Planning Ahead for Supply Chain Disruptions
Disruptions to the supply chain due to ongoing issues with obtaining materials, inflationary pricing, labor shortages and transportation are expected to continue throughout 2023 and into 2024 or beyond, resulting in long lead times for equipment and parts for end users. While supply chain disruptions can wreak havoc on projects and maintenance around the facility – as well as the internal production schedule – proactive planning for large equipment orders and crucial replacement parts, along with upping the maintenance game, can help manufacturers manage supply chain challenges without impacting production or the bottom line.
Supply chain disruptions expected to continue
In a December 2022 CNBC survey of 341 logistics managers at major U.S. companies and trade groups, more than half of all respondents said they do not expect the supply chain to return to normal until 2024 or after. More than half, 61%, said their current supply chain is not operating normally, compared with only 32% of respondents who said it is functioning normally. When questioned as to when they expect to see a return to normalcy, 22% were unsure, 19% said 2023, 30% said 2024, and another 29% said in or after 2025, or never.
The poor outlook follows nearly three years of global supply chain problems, which began with the shutdown of Wuhan, China, where the Covid outbreak began. Survey respondents said they are still placing orders six months in advance to ensure arrival.
The trickle-down effect of worldwide supply chain disruptions is creating a situation in which the end users of industrial equipment and critical replacement parts are faced with long lead times – defined as the time it takes for a piece of equipment or part to be delivered to the site – for necessary machinery, parts and components. For example, electrical components and panels have lead times beyond six weeks in best-case scenarios and even longer in the worst situations, while large equipment, such as air compressors, may take much longer since its fabrication relies on an assortment of materials and intermediate components that may be sourced from a variety of suppliers who are also experiencing supply chain issues.
Planning for supply chain disruptions
Supply chain disruptions are a major challenge for end users of industrial parts and equipment and can have a significant impact on their own production schedules. For example, if a manufacturer had been planning a project in an effort to increase throughput, it may not be possible to obtain the critical equipment for the project in a timely fashion. Or, if there is a breakdown of a machine and a crucial component can’t be sourced for weeks, production may need to be stopped until the part can be obtained. Obviously, neither situation is a good one for the bottom line.
The good news is proactive planning – both for large projects and maintenance needs – can help manage the challenges created by supply chain disruptions.
Planning ahead for large equipment purchases
When it comes to purchasing equipment, experts suggest working with your supplier to obtain the anticipated lead time for largest and/or most crucial pieces of equipment and planning around that time frame to source the other components and manage the project schedule. Delivery for large equipment may stretch to months or longer after ordering, so beginning the planning stage and discussing realistic lead times with a reputable supplier well before the date the project must be completed will help ensure that glitches in the supply chain will not impact the project schedule.
As a bonus, the additional planning time can be used to allow engineering, purchasing and project managers time to improve the specifications of the project and ensure that any required upgrades to utilities or construction can also be completed prior to delivery of the equipment. Ordering early may also secure the current price of the equipment, as inflation and shortages are expected to continue to drive prices up over the next year.
This is also the time to develop and maintain strong relationships with your equipment supplier as it will ensure that you remain informed of developments that can impact the availability of key equipment, parts and components. Suppliers may also have access to a variety of equipment manufacturers and their parts and components to help respond to any shortages or glitches that may occur.
Planning ahead for maintenance and spare parts
Beyond making large equipment purchases tricky, the breakdown of the supply chain is also negatively impacting the maintenance department in many facilities. To ensure production, maintenance teams need access to necessary spare parts, but the current supply chain situation can prevent that from happening. Here, too, proactive planning can help alleviate the risks of having a failure curb production for weeks, which could be devastating to the bottom line.
Experts recommend anticipating the possibility of breakdowns as well as planning maintenance activities that can prevent breakdowns all together. To ensure that failure of a critical part does not create devastating downtime, it’s important to take assessments of the equipment that is most critical to the operation and create a list of the essential components for that equipment, as well as for the machines or parts that are most likely to fail and/or be difficult to obtain quickly. It is likely wise to contact your supplier to order an inventory of critical spares or, if possible, establish an agreement or contract with your supplier to keep essential components on hand for your needs. Ensuring inventory for likely-to-fail components on critical production equipment should help maintain production, even during supply chain disruptions.
However, unexpected breakdowns can and will occur, so upping the maintenance game is of utmost importance during periods where parts are hard to come by. If there is not a predictive maintenance or condition-based maintenance plan in place, now is the time to develop one. This type of proactive maintenance strategy relies on history and/or machine data to anticipate maintenance issues before they occur and gives maintenance crews a heads up that a problem may be on the horizon with ample time to order spare parts and address the trouble prior to a devastating breakdown.
While no one can account for every issue that may arise during times of economic and supply chain uncertainty, proactive planning that anticipates lengthy lead times and prepares project managers and maintenance crews in advance can help relieve some of the anxiety associated with large projects and maintenance while ensuring the bottom line is not affected by the inability to obtain equipment and parts.
Please contact a representative at JHFoster for information about ordering the parts or equipment that are essential to your production or project.