January 12, 2022

Supply Chain Disruptions & the Pace of Change

Anyone who has spent any amount of time in the supply chain profession is well experienced in dealing with constant changes. Supply chain disruptions are, after all, an unavoidable part of the territory. Even with this rule in mind, there’s no denying that the breakneck speed of evolution and adaptation we’ve endured over the last 24 months has been, in a word, revolutionary. By now, it’s become clear that the ramifications COVID-19 has had on global supply chains will be felt for some time to come. Many of the coping mechanisms implemented during this period will likely be seen as permanent fixtures in supply management, rather than stopgaps.

However, it’s crucial to avoid viewing the pandemic through a siloed lens. We need to put the pandemic into context for an accurate understanding and analysis of what we've experienced and the resulting turn of events. At the end of the day, we are still living in what can—and should—be considered a black swan event. Even more importantly, we must remember that this event is one that will eventually subside; it will come to an end, just as all other seemingly insurmountable supply chain disruptions have.

Don’t Be So Quick to Say Goodbye

But even though it will one day be in our rearview mirror, that doesn’t mean we should leave it behind completely. After all, it would be foolish not to carry the lessons we've learned from it into the future; for example, the importance of maintaining an agile and innovative company culture, as well as an eagerness to implement cutting-edge technologies.

supply chain disruptions

One of the most important learnings to take away from this experience is the fact that supply chain disruptions and hazards are unavoidable—no matter what else may be going on in the world. Even throughout the pandemic, there were a number of other challenging events that took place: Brexit, trade tariff wars, the closure of the Suez Canal, and a number of extreme weather occurrences, to name a few.

It is critical to acknowledge that disruptions will continue to be a part of the picture, even after what has seemed like the most impactful two years in recent history is in our rearview. At the end of the day, we live in a turbulent world; data from McKinsey supports this stance, with findings that indicate we’ll likely experience serious disruptive events every three to four years.

Making the Most of Supply Chain Disruptions

Disruptions are, if nothing else, a catalyst for growth. Over the last 12 to 14 months, it’s been proven time and again that those organizations that are nimble and adaptive are the most well-positioned to deal with the world as we see it today—and as we will undoubtedly see it in the years to come. 

So, what’s the key to success? Based on what we’ve seen, it all boils down to implementing and adopting technologies that allow you to react quickly. Embracing a best-in-class digital strategy, with tools that streamline the insights-to-action process is the most effective way to anticipate and react to the unavoidable disruptions you’re bound to encounter.

LevaData’s revolutionary, AI-powered platform offers the tools, recommendations, and insights needed to successfully manage supply chain disruptions. Learn more about our Supply Risk Navigator solution here. Then, schedule a demo with us to discover how we can help transform your company’s risk management strategies.

September 15, 2021

Semiconductor Lead Time Updates: Long-Awaited Relief Possibly on the Horizon

After reviewing the latest semiconductor lead time insights and analytics, LevaData has derived some unique perspectives from customers’ operational and market data.

While supply constraints, such as seasonality or new COVID-19 labor shortages, are undoubtedly still present, the impact of these factors varies. They’re worse at various nodes in the supply chain and affecting specific components within a group more than others.

However, after experiencing a dramatic 2-3x increase in average semiconductor lead times over the last eight to 12 months, it appears that the situation may be shifting again. The delays are shortening or, in some cases, beginning to flatten at the least.

The graph above, which includes up to the first week of September, plots lead times of a basket of commodity components used in almost every electronic device. MCUs, MPUs, and Diodes were some of the initial categories to start the sharp increase in lead times.

Now for the first time, we’ve seen a several-month streak of lead times either flattening or declining – especially in those categories that initially led the lead time increases.  

  • Is this a real plateau or trend inflection?  
  • Could these categories that faced the most significant initial lead time increases indicate that things are beginning to moderate and trend back toward normal?

Most component manufacturer’s facilities are near or at 100% capacity and many companies have been purchasing excess quantities of components to stockpile supply going into the busy holiday season. Are the markets over-stockpiling, and are these changes in lead time momentum signaling the beginning of supply constraints' path returning to normalcy? Or, is it that manufacturers have simply adjusted their forecasts down closer to constrained supply?  

The graph above, which includes up to the first week of September, aggregates that basket of commodities as a single line to show the change in overall lead time momentum.

Many companies’ cash flow was greatly affected by having to tie up more cash than usual to establish sufficient component supplies for enabling continuity of product supply to their customers. However, this change in momentum might be pointing toward brighter days for companies, where “extreme” excess inventory is no longer needed. The change in lead time momentum indicates that the semiconductor market is beginning to shift back toward more balance between supply and demand. However, unforeseen volatility factors, like COVID-19 shutdowns, will continue to impact that trend over the next three to six months.

