain strengthening strategies that include adopting new technologies, building strong partnerships, optimizing inventory management, relocating operations and more. Manufacturers can use these tactics to effectively execute their supply chain plans to better manage risks, increase efficiency and customer satisfaction, improve responsiveness to global supply shifts and gain a competitive edge in the marketplace.
Key Takeaways
- A manufacturing supply chain starts with raw materials and ends with sale-ready products. A disruption at any step along the way can cause delays and increase costs.
- A strong supply chain helps manufacturers operate efficiently and keeps customers satisfied through improvements like implementing modern technology solutions, building stronger relationships with suppliers and streamlining processes.
- By making improvements across the supply chain, businesses can be more prepared to manage risks and plan for disruptions, giving them a competitive edge when external supply breakdowns occur or market trends shift. Additional strategies to strengthen a manufacturing supply chain include optimizing inventory management, reshoring operations and implementing sustainability practices.
The Importance of a Strong Manufacturing Supply Chain
The manufacturing supply chain comprises the processes that turn raw materials into final products that customers want to buy. A well-planned supply chain ensures that all materials and components required for production are available in a timely and efficient manner. This helps to optimize production processes, improve lead times and reduce costs. A strong supply chain also ensures that products are shipped to customers as promised. Customers expect quick order fulfillment and short delivery times. Without an efficient supply chain, businesses will struggle to satisfy those expectations and, worse, push customers to a business that can deliver.
A strong manufacturing supply chain can help build resilience in the face of disruption. Because of increased globalization, supply chains have become more complex — and more fragile — so modern manufacturers must reinforce their supply chains to stay competitive. According to the 2022 Economic Report(opens in new tab) of the President by the Council of Economic Advisers, “The globalization of production has also made supply chains more vulnerable to disruption… they have less ability to recover quickly from unexpected events… they can also easily break.” This fragility has many causes, including fluctuating international trade relations and the rising number of increasingly costly weather disaster events, as measured by the National Centers for Environmental Information(opens in new tab). When breakdowns occur, businesses with stronger supply chains are in a better position to adapt and serve their customers by quickly adjusting processes, such as switching to an alternate raw materials supplier if the primary vendor’s location is struck by a natural disaster.
11 Ways Manufacturers Can Strengthen Their Supply Chains
Shoring up the supply chain must be viewed as a continuous process to keep up with ever-changing global supply networks and customer demands. Every industry has its own unique challenges that require specific improvements to overcome, but almost every manufacturing supply chain can be strengthened by these 11 strategies.
1. Implement modern technology solutions.
Modern technology gives manufacturers increased visibility throughout the supply chain, providing more accurate and up-to-date data to inform decision-making. Companies can boost efficiency and productivity by automating some processes, such as inventory tracking and reordering to ensure that levels of raw materials and final products are optimized to balance stock on hand while minimizing carrying costs. Manufacturers often use enterprise resource planning (ERP) systems to give managers an accessible big-picture view of the supply chain to identify and fix inefficiencies before they create bottlenecks or other major problems. Warehouse management software, for instance, provides full visibility into real-time inventory levels and storage, staff productivity, demand forecasting and order fulfillment workflows within a warehouse.
2. Build strong relationships with suppliers.
The supply chain process begins with suppliers. Manufacturers need to trust and rely on their suppliers to obtain the raw materials needed to produce goods. By developing strong and mutually trusting relationships with their suppliers, manufacturers can more effectively communicate their needs to plan better and get ahead of any shortages, delays or other issues. Manufacturers can also coordinate perks, such as first-in-line access for hard-to-get supplies, cost savings through special discounts and reliable deliveries. According to a July 2022 survey of more than 200 U.S. manufacturing executives by Deloitte and the Manufacturers Alliance, the top choice for mitigating the risk of supply chain disruption was “strengthening existing relationships,” with 83% of respondents listing it as a key strategy. Supplier inefficiencies adversely affect lead times, so it’s important to be selective and weed out suppliers that consistently cause issues or delays.
