Supply Chain Shortages and Their Impact on Manufacturing

When you’re responsible for ensuring the success of a U.S.-based multinational organization, it’s safe to assume that supply chain issues will always be top of mind.

Indeed, the National Association of Manufacturers reports that more than 65% of respondents surveyed consider supply chain to be a continual business challenge.

This article examines the impact of supply chain shortages in manufacturing operations within United States multinational companies. It provides insight into the root causes of these disruptions and strategies for mitigating risks and building a more resilient supply chain.

Main Factors Causing Supply Chain Problems for Manufacturers

Cost increases for raw materials. It’s recommended to set up relationships with multiple suppliers for the same raw materials, so in the event of disruptions, you can secure a better deal from one provider over another.

Equipment breakdowns. When crucial machinery malfunctions, you can be left high-and-dry until equipment can be repaired, upgraded or replaced. Review your current maintenance schedule, such as for the cranes you use to maneuver large amounts of goods. Multinational, U.S.-based organizations often outsource their industrial crane services to prolong the useful service life and reduce the total cost of ownership of material handling equipment.

Domestic supplier interruptions. According to one report, 45% of businesses have experienced delays from their domestic supplier. Accordingly, sectors from energy to auto to technology reduced their production forecasts.

More dependence on foreign suppliers. Relying on foreign sources of materials or components can leave your company in a lurch when international transportation systems experience bottlenecks or shortages. With shortages of products and components, you may have to stop manufacturing or bundling items for your customers.

Labor shortages. The average turnover rate in large carriers was 94% and 79% for small carriers during the period from 1995 to 2017, per a national think tank. It noted that the trucking and freight industry had suffered a shortage of 80,000 drivers as of 2021,leading to corresponding larger wait times when factoring the interconnected system of air, rail and maritime deliveries. This underscores how labor shortages can lead to more transportation and logistics issues.

Longer lead times. As suppliers grapple with their own shortages, lead times will be longer, which will add more delays to your production cycle.

Trade uncertainties. With shifts in the political winds, threats of tariffs and other trade barriers can lead to further disruptions in what was once a stable supply chain system.

Features of Resilient Supply Chains and How to Achieve Them

Trace the supply network from end-to-end. You may discover that one supplier has become a weak link in your current supply chain. It could be time to select suppliers in more strategically positioned regions, for example.

With more visibility into your supply chain, thanks to data collection and analytics, you’ll have the information you need to adjust or expand the network.

Map your suppliers. Executives should invest more time into supplier mapping to ensure comprehensive coverage of their supply chain needs.

Diversify suppliers. You’ll want to diversify your supplies and aim to localize them whenever possible.

Onshore crucial manufacturing processes. Multinational U.S. firms should consider investing in onshore manufacturing and supply to avoid the problems that come from relying on foreign suppliers.

How to Create a Supply Chain That’s More Resilient

Update your computer and software systems to harness data more effectively. Gather more information and employ advanced operational analytics to gain better control over the supply chain.

Finally, identify processes whose common and undemanding tasks are suitable for automation, such as by using machine learning and artificial intelligence (to monitor and harness information from Internet of Things devices installed throughout your facilities) and deploying robotics on the factory floor.