Moving goods seamlessly from Point A to Point B – often across nations, oceans, and continents – takes a monumental global logistics effort. The supply chain process is akin to a well-orchestrated performance with individual players comprised of freight forwarders, third-party logistics providers, World Cargo Alliance (WCA) agents, distributors, wholesalers, retailers – and manufacturers.
Each plays a vital role in assuring that whether the goods are lumber supplies, jet engines, furniture, household goods, appliances, or other products, they travel from their origination point to their final destination on a timely, careful, well-orchestrated journey.
One analogy? Think of the famous 1950s-era Rat Pack performing in Las Vegas; each performer was exceptional, yet different – but all of them contributed to the ultimate performance delivery. So, in this series of blogs, we’re looking at the multiple stage players along the global supply chain. This time, our focus is on The Manufacturers, who make many of the goods needed for everyday living.
Part 4: Manufacturers Play a Vital Role in Keeping Goods Pumping Into the World’s Supply Chains
Approximately 592,000 U.S. manufacturing businesses work daily to transform raw materials into snazzy new products. Major corporate factories, mills, plants, and warehouses routinely transform materials via a physical, mechanical, or chemical process into everything from clothing to candy, toys, baked goods, home goods, furniture, chocolate, automobiles, and more. Small businesses too are a part of that number as they often churn out singular products, specialty items or custom-produced goods.
How Critical is it to Keep Goods Pumping into the Supply Chain?
Whether a manufacturing operation is big or small, though, just how important is it to the U.S. economy? Decade by decade, the U.S. manufacturing output typically represents from 11 to 14 percent of the total U.S. gross domestic product (GDP). In fact, a recent blog by Converged by Propel notes that every $1 spent in manufacturing adds $2.47 to the economy.
Needless to say, keeping the goods pumping into the supply chain is critical to the economy – and manufacturers play a vital role in doing so.
In 1970, the U.S. was number one in manufacturing worldwide, but in 2010, China moved to the top slot with a wealth of new manufacturing operations, most notably electronics. Still, the U.S. manufacturing sector remains strong, thanks in part to automation, cloud computing, industrial robotics, and other new production and product flow tactics.
Suppliers who provide manufacturers with raw goods face an ever-changing array of challenges in getting materials shipped in a timely and efficient manner. Feast or famine… Over-capacity or under-capacity… It’s the nature of the business! And over the past three years, they’ve managed through the entire gamut of disruptions from container shortages and port congestion to labor shortages, increasing fuel prices, inflation – and most recently, issues related to vast inventory fluctuations.
That’s why it’s so important for manufacturers to have a sense of urgency about planning and executing cogent supply chain strategies that can help mitigate the risks associated with a capricious supplier network.
How Are Manufacturing Supply Chains Evolving?
Recently, Deloitte collaborated with Manufacturers Alliance to look at how traditional manufacturing supply chains are evolving. More than 200 manufacturing executives were asked what they’ve observed in their businesses the past 18 months. How are they balancing costs? How are they improving efficiency? And how are they fostering resilience?
What were the biggest challenges in the past 24 months cited by the manufacturing executives? Fifty-nine percent said shipping delays were a challenge, clearly the biggest issue. They also pointed to parts delays (56 percent), transportation delays (56 percent), talent shortage (53 percent), restricted supplier network (50 percent), cyber risk failure (46 percent), supplier bankruptcy (43 percent) and excess inventory (43 percent).
Many manufacturers are using third-party providers like the Prime Logistics Group to provide reliability, cost-effective services, and good leverage in the market for logistics, shipping, and delivery – for both those inbound materials and completed goods move along the supply chain.
Elements of a Successful Supplier Management Strategy
Tallying its survey results, Deliote learned from the manufacturing executives that four components remain front and center for those seeking a successful supplier management strategy.
- First, manufacturers are strengthening existing relationships.
- Second, they’re engaging multiple suppliers. However, while nine of 10 survey respondents said they have multiple suppliers, the survey results showed that only 44 percent have regional diversification of suppliers, an area for improvement.
- Third, they’re deploying digital tools for increased visibility.
- And fourth, they’re combining efficiency with resilience.
While these approaches aren’t new, they’re quite effective when finetuned and customized to fit the specific manufacturing operation. Mitigation and proactive optimization at every step are a necessity for manufacturers as well as those of us elsewhere along the supply chain this year.
It’s critical for manufacturers to keep production flowing, retain quality workers, manage increased labor costs and inflationary trends, and produce high-quality goods. Those finished products then can flow to distributors, wholesalers and retailers, and ultimately to consumers. But the trick is to do it in a timely manner.
Why not evaluate whether a high-quality, experienced third-party logistics firm such as Prime Logistics Group could enhance your current operational status and performance as relates to the supply chain. With 2023 nearly half gone profitability-wise, it’s critical to take advantage of all available resources and our experts are here to assist.”
Next, our Part 6 blog in the series will focus on distributors and the important role they play in the supply chain.
About Prime Logistics Group
One of four divisions of Prime Group, an international logistics services conglomerate founded in Ecuador in 2001, Prime Logistics serves to streamline, optimize, and expedite freight to and from the U.S. for a wide range of major industries.
With offices in Miami, New York, Los Angeles, Bogota, Quito, and Amsterdam, Prime Logistics capitalizes on its long-time relationships with the major air carriers, ocean lines, and truckers to offer competitive rates in securing ample space to destinations all around the world.
For general information, call 305-592-2044 or visit www.PrimeLogisticsGroup.com.