Maintaining a Competitive Advantage

As we’ve previously mentioned, there are two key requirements you need to satisfy to stay ahead of the game and protect your supply chain. The first is accessing and utilizing reliable, up-to-date analytics on lead time averages and insights. The second is investing in a reputable, always-on risk navigation platform. LevaData’s Supply Risk Navigator software does just that, offering companies the visibility and recommendations needed to safeguard their supply chains and maintain agility. Connect with us today to learn more about our revolutionary, AI-driven platform and what we can do to help you manage these risks and more.

November 3, 2020

From Triage to Transformation… Building Resiliency with Agile Supply Chains

The bitter China–United States trade war might actually have helped organizations prepare for the COVID-19 pandemic.

When the world’s two largest economies decided to impose tariffs on hundreds of billions of dollars’ worth of one another's goods, corporations were pressed to consider alternative supply chain management constructs.

LevaData recently sat down (in a virtual, COVID-19-friendly manner) with a group of Chief Supply Chain Officers (CSCOs) from some of the worlds most renowned high-tech electronics and manufacturing companies. We wanted to understand how their respective organizations had managed to move from triage to transformation during the first phase of the pandemic, while building resiliency and agility for the future.

One fact is beyond doubt: COVID-19 disrupted supply chains like few crises have before. It exposed supply chain vulnerabilities of many organizations, especially those that operate or have business relationships in China and other impacted geographies.

Wuhan, the Chinese province where the COVID-19 outbreak is reported to have originated, is highly industrialized and plays an important role as a manufacturing hub for numerous Fortune 500 firms. Many of the organizations we spoke with were however already actively rethinking their supply chains long before the pandemic, especially those with a high dependence on China to fulfil their need for raw materials or finished products. While tariffs are often quoted as one of the main factors for such exit strategies, there are several other concerns as well, related to intellectual property and security, prompting organizations to reconsider China.

Keeping the lights on

A decades-long lean manufacturing effort focused on minimizing costs, reducing inventories, and driving up asset utilization had removed buffers and flexibility to absorb disruptions. When the pandemic hit, much of this needed to be unraveled, and quickly. The lack of visibility beyond the first tiers made their efforts unmistakably challenging as supply chain management teams started reacting to the disruptions caused by COVID-19. One of the first challenges was to gauge supply chain impacts and to find leverage without reliable forecasts, while everyone else was trying to lock in inventory. Beyond securing their own supply and business continuity, teams even found themselves helping to facilitate their suppliers’ transition to a work-from-home environment in order to maintain production. For those organizations who had already reduced their dependency on China, many had moved production to Malaysia. While the COVID-19 outbreak in Wuhan served as a precursor, the shutdown of Malaysia followed shortly. The counter measure became moving inventory out of these regions but also leveraged local manufacturing capacity to dual source.

As teams witnessed forecasted demand from traditional brick and mortar plummet, demand started to surge via on-line channels and agility became the sustenance to offset the lack of predictability. Initially the cost of airfreight could be passed on to the customer because of scarcity, but once the airlines started to close down, airfreight was no longer an option. The trade war had only caused financial implications affecting cost of goods, the main question for supply chain teams during the pandemic became what do you do when you can’t get it at all?

Never let a good crisis go to waste

In many ways, the pandemic exposed patterns and flaws in our supply chains which historically could be circumvented by securing alternative sources or expediting freight already in motion. For most organizations, the pandemic highlighted the importance of efficient supply chain management and it earned the supply chain function a seat at the leadership table. Attention was brought to cost of distance and the importance to compress time instead of just squeezing out inefficiencies. Leadership teams are consequently not just reconsidering their reliance on China or monolithic reliance on any geographical regions. It also accelerated inchoate transformation decisions to shorten supply chains and move some production closer to consumers in EU and US. Those with their own manufacturing capacity are moreover looking at increasing production redundancy between production locations to secure core products.

How to play the new game

Supply chains are in dire need of de-risking and will need to take a cluster-based transformation approach per key region focusing on network optimization. Most organizations are already busy reexamining their supply chain constructs, and many have created risk and resiliency think tanks identifying, and eradicating, points of failures. Without the ability to travel, people have generally become more productive and are subsequently coming up with more improvement initiatives. Some of the companies we spoke with, even pledged to leverage AR/VR technology moving forward to reduce time-consuming physical factory visits. Compared to most historic supply chain disruptions, during the COVID-19 pandemic, the manufacturing infrastructure remained intact while workers were being sent home. This highlighted the reliance on, and cost of, labor inside the supply chain and new strides will be taken towards optimization and automation.


About the Cognitive Supply Chain Management Executive Roundtable

Each quarter, LevaData hosts intimate roundtable discussions featuring a mix of thought leaders and Chief Supply Chain Officers (CSCOs) from global manufacturing organizations. Each roundtable is focused on a pressing issue that impacts the ability of these CSCOs to push their businesses forward and include discussions on where emerging technologies may be helpful in overcoming these challenges. To ensure these events generate candid discussions and opportunities to share experiences, they are not recorded, and the participants are largely anonymous. To continue this important conversation beyond this event however, we have captured highlights and key insights from our discussions above.

If you’re a CSCO that would like to join this community to share your experience and learn from your peers, we’d love to have you, reach out today.

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