4 Keys to Navigating Extended Lead Times

Manufacturers are experiencing longer lead times and difficulty locating some componentry, such as specialized HMI and PLC equipment, quickly, according to PMMI, the Association for Packaging and Processing Technologies' 2021 End-of-Line Equipment Purchasing Trends and Design Insights report. These parts are experiencing delays, but many equipment parts and packaging materials are also suffering from supply chain issues.

Causes of Supply Chain Disruption

It's crucial to first comprehend what leads to supply chain interruptions. It might be challenging to identify the precise reason for a lengthy lead time, although several elements are frequently at play. The widespread disruption of conventional shipping channels, the general labor shortage that has hampered OEMs' ability to produce machinery, and the sharp rise in demand for packaging equipment—particularly machinery and components that incorporate higher levels of automation—are all contributing factors that have their roots in the COVID-19 pandemic. Unfortunately, these problems are difficult to resolve since they affect worldwide supply chains and warehouses, which also have to deal with blocked ports, closed borders, and the biggest problem of all: a severe labor shortage.

Rise in Demand of Raw Materials

The demand for particular raw materials may increase as technology advances. For instance, the adoption of electric vehicles and advancements in infrastructure point to an increase in the price of copper. Over the next 20 years, the demand for copper might increase by 50%, according to a 2016 McKinsey forecast. If you already utilize copper-based items, such as insulated copper wire, these changes can be felt in your daily life. Unfortunately, there are times when the availability of raw resources cannot keep up with the rate of demand.

Skilled Labor Shortages

Like many other sectors, manufacturing is experiencing a manpower shortage. “Staffing is one of the biggest issues. From shipping lanes to truckers, to factory workers on the plant floor. Either making machines or making CPG goods, people can’t get the workers,” says Bryan Griffen, PMMI’s director of Industry Services. A little change in worker availability can have a significant effect on the rest of the supply chain when labor is in short supply. Labor supply disruptions can result in delays of several weeks, from strikes to COVID-19 scheduling issues. Because there aren't enough workers, warehouses are producing at less than full capacity, making fewer parts and pieces of equipment, and restricting access to the customers who need these supplies to run their enterprises.

Shipping Disruptions

The supply chain's various components are connected by the transportation industry. Even if there are no issues with labor or raw material availability, shipping delays can significantly lengthen lead times. For instance, ocean freight capacity struggled to meet the increased demand when nations started to relax COVID-19 rules. Longer lead times resulted from the lack of shipping containers and the increased port wait times induced by this. At the same time, there was already a driver shortage in the FTL (full truckload) and LTL (less-than-truckload) markets when the pandemic started. Increased lead times for new commercial vehicles and high consumer demand have made capacity issues more difficult.

Supply Exceeds Demand

The COVID-19 epidemic also caused a faster restoration of demand than the market's capacity to supply goods in several markets. The industry is experiencing short-term pressures and difficulty in satisfying project needs, even though demand and supply will eventually balance. These difficulties with the supply chain won't go away any time soon.

Tips for Dealing with Long Lead Times

Communicate Needs Early

If you are aware that you will require material for a task or project, let us know as soon as possible. Put in blanket orders so that we can order components in advance and keep some stock on hand. The supply chain can then be kept in good working order by making well in advance requests for staged releases. To make plans for upcoming reorders, you can also review your past statistics.

To beat the lengthy lead times, pre-order as many parts and components as your budget will allow. This is especially important for (traditionally) imported goods like electronics that have even greater delays than domestic parts.

Even if it goes against the principles of lean manufacturing, keeping inventory on hand can assist ensure access to the supplies of the materials and parts that are unexpectedly in short supply in the current environment. Consider placing bulk orders for the components and parts you know you will need in the upcoming year.

Diversify with Other Brands and Materials

Lead times can occasionally fluctuate dramatically between manufacturers. You could be able to receive your material more quickly if your distributor is aware that they can source from other producers. You should inform your distributor if you are open to utilize a different manufacturer or material. As a result, we have the freedom to choose the optimal solution despite supply chain limitations.

When Feasible, Use Standard Components

Standard components can easily be purchased from several manufacturers, making them less susceptible to supply chain problems. As a result, you can pick the components with the quickest lead times. Therefore, employing standard components while creating a new system is a wonderful idea to prepare for potential lengthy lead times and cut expenses. Changing your existing machinery to work with various parts or with different materials may mean the difference between continuing production and stopping operations.

Try Automated Inventory Management

Manually processing orders raises the possibility of error. These mistakes also can't be promptly fixed when you have long lead times. You can easily track purchase orders, stock levels, sales data, and carrying costs using an automated inventory management system. The system can automatically place new orders for supplies when your supply runs short.

