In March 2019, IndustryWeek launched its Supply Chain Initiative. The initiative’s stated goal is to highlight the importance of small- and medium-sized supplier/manufacturers (SMEs) to U.S. manufacturing, OEM order fulfillment effectiveness and, in general, to the overall U.S. economy
We hoped to accomplish this by providing thought leadership in purchasing strategy and practice. The intent was to recognize and optimize supplier financial impact above and beyond material costs, which is often not an OEM consideration
For instance, the need for OEMs to build finished goods inventory ahead of demand in order to maintain customer fill rates is due to the lack of capability responding to market variations in original forecasts. The biggest contributors to this lack of capability are extended supply chains.
But it is very rare to find OEMs that tie the amount of pre-built finished goods inventory to supply chain strategy and practice. As a result, purchasing departments are not incentivized through both individual and overall performance metrics to dedicate resources to developing a lean supply chain that can routinely respond to OEM schedule changes in short order.
To date, IndustryWeek has made good progress toward meeting its goal through the posting of over 100 columns that focus on progressive supply management and practices, as well as through the publishing of my recent book on the subject, “Better Business: Breaking Down the Walls of the Purchasing Silo.”
IndustryWeek plans to extend the impact of its initiative by working with several other well-known organizations in a new initiative called The Onshoring Project, which has an overall goal to:
Develop and share new metrics, new tools and practices that will shift the focus of original equipment manufacturer executives from an almost sole reliance on piece-price in sourcing decisions, a practice that has led to disastrous impacts to the health of U.S. manufacturing, the country’s overall balance of trade and employment.
It makes a lot of sense for IndustryWeek to participate in the Onshoring Project, as the goals of both initiatives align very closely. By working with our consortium’s partners, we increase each member’s impact through complementary and supplementary collaboration.
Besides IndustryWeek, the founding consortium organizations include the Association for Manufacturing and Technology (AMT); the American Industrial Acquisition Corporation (AIAC); Helpful Engineering; The Reshoring Initiative; and Gardner Business Media. Any companies, OEMs and/or SMEs, or organizations can learn more about it by visiting www.theonshoringproject.com. If you like what you see and feel that your organization/company can positively contribute, you can sign up to receive more information.
And it probably needs to be said: By contribution, the consortium is not talking about funding. There are no membership fees to join. The Onshoring Project is looking for members who can contribute their ideas and any available existing resources to develop project deliverables. (By the way, work on one new tool related to evaluating supplier lean-ness is already in motion.)
The COVID-19 pandemic has given visibility to the problems and costs of over-extended supply chains. For this reason, both IndustryWeek and The Onshoring Project feel the time is right for advancing the need for changes in sourcing strategy. And we feel we can justify and validate those changes through our joint efforts.
I’ll end by adding one of my favorite observations. Specifically:
An OEM cannot be considered a world-class manufacturer unless it works with a world-class supply chain.
I truly wonder how many OEMs really believe that their supply chains are world-class.
Paul Ericksen’s book is Better Business: Breaking Down the Walls of the Purchasing Silo. Ericksen has 40 years of experience in industry, primarily in supply management at two large original equipment manufacturers.