The unforeseen problem of a sudden shutdown can occur both locally and offshore for a variety of reasons such as natural disaster, explosions, supplier shutdown, poor management, etc. There are a number of steps a company can take to avoid a costly shutdown due to problems in the supply chain. Two common approaches for ensuring a supply of critical or proprietary parts is to hold a safety stock or to dual source.
Holding of safety stock can be expensive but is one way to be prepared when a supplier fails to deliver. The amount of safety stock should be proportional to the expected time to develop a new supplier. Depending on the per-cost for your critical parts this can be an expensive if not financially unfeasible option.
The other option would be dual sourcing which may represent your best long-term option as well the economical option in contrast to holding a safety stock. In respect to dual sourcing one could have a local source plus an offshore source or two offshore sources. Annual usage will determine the feasibility of dual sourcing. An additional benefit of dual sources lies in competitive pricing by having each source know they are not alone in the project. This can lead to metrics for quality, on-time delivery, etc.
Note: If tooling has a lengthy development time, one could build and prove multiple sets of tooling so that the spares can launched with a new supplier immediately. In that case, the spare tools should not be inventoried with the incumbent supplier.
Lastly, one should always choose the supplier carefully and have an ongoing relationship with them. By visiting them periodically (or sending someone in your behalf) one can develop a sense of how things are going and perhaps help foresee pending problems. Nearly 15 years ago we helped a firm develop multiple families of OEM valves with an offshore source and they still maintain that relationship today.
The SourceParts Q&A column addresses your questions concerning in-sourcing, out-sourcing and second-sourcing of precision machined parts, stampings, fabrications, hydraulics, conveyor machinery and wiring harnesses.
Steven Anderson is the President of Global Development Solutions Corporation (GDS) www.gdsconsulting.com. GDS specializes in sourcing a wide range of parts, kits and assemblies. To speak with Steve (508) 835-5809 or anderson@gdsconsulting.com.
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Disclaimer – Material presented in this column is intended for information purposes only.
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