Thoughts & Ideas
Welcome to the section of our website where we share “Thoughts & Ideas” on how we believe we can help our customers as well as introduce supply chain professionals to alternative ideas.
Supply Chain Risk Mitigation
For most supply chain professionals, there has been an increased level of risk lately. We have been helping customers address these major issues.
THE CHALLENGE: It is become a common occurrence to see signs outside of manufacturing plants (and just about any type of business) that say “Help Wanted.” We are even seeing signs that claim to give a sign on bonus of $2,000 for entry-level production workers. There is a labor crisis that is starting to seriously impact businesses. Supply chain teams have started feeling the effects from their local suppliers in terms of erosion in on-time delivery, longer lead times and quality issues due to labor turnover. Additionally, local suppliers are starting to have to make tough decisions on which customers they can serve and which ones they have to serve less.
HOW WRP IS HELPING: WRP is engaging in a strategy to become a critical backup mechanism for customers that are impacted by these challenges. WRP’s supply base in Asia doesn’t have any labor capacity issues. Our supply base is well established and dependable due to ongoing quality inspections and improvement programs from our teams living in the country. Additionally, one of the benefits of working with WRP is that we hold significant inventory in our warehouse in Byron Center, MI to ensure our customers have more than enough part flow to allow for ebbs and flows in their business. Even better, WRP holds this inventory on our books, not our customers’.
THE CHALLENGE: As the Administration imposed the 10% tariff on many Chinese parts, this has had a negative impact on those companies that import from China. Given the pending threat that tariff could rise to 25%, it might have a very significant impact on American companies. Additionally, the steel and aluminum tariffs have encouraged local USA steel and aluminum companies to increase their prices. This, too, has a negative impact.
HOW WRP IS HELPING: Over 5 years ago, WRP saw that we needed to diversify from our dependency on sourcing predominantly from China. Since that time, we’ve built a very robust supplier partner base in Vietnam that has exceeded our expectations. Our current customers have seen a savings of up to 15% or more in parts coming from our Vietnam partners, above the savings they obtained from sourcing in China. Given the current tariff situation, we can expect that savings gap to grow even further.
Pain Management - Do these sound familiar?
LESS THAN 99% ON TIME DELIVERY – Are your local suppliers unable to meet delivery dates due to labor issues?
TYING UP CASH – Are you holding a large amount of parts inventory to get achieve MOQ’s or better price volumes?
COSTLY LCL – Are you paying twice as much for shipping because you don’t have enough volume to fill a container?
MONTHS OF INVENTORY – Are you sitting on large volumes of inventory in order fill an infrequent container?
LABOR – Have you had your people sorting bad parts?
AIR FREIGHT – Have you spent money on air freight due to either delivery or quality issues to get parts to meet your customers’ needs?
LATE HOURS - Are you staying up late to communicate with overseas suppliers?
POOR QUALITY – Is your team bogged down on solving quality problems, sorting product at your customer, and dealing with corrective actions?
MISCOMMUNICATION – Do you have trouble making sure your suppliers fully understand your needs and specifications, even when they say yes?
PAYING TOO MUCH FOR PARTS – Are you getting the best price from the right countries for your parts?
TARIFFS - Are you worried about how tariffs will impact your business, especially from China?
FINES AND PENALTIES – Are you knowledgeable about what harmonized codes to apply to your products to prevent customs penalties?
INSURANCE - Do you have the right insurance coverage on inbound freight and maritime freight?
PORT STRIKES & WORK SLOW DOWNS – Do you have the time to figure out how to manage through strikes and slowdowns?
CUSTOMS – Do you have enough flow of products that they won’t be stopped for inspection?
PROJECT LAUNCH DELAYS – Are you having trouble keeping product launches on track with your parts supply chain?
If these sound familiar, World Resource Partners can help! World Resource Partners combines 25 years of supply chain expertise, best-in-class global production capabilities, and logistics partners to create a dynamic approach to problem-solving that advances quality, reliability, and value. Give us a call and find out how we can manage your pain...
DIVERSIFICATION- A “KEY” TO SUCCESSFUL SUPPLY CHAIN MANAGEMENT.
As we all have learned the hard way in our investment portfolios, if we get too far out of balance in one market, stock, or investment and a downturn hits we are much more likely to suffer a greater loss and take a longer period to recover. This means we need to take the time to frequently evaluate our investment strategy and rebalance our holdings to ensure we are evenly distributed over a broader range of investments. Also, being long-term oriented, and not making short-term, quick emotional responses to frequent, short-term market/economic changes will lead to much better returns over time.
Our supply chain strategy should mirror our investment strategy. We MUST have a macro global perspective in how we manage and focus our material purchases. When looking at the current events in the world around us today; on the one hand, moving all of our sourcing out of China in the short term, due to the “trade war,” may seem like a good idea, but that is akin to pulling our investments out of the stock market when things look choppy. With 6.9 million unfilled jobs in the US already (many in manufacturing), there is no chance that our manufacturing base can create enough capacity to handle all the components/products that are sourced in China today by resourcing them back stateside. The sheer numbers of Chinese workers making the products being imported into the US today, based on a population that is 4 times larger than the US, makes the notion of displacing all the work back here difficult to fathom. BUT, it is wise to look for multiple global partners to spread your supply chain risk across more than just the US and China. There are partners to be found in India, Vietnam, and elsewhere around the world that can mitigate the risk and provide solid service and quality for your organizations. These broader geographies will help to create a platform for the future that will spread your vendor portfolio and not allow any single event or issue in one geography to dominate the day.
World Resource Partners is positioned to help with the task of “supply chain diversification”. Give us the opportunity to help create a more secure future for your business. We would be glad to explore alternatives with you.