Several of my clients are in the aerospace industry. In that industry, supply chain readiness audits are commonplace. These are especially prevalent today as growth in that market is substantial. Companies must be prepared for significant growth to support the doubling of the world’s fleet in the next 20 years to give their customers comfort in their long-term viability.
Although this is especially prevalent in aerospace, I’m finding double digit growth widespread in the marketplace today. Manufacturing is making a comeback. How ready is your supply chain? There are several aspects that should be reviewed to make sure growth will be seamless. A few of the top ones include: 1) Capacity readiness. 2) Staffing readiness. 3) Supplier readiness. 4) Financial readiness. 5) Process readiness. 6) Systems readiness. 7) Network readiness.
1. Capacity readiness: What is your projected demand? Turn that demand into machine hours. Do you have enough machine capacity to support it? Make sure you look out into the future long enough to cover growth with plenty of time to research, order, install and ramp up your machine(s) successfully.
2. Staffing readiness: Similar to capacity readiness, it is also imperative to review staffing. What does your demand plan say when converted into people needed? How many do you need to hire? What support positions are required? Do you need to fill gaps with temps or contractors? What skills are needed? This will also lead to cross-training and skills development. Neither can be accomplished overnight; however if you start months and years in advance, you’ll be successful.
3. Supplier readiness: Once you know what you’ll need to produce and outsource, you’ll know what supplier support will be needed. Are your suppliers ready to grow at the rate required? Do they even know about your growth expectations? Will you need additional suppliers? Will you need to partner with your supplier to create new materials/ products?
4. Financial readiness: Growth requires cash. It seems like such a great problem to have; however, growth causes far more complications than contractions. Although unpleasant, it is easy to figure out how to cut back yet it is not so easy to be prepared for growth. Have you figured out what your capacity, staffing, supplier support and other infrastructure requirements will be? Do you have the cash to support the ramp up? You will have to pay before you get paid. Cash flow planning is essential.
5. Process readiness: Doing more of what you’ve been doing is rarely sufficient. Instead, consider process improvements. Will lean principles improve your ability to grow quicker? Will SIOP (sales, inventory, and operations planning) support your growth? Are your foundational processes sufficient to support double digit growth? Are there opportunities to be more efficient and/or create customer loyalty? How about customer collaboration programs?
6. Systems readiness: One of the best ways to support growth without adding significant overhead is to leverage systems. Most companies use 20% of their ERP systems at most; consider how to increase that percentage in the “right” functionality to support your business. Is there additional technology that could provide a massive return on investment and support your growth? Keep updated on technology trends and pick those that will fit with your strategy and help deliver results.
7. Network readiness: Remember to think about your entire supply chain network. Are you producing the right products in the right facilities at the right time? Is there an opportunity to re-balance and improve your ability to grow profitably? Where are your customers and suppliers in relation to your facilities? What types of transportation and distribution nodes do you utilize? What lead time should your network support? There are many considerations to think about when evaluating your network.
Although evaluating your supply chain readiness is paramount to support growth, there is no reason to wait for your customers to request an audit. Integrate supply chain readiness into your yearly strategy review process. This way you’ll be in front of your customers and ready for unexpected opportunities. Imagine the possibilities to grow quicker and larger!
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