Use the Dual Source Supplier Strategy

What causes are to blame for the sharp rise in manufacturing company failures? 
 
Shockingly, 2008 revealed only 15% of metal stamping and manufacturing companies showed a profit. Bankruptcies hit a new high. What is causing this? The answer has multiple dimensions. However, one of the most consistent problems facing manufacturing companies is the ability to reliably acquire quality supplies. According to a 2008 survey by Aberdeen Group, 99% of companies surveyed had supply chain disruptions. Also in 2008, Modern Materials Handling Magazine reported that 58% suffered financial losses. How many of these disruptions and losses may be attributed to a poor choice in supplier?

Case in point: 
 
In March 2000, cellular phone giants Nokia and Ericsson each had a supply chain catastrophe. Their common, key supplier, Philips, had their radio frequency chip (RFC) manufacturing plant destroyed by fire. Each company’s reaction has become a classic lesson in how the proper approach can become a competitive advantage. Nokia reacted quickly and was able to meet its production goals and even boost its market share to more than twice their nearest rival. However, Ericsson was not aware of the problem for weeks. Their ability to meet customer demand was suddenly and severely compromised. Ericsson relied solely on Philips’ plant for the RFCs and quickly found itself with nowhere to turn. That year, Ericsson posted a nearly $1.7 billion loss and ultimately had to outsource its cellular handset manufacturing business to another firm due to inadequate supply-chain management and a failure to implement “lean manufacturing”.

What is “lean manufacturing” and how critical is it to business success? 
 
Lean manufacturing or lean production: 
  • Involves never-ending efforts to reduce or eliminate waste — or any activity that consumes resources without adding value
  • Essentially means doing more with less
What could be the results of not implementing lean manufacturing? 
 
Failure to implement lean manufacturing (or lean production) can lead to: 
  • Missed order dates 
  • High product cost relative to the competition 
  • Declining market share due to delivery time and/or cost problems 
  • Limited capacity
  • High degree of supply chain disruptions
 
In addition to cutting the waste and adding value to your production processes, you *must* have back up supplier. This is called “dual sourcing”. To dual source means to use two preferred suppliers to provide the same product or service. Dual sourcing results in less risk due to having a second qualified metal parts supplier up and running, waiting in the wings, if the other fails to perform. What could happen if you or your supplier has only ONE source? Anyone can have a problem; if one company fails you must have a back up in order to avoid supply-line catastrophes. This protects you, hedges against pricing disasters, down time, missed orders, and a potential company failure.

Strengthen your own supply chain by working with companies that dual source. 
 
How are your suppliers? Are they using a dual sourcing principle to protect themselves and their ability to do what they promise? Unique Tool is an American supply company that has mastered the process of lean production and dual sourcing. As a result, they can reliably offer you continuous supply availability and quality of product. Avoid the hap-hazard approach to business that can leave your customers in the lurch or even cost you the valuable accounts you worked hard to gain. For more information or to speak with someone who can help empower your business in today’s manufacturing market, call 1-734-850-1050 or send us a message using the contact form below.
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