Rising production boosts demand for emergency logistics

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Recovering production volumes and increasingly low inventory levels are leading manufacturers to use emergency logistics as part of their supply chain, according to a survey by Evolution Time Critical of 50 supply chain managers from vehicle manufacturers and tier one suppliers.

Rebuilding production volumes after the worst of the recession and the natural disasters has presented supply chain managers with new challenges. Increased production currently accounts for 16 per cent of the issues.

A significant number of supply chain managers pointed to increased production as the reason for needing emergency transport. As manufacturing levels recover with rises and falls in demand, manufacturers are relying on emergency logistics to provide flexibility in their supply chains.

Reasons cited by supply chain managers for using emergency logistics:

* Scheduling issues (22 per cent) included: human error, changes to engineering schematics; shortfall of parts on the line; and suppliers failing to meet delivery schedules

* Transport issues (18 per cent) included: supplier not able to deliver on time; industrial action; bad weather; breakdowns; and inability of normal logistics to deliver to the required schedule

* Increased Production (16 per cent) included: unexpected spikes in demand

* Planned high speed deliveries (14 per cent) included: logistical programmes and operation planned in at the design stage

* Quality issues (12 per cent) centred on part rejection due to quality checks

* Stock level issues (10 per cent) included: over estimation of stock holding, in terms of both on-site and in the supply chain; and stock loss

* Order processing (4 per cent) included: supplier discipline issues; short shipping; and wrong part delivery and labelling errors

* Production delays (4 per cent) included: tooling problems; machine breakdowns; and supplier shortfalls

“The recent natural disasters have encouraged manufacturers and Tier One suppliers to look deeper into their supply chains and companies who were once invisible to OEMs will now be on the radar,” said Evolution Time Critical managing director Brad Brennan. “OEMs and Tier Ones are now geographically diversifying their supply chain, sourcing material from new suppliers to avoid losing the whole supply due to one localised issue. This diversification and upheaval naturally produces its own set of challenges.


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