Delays in the supply chain affect raw materials as well as machine parts. This has an influence on suppliers, firms that manufacture consumer packaged goods, and ultimately consumers. “CPGs, and then end-users are now not always getting the best quality of materials. And at this point CPGs have no choice―you take what you can get,” says PMMI’s Griffen. “Machines today should be tolerable to run sub-quality film and material because you never know if you can get the perfect quality product. Consumers need to have food on the shelf, so we have to run what we have.”

The truth is that through 2022, it is expected that the problem of lengthy lead times and supply chain delays would persist. The main issue, in the opinion of experts, will be resolved once more maritime channels reopen and trucks resume their operations.

General Spare Parts Management

Outside of dealing with extended lead times for some components is the general process under which spare parts are managed. An efficient parts management strategy can lead to lower carrying costs, less performance interruption, and greater efficiency as a whole.

Creating Uniform Work Order Procedures

A reliable yet simple work order method might be useful for efficient inventory management. Once a process has been thought through, it should be standardized for everyone and made simple to follow.

To ensure the correctness of the inventory control system, proper rules covering all components are required for active work orders. The creation of a simpler work order procedure guarantees that all pertinent data is taken into consideration.

The following factors should take into account while standardizing the work order process:

• How difficult is it to order components without a work order?
• The capacity to identify staff members who are not following the established protocol, which might result in inaccurate inventory.
• Do you have a flexible enough procedure that allows you to create work orders with greater priority in advance?
• Reduce the time it takes to process work orders and purchase order requests.

Controlling Parts Inventory Effectively

It's not necessary for spare part inventory management to be comprehensive to be deemed effective. It is unlikely to find huge volumes of stock of different parts in the actual world. Inventory control relies on correctly arranging and storing spare parts in a safe maintenance storage.

If components or fresh stock are taken without records, reorder requests are less likely to be made. The effectiveness of your inventory control can be greatly revealed by thorough analysis and review of your check-out and storage system.

The following factors should be taken into account to improve inventory control:

• Creating precise criteria to help, classify, and describe spares (prioritizing items in the inventory by labeling them as "essential" might assist).
• Periodically examining all spare components in light of time changes, alternatives, and other factors.
• Reduce your total inventory expenses by regularly reviewing spares to see if you are retaining surplus stock for certain items.

Comprehensive Knowledge of Lead Times for Various Parts

A good spare part inventory management requires having a complete understanding of your spare component lead times. When choosing which components to stock and in what quantity, lead times are crucial.

For instance, stocking strategies frequently overlook spare parts for machinery that is not essential to daily operation. On the other hand, a day or two without components for such vital assets is almost unacceptable if lost production time results in a large financial loss for your company.

When seeking a thorough comprehension of lead times for components inventories, the following elements should be taken into account:

• Introducing made-to-order and eliminating expedited options for items with lengthy lead times (preferably it is best to keep parts with long lead times).
• Making a list of readily available off-brand components (as a viable substitute during a crisis).

Estimating Risk for Each Piece of Equipment

Although equipment failure is inevitable and can happen at any time, estimating the likelihood of downtime can help with effective spare part management.

There may be a few parts that are still useful for use in the future when a machine breaks down or needs a significant overhaul.

Every piece of equipment's risk should be calculated taking into account the following factors:

• Calculating your risk by figuring out how much an hour of downtime would cost your company overall.
• Working with relevant data and part lead times.
• Calculating costs and the shutdown's causes.
• Creating a cost comparison between "new vs. old" replacement components.

Implementing Stronger Security Measures

Another crucial stage in developing a successful spare parts management system is limiting who has access to the parts inventory warehouse. If everyone has access to the warehouse or area where the parts inventory is kept, you will probably be fighting an ongoing struggle against inaccurate inventory.

The following are a few of the crucial actions to take into account when putting better security measures in place:

• Adopting regulations preventing some employees from accessing part inventory.
• Ensuring that every inventory supply has physical security measures in place, such as parts counters.
• Putting in entrance and exit badge access combined with security camera systems.
• Teaching factory workers how to properly maintain equipment and conducting regular reviews of vital spare components.

The best course of action in dealing with the current lead time situation is to continue being upfront with your customers, plan ahead as much as you can, diversify your suppliers, and lean on your community in order to keep operations as efficient as possible, even though there may not be any tangible solutions to the problem of long lead times for OEMs at this time. It's challenging to navigate lengthy lead times and material shortages, but you may lessen uncertainty by partnering with a distributor who is dedicated to the success of your business. Contact us today for assistance in navigating long lead times for manufacturing components.

Sources: https://solutions.borderstates.com/navigating-long-lead-time/; https://news.ewmfg.com/blog/the-trick-to-managing-long-lead-time-components-through-your-supplier; https://www.oemmagazine.org/business/business-management/article/22118546/how-to-manage-machine-building-lead-times-during-supply-chain-disruptions; https://limblecmms.com/blog/7-things-to-consider-f..