Supply Chain Woes Meet the Cocktail-Party-Topic Threshold
When a topic can serve as an easy conversation starter at a mixed, social event, you know it’s truly entered the “national consciousness.”
Last week I tuned into supplier sourcing platform ThomasNet’s Industrial Sourcing and Supply Chain Activity webinar, reporting on the just-completed third quarter. During the presentation, Tony Uphoff, Thomas’ president and CEO, commented on how mainstream the supply chain topic has become.
“There are a bunch of different components coming together,” Uphoff said, “and the reason the supply chain is becoming a cocktail party conversation, I think, is that people are becoming all too aware of the complexities around all of these different components.”
Indeed, it’s not hard to find mainstream media coverage of sourcing and supply chain issues that are in normal times a pressing concern for folks in logistics but not many others. Whether it’s in less expected outlets like The New Yorker or The New York Times, or more predictable coverage in Bloomberg or the Financial Times, the global supply chain is top of mind for non-manufacturing lay people in a way normally reserved for trending TV shows. If you’re told you have to wait eight months for a new sofa to be delivered, which just happened to me, I guess that makes sense.
A Strong 2021 That Could Have Been Stronger
For people in industry, the ongoing supply chain crisis has forced adaptation to a new business-stymying normal. In advance of Fakuma, Wittmann Battenfeld held an online press conference to discuss its plans for the show as well as its financial performance. Company President Michael Wittmann said the maker of injection molding machines, auxiliary equipment and robotics set a new record level for business in the first quarter of the year, with strong performances continuing in August and September, when it normally experiences lulls. This good business activity came despite severe material shortages, according to Wittmann, which ultimately prevented even greater sales.
The company expected full year revenue of Euro 360 to Euro 380 million, 21% higher than 2020, but Wittmann believed his company could have topped Euro 400 million if “normal deliveries” were occurring. He also believed the backlog fueled by strong demand and longer lead times would last until the middle of 2022.
During an online presentation the same day by moldmaker StackTeck, highlighting its TRIM technology and new efforts in supplying inmold labeling automation cells, the company noted that it has to order controls and control components well in advance of sales to keep its pipeline full. At this time, it takes 26 weeks—half a calendar year—to have a control delivered, and StackTeck didn’t see that changing in what’s left of 2021.
In Thomas’ webinar, the company noted that printed circuit boards were the most-sourced products in the third quarter, owing to the ubiquity of computer like interfaces and capabilities in everything from cars to refrigerators. Within vehicles, Thomas reported that automotive injection molding was up 134% month over month, while injection molded plastics were up a whopping 352% month over month and 13% year over year.
Thomas said those figures were despite the plant shutdowns experienced by almost every major automotive OEM because of the aforementioned shortages, particularly in chips and the controls they empower. How much higher could those already gaudy figures have been if supplies were readily available?
Reshoring on the Rise
A big part of the ongoing issues with the supply chain is the fact that many OEMs are completely reconfiguring where they source goods and services, with many looking to find partners closer to home.
Thomas’ survey found that 83% of manufacturers said they are likely-to-extremely-likely to reshore, up from 54% in March of 2020. Over the last 12 months, Thomas processed $204 billion in RFIs, which was three times higher than the $69 billion it quoted in 2018. “With reshoring, the game is afoot,” explained Thomas’ Chief Marketing Officer Shawn Fitzgerald, “and things are moving very, very quickly right now.”
“There’s a huge movement to accelerate reshoring and localize manufacturing,” Uphoff said. “I can’t say the days of single sourcing are over, but we see companies that aren’t just shoring up a supply chain, but protecting it. The pandemic brought into stark relief how fragile some supply chains are.”
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