3. Establish communication and procedures for disruptions.
Disruptions in the supply chain may be unavoidable, but with proper planning, businesses can mitigate the risks. For example, many manufacturers use multiple vendors or delivery providers to allow for options in the event of an unexpected shutdown. Similarly, manufacturers may have multiple facilities in different areas that can ramp up production to compensate for a shutdown in one region. But these plans can only be implemented quickly with effective communication and pre-planned strategies. In the example of a supplier shutting down, the replacement vendor must be contacted immediately, before the competition has time to buy up the now scarce supplies. Visible data across an organization, often through dashboards, and open lines of communication are essential in creating and executing contingency plans in the event of a supply chain breakdown.
4. Implement lean principles.
To stay competitive and reduce waste, many manufacturers strive for a “just in time” (JIT) inventory management system, where raw materials are ordered as needed and unsold products and unused materials are kept at a minimum. Historically, businesses kept more stock on hand to ensure that there was always enough to meet demand. But according to data from St. Louis Fed, the ratio of private inventories to final sales in late 2022 was down 40% from the early 1980s and down 57% from the early 1950s. As more businesses use technology and automation to collect accurate data — both internal sales data and external market data — they are able to create more accurate forecasts to get closer than ever to meeting demand without overproducing. This reduces carrying costs and waste without leaving customers with frustrating back orders and delays. Lean principles can also give businesses more flexibility to meet changes in customer demand or supply chain shifts, avoiding storerooms full of goods that have gone out of style. However, JIT inventory management also comes with risk because a reliance on exact delivery times or only one supplier can mean a flawed batch of materials or a delay that is compounded throughout the supply chain, leaving orders unfulfilled.
5. Utilize data analytics
Any improvements to the supply chain need to be tracked and analyzed to ensure that they are meeting expectations and working as intended. Manufacturers should monitor and analyze key performance indicators (KPIs) to track trends and quickly identify any weaknesses. Metrics, such as inventory turnover rates, product-specific sales reports and changes in supply costs, should also be analyzed to find areas for improvement throughout the organization. Many supply chain management and ERP systems offer businesses detailed, data-driven reports on these and other KPIs to give analysts the tools they need to strengthen their supply chains.
Knowing is Half the Battle
6. Reshore or near-shore operations.
Global supply chain breakdowns are often hard to predict and can be caused by anything from a blocked canal to a shift in international politics. Manufacturers often bring some, if not all, of their overseas operations closer to their home base to mitigate these risks, either through reshoring or outsourcing to a closer, or near-shore, operation. While local regulations may increase some costs, such as labor or materials, reshoring often decreases shipping costs and lead times, giving manufacturers more control over when goods are produced and delivered. This can also be helpful in volatile markets that experience quick changes in customer preferences, making flexibility imperative. By keeping operations closer to home, businesses may also experience higher quality control from greater oversight and decreases in waste and unusable products.
7. Encourage a culture of continuous improvement.
Improving the supply chain is a continuous process because innovations, changes in the global supply chain and shifting market trends require ongoing analysis. After all, what works in today’s market might not work as well in tomorrow’s. An important asset for continuous improvements in the supply chain are the workers on the floor, as they are one of the best resources a company has to spot inefficiencies. Businesses with an open line of communication between labor and management can quickly identify weaknesses and address them before they create major problems. This also empowers employees to take ownership of their part in the workflow and can lead to increased productivity and higher-quality products. By encouraging a culture of continuous improvement, businesses can build innovations and new strategies from the ground up.
8. Implement sustainability practices.
Businesses that incorporate environmentally conscious and sustainable business practices into the supply chain can reduce costs, prepare for the future and meet the demand of customers who prefer to buy goods produced by “green” companies. By investing in energy-saving equipment, from high-efficiency manufacturing machinery to simple eco-friendly lightbulbs, businesses can reduce their utility costs and, in many cases, optimize downtime to increase equipment lifespans. Investing early in more efficient material can also give businesses the opportunity to get ahead of the curve as new environmental standards are implemented and competitors scramble to meet new regulatory deadlines. The manufacturing supply chain is often where businesses use the most energy, so it’s advantageous to identify areas where sustainability practices can make a difference.
9. Conduct regular supplier assessments.
A supplier may have been the best choice when the contracts were first signed, but better options may become available along the way — as replacements or as additional or backup vendors. By conducting regular supplier assessments and exploring options, businesses can be confident that they are getting the best balance of quality and price for their raw materials. And if the original supplier remains the right choice, assessments can lead to a deeper understanding of the vendor’s role in the supply chain and insight into any potential vulnerabilities. Businesses that regularly assess their supply chains and update their vendor needs can also improve their supplier relationships and increase the collaboration between the two parties, becoming more efficient and strengthening the supply chain in the process.
