One of the challenges facing subcontract manufacturing in the present economic climate is being able to respond to significant changes in customer forecast and planning, as demands become ever more unpredictable. When the product being manufactured is new to market, these challenges are yet more pronounced. If components within that product become subject to allocation, or supply is restricted because of natural disaster, as in the case of the Japanese and Thai floods, or if they enter end of life programs, then the situation becomes even more complex.
In order to effectively manage such volatile demands on the supply chain, Dynamic EMS uses a number of methodologies. The most important of these is to work closely with both customer and supplier to understand and mitigate for those occasions when problems may arise.
A clear example of this ethos is illustrated in Dynamic’s work with one of its customers, introducing a novel product in their particular marketplace.
Accommodating flexibility
Dynamic EMS’ John Dignan explains: “Although demand was buoyant, predicting the actual take up rate for this start up product was very much guesswork. This led to the classic dilemma of needing to respond quickly to volume demand without generating excessive inventory of components or finished product.
“Furthermore, it was discovered that despite extensive field trials, certain modifications to the design were desirable to increase market penetration and heighten the perceived quality of the product within the customer base. While these revisions did not significantly affect the bill of materials, the stop start nature of production, and the desire to rework existing product to retrofit these improvements, meant that significant support was needed from the supply chain. We needed our supply chain partners to pipeline key components, such that they would be available in volume at short notice, without incurring the expense of holding physical inventory.
“To complicate matters further, during the initial production stages of this product, two key items went on allocation and one, subsequently, was made end of life by the manufacturer.”
It is at times like this that Dynamic’s supply chain strategy really pays dividends. Dynamic was able to arrange regular tripartite meetings with the customer and the suppliers of the critical components. This helped all parties to understand each other’s demands and constraints and thereby to agree the most effective solutions to the issues at hand. In one case this process extended to a four way meeting to include the manufacturer of one of the components as well.
John continued: “Such a close way of working generated a much greater empathy between everyone involved. It enabled, not only the fruition of effective solutions to the supply problems being faced, but also the ability to react quickly to a rapidly changing situation, with all the key decision makers able to review alternative plans of action in real time. As a direct result of this approach, all delivery and performance targets for all parties were met with negligible cost implications.”
This is obviously a specific example of the benefits of adopting this approach, but these challenges are not uncommon and Dynamic prides itself on its ability to work closely with both customers and supply chain partners to best maintain the security of the supply chain. It provides discrete supply chain management as a ‘value add’ for customers, but with the ability to bring the supplier directly to them when that would give additional benefit.
As a corollary, it also helps the supply chain to manage issues more effectively, knowing that they have a robust communications conduit through which they can understand best what the true demands and issues are, sometimes direct from the ‘horse’s mouth.’
Informed planning
By the same token, this enables Dynamic to provide a comprehensive end to end service, allowing customers access to the information and expertise they need to formulate marketing plans. Dynamic and its supply chain partners can identify the areas of greatest risk and are able to suggest appropriate strategies to manage those risks, with either Dynamic, as the subcontractor, or the supply chain, providing the resource where needed.
John concluded: “The fate of those companies who have not added security to their supply chain, either through inability to meet contract deadlines, or through struggling with the debt of holding excess inventory is often unfortunate. In today’s marketplace, the ability to understand and address the potential risks in the supply chain is not just a desirable asset, it’s a vital one for any sub contractor who wants to stay financially healthy.”