Solutions For Part Shortages
Ways Companies Are Handling Not Having The Right Parts, How To Work With Suppliers, and Rally Your Team Around Finding Solutions
Sharing Forecasts With Suppliers
Sharing forecasts with your suppliers and giving them a heads up on what parts you’ll be needing 18 months out can benefit both parties. It’s taking much more effort to track down parts and make sure companies have what they need to get the job done. Working together, maintaining strong communication, and healthy relationships allow for more opportunities for success. As one coach said, while his manufacturing company was working with a supplier, strong communication allowed the supplier to be able to say, “I can’t get you that, but I can get you this other one, will that work?” Turns out, the alternative part worked just fine, so they were able to clear a backlog on that one part. Get your suppliers to help you solve problems.
Build A MiniGame™ To Rally Employees Around
The supply chain has absolutely been off-kilter, but there’s also been a lot of finger-pointing at the supply chain. Why not assume some of the responsibility and think of ways to get progress back on track? One company put together a MiniGame™ (a short-term challenge to correct a weakness) that was built around a circus carnival theme – because it was like a three-ring circus out in the plant, just trying to get things out the door. So they created this game around filling schedules. It was all about focusing on what they could get out the door. Whoever the winners were from each department got to partake in a carnival game celebration. But the game forced employees to think of solutions rather than just pointing fingers and saying “the parts aren’t here.” So the team started looking at what they could do with salvage and how they could improvise by getting engineering changes approved to be able to provide other options. They started doing a lot of cross-training that they hadn’t done before. Say maybe upstream production areas like disassembly were finished with what they needed to do, but the assembly side needed more people. They started cross-training to position people where they were needed up and down the production stream. But all of this was created because they put that focus around, “hey, we’re all in this as a team. We know we have some parts shortages, we know we have people shortages, but let’s find all those unique ideas and changes in processes so that we can still get products out the door to our customers.”
Don’t Let material shortages be An Excuse For Poor Performance
Material shortages are becoming the catch-all excuse for poor performance in many areas. Shareholders need to dig a little deeper for information to make sure the issue isn’t something else, like poor decision-making or poor leadership. Of course, the supply chain is hindering many businesses, but there are several actions companies can be taking to mitigate the issue.
Beware Of A Misleading Economy
Companies Are Being Cautious of False Backlogs, Preparing Smart Contingency Plans, and Finding Reputable Data To Help Navigate the Economy
Another issue is false backlogs. Companies are experiencing HUGE backlogs. So they think they’ve got all this future demand, but how much of it is real and how much of it is the result of panic buying and the whiplash effect? If you were to ship everything in your backlog, how much would you be overstocking your customers? That can come to an awful ending for a lot of people.
Panic Buying And The Importance of Forecasting Cash
As business leaders are struggling to make their way through parts and people shortages, one thing many are forgetting about is cash. Nobody’s forecasting cash six months out. People are trying to figure out the supply chain and they’re panic buying. Companies are tying up all their cash in inventory without being able to get any revenue because they don’t have the parts to get their products out the door. Companies need to start thinking about what they need to do to make sure they have cash. If you run out of cash it’s game over. People are changing how they’re billing their customers. For example, say a manufacturer is going to build a customer something, it takes them three months to build it. They’ve started calling it a construction loan, and they’re having their customers pre-pay us for the product. Business leaders need to understand the impact of cash when they pursue opportunities. If we are approaching the beginnings of a recession, one bad decision could be detrimental. As a coach said, “you could accept that $1 of opportunity that could take you out.”
Cash is King: A training bite to rally employees around improving company cash flow
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Building Backup and Contingency Plans
There’s been lots of talk about a recession and how close the next one will be. Of course those words are alarming to anyone. People are really starting to be aware of the importance of having backup plans. Leaders are starting to build some business plans around expectations of future losses of business. What happens if this supplier goes out of business, who’s our backup? If our business goes from where our revenue is today to 75-50%, what happens? People are seeing some things on the horizon, so start thinking about what kind of contingency plans you need to have in place.
Using Reputable Data
Finding a reputable source of data that you can rely on for quality and accurate information is crucial. We encourage using ITR Economics. ITR Economics is an economic firm that SRC and The Great Game of Business® have been following for around 20 years. Their track record in terms of forecast accuracy has been incredible. They’re plain-spoken, practical economic economists that can talk our language – business entrepreneur language. They have a good hold on what’s really happening. There’s a lot of talk in the media about where we’re headed in terms of a recession and a lot of the information being distributed probably isn’t the reality. The media can cause a lot of unnecessary panic that way, which can actually have a negative effect on the economy based upon the way that misinformation is making decison-makers react. It’s nice to get a reality check from ITR to share with our clients. So we’re making better decisions around what business cycle we’re really in, where we are headed. We need to be doing more long-term planning and making sure we are preparing are companies for what lies ahead. It’s important you have a reliable source of information to help build those long-term plans and contingencies.
Download ITR’s app on your phone to keep up with the latest economic trends and forecasts.
Looking to stay ahead of your business, but don’t have time to do all the planning? Let a business coach help you and your company get back on track.
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