10. Streamline processes.
Streamlining processes can fortify the supply chain by standardizing workflows and reducing bottlenecks. A streamlined supply chain reduces lead times and improves order-fulfillment rates by eliminating unnecessary tasks and increasing coordination to help businesses quickly change course in the event of supply chain disruptions or supply shifts. Many businesses use an ERP system and automation to integrate multiple business processes on one centralized platform. This helps businesses keep communication open and accessible, creates more reliable and robust data and increases productivity. For example, by integrating manufacturing with sales, teams can easily communicate and share data to streamline the order-fulfillment process and give customers more accurate information on current stock levels and delivery estimates.
11. Build a robust risk management plan.
No matter how well a business plans, there’s always the possibility of an unexpected supply chain disruption. The more contingency plans a business has in place, the more likely it will be able to weather the storm. Businesses need to be able to identify and mitigate potential risks to create a robust risk management plan and to do so, they need visibility into every link of their supply chain — from procurement of raw materials to final product delivery. Some disruptions may be beyond the manufacturer's control, such as a natural resource shortage, but by planning ahead through actions like diversifying processes, identifying backup suppliers and monitoring changes in the market, businesses can do more with less and gain a competitive edge in uncertain times.
More Effectively Manage Your Supply Chain With NetSuite
Gaining the visibility a business needs to effectively manage its supply chain is a challenge. But with NetSuite’s supply chain management solution, companies can oversee business processes from first contact with suppliers to final product delivery. With NetSuite, businesses can track supplies, schedule resources and ensure that accurate records are kept throughout their supply chain. Plan for the future with NetSuite’s integrated demand planning and forecasting tools to make sure shelves are stocked to satisfy customers’ needs and goods are delivered as promised.
For a streamlined manufacturing operation, NetSuite’s manufacturing cloud ERP system helps businesses coordinate every step in the supply chain with a single centralized solution. NetSuite gives businesses control over their manufacturing workflow without sacrificing flexibility by providing a global view of inventory to help manage internal and outsourced manufacturing processes. And the system is scalable, so growing businesses can be prepared for tomorrow’s supply chain challenges.
As supply chains have become more wide-reaching due to globalization, they’ve also become more fragile. Businesses need to mitigate risks and plan for supply chain disruptions while strengthening their day-to-day supply chain processes. Companies can implement strategies, such as increasing supply chain visibility, strengthening supplier relationships and streamlining processes to build risk management plans, to gain a competitive advantage when supply chain disruptions inevitably occur. And by strengthening their supply chain, businesses can gain advantages even under normal operating conditions, including increased efficiency, reduced costs and faster lead times. But remember, supply chain optimization is an ongoing requirement, and companies must continue to find and monitor improvements to ensure that the business can adapt to tomorrow’s supply chain needs.
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Strengthening a Manufacturing Supply Chain FAQs
What is a manufacturing supply chain?
The manufacturing supply chain comprises the processes that turn raw materials into the final product that customers want to buy. A well-planned supply chain ensures that all materials and components required for production are available in a timely and efficient manner.
What are the four supply chain strategies?
Four strategies to strengthen a supply chain are implement modern technology solutions, use data analytics, reshore or near-shore operations and build a robust risk management plan.
What is the best way to manage supply chain and manufacturing operations?
Every business’s supply chain has its own needs and challenges, but most manufacturing supply chains can be effectively managed through strong supplier relationships, continuously monitoring and implementing improvements and having clear and concise strategies for day-to-day operations as well as contingency plans for disruptions.
What are the five Rs of supply chain management?
The five Rs of supply chain management are:
- The right place: Goods must be delivered to the right place, whether it be a retail location, a warehouse or directly to the customer.
- The right time: Goods must be manufactured quickly to meet demand and satisfy customers.
- The right quantity: Overproduction can lead to wasted goods or high carrying costs, while underproduction can lead to back orders and unsatisfied customers.
- The right quality: Goods must meet customer expectations and satisfy their needs. If they don’t, repeat customers become less likely.
- The right price: Goods must be produced and delivered efficiently. Otherwise, the cost will exceed the amount that customers are willing to pay.
