Supply Chain Crunch: The Lessons Learned

I learned something during the supply chain crunch of 2021 and 2022.  My guess is that you did too.  More than anything, I learned how much I took our previously dependable supply chains for granted.

Our business suddenly and unexpectedly learned that some of our regular supplies weren't available for months.  Some of them for nearly a year!  It was a shock to our system for sure.

I could bore you with lots of details, but instead, I'll just bore you with one.  Perhaps the most stunning one.  We were told in the middle of 2022 that our ink manufacturer was concerned that they couldn't get black pigment, meaning we might run out of black ink.  

Now, black ink is only a tiny fraction of our total material cost for our products. Considerably less than 1% of all the material we buy.  (we make signs, decals, and tags for industry.).

Ink is a tiny fraction, but everything grinds to a halt if we can't print with black ink. That "less than 1%" stops everything. Our product means nothing without printing on it.

"So what happened?", you may be asking.  Well, we dodged a bullet.  We managed to get resupplied with black ink just as we were running out.  We dodged several bullets in 2022, as we were just barely able to keep up.  But we did.  Barely.

I learned three things that I'd like to share:

 1.  Just-in-Time inventory management failed greatly.  Just-in-Time depends on everything working almost perfectly, and the supply chain problems were far from perfect.  I do understand that few companies can stock large quantities of major components.  That's just too expensive.  However, having a stock of minor components is doable.  My company's example was black ink.  For other companies, it wasn't black ink, but it was something. You can't let a tiny component stop everything.

2.  Analyzing inventory costs involves much more than just the cost of materials.  If you lose business (sometimes permanently) because you can't deliver, your real cost suddenly skyrockets.  In my company's case, we were fortunate because we were able to deliver when our competitors could not.

3.  Predicting every supply chain vunerability is impossible.  You'll never be able to anticipate everything.  However, you can anticipate some things.  Give it some thought and give your company a little bit of an audit.  Try to identify supply chain weaknesses you can shore up.  It will definitely pay off.