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Supply Chain News: US Manufacturing Situation - Everyone is Scrambling

 

Auto Parts Maker Sogefi’s West Virginia Factory Sees Daily Fire Drills

May 12, 2021
SCDigest Editorial Staff

We may never have seen the level of stress points currently in US manufacturers.

And that means delays, expediting, missed or late shipments from suppliers or to customers – and for many near constant firefighting.

Supply Chain Digest Says...

A recent company job fair in neighboring Kentucky drew only two applicants. Before the pandemic, a job posting on Indeed.com might draw 100 resumes

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A variety of factors are in play. They start with still very strong demand, as the US economy continues to expand.

From there, a complex interplay of labor shortages, port delays, rising costs and more are leading to extreme variability and uncertainty. The near chaos conditions may actually hold back US economic expansion.

Case in point: an auto parts factory in West Virginia owned by Italian company Sogefi, recently profiled in the Washington Post.

Facing parts shortages daily, the pressure is even stronger on suppliers to automotive companies, which are still mostly trying to hang on to just in time inventory strategies, meaning a late shipment can sometimes shut down a production line.

And that risk costs Sogefi real money.

For example, after Sogefi was late on deliveries of one part to an auto OEM, it began expediting shipments of the part in twice-daily truck runs. The added cost of the 800-mile round trips comes at Sogefi’s expense.

But parts shortages are shutting down some production at Sogefi too.

The Post reposted that earlier this year, the absence of one 12-cent part - one of 20 components in the final product - shut down an assembly line at the plant for two weeks. A shortage of 26-cent corrugate boxes recently delayed a shipment of a part selling for about $33 apiece.

The Post also notes that the Sogefi plant uses about 100 suppliers from across the globe. Currently, about a dozen appear on the company's “crisis management list” in terms of deliveries. Normally, perhaps one or two suppliers would be in such a status.


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And communication about shipment issues from suppliers often is short notice.

In normal times, “You had time to react,” Todd Gregory, the plant’s purchasing manager, told the Post. “Now you’re told you’re going to miss shipments two days from now.”

Then there is Sogefi logistics manager Randy Simpkins, who is let’s just say under some stress. He spends a good part of his day wrangling with suppliers about when ordered parts will be coming, then another chunk of time on the phone with customers explaining when they can expect Sogefi’s own deliveries.

“Randy is on calls every day getting yelled at: ‘Where is my shipment?’” one colleague commented.

As with it seems most US manufacturers, Sogefi is constantly battling labor issues – both its own and at some of its suppliers.

A recent company job fair in neighboring Kentucky drew only two applicants. Before the pandemic, a job posting on Indeed.com might draw 100 resumes. Currently, it might get only five, the Post story notes.

This same basic story is playing out across huge numbers of other US manufacturers too.

The Institute of Supply Management’s monthly Report on Business for April released last week, said manufacturers wer citing “record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products”

 

Are you seeing these same types of woes at other manufacturing? Let us know your thoughts at the Feedback section below.

 

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