Is on-time delivery a thing of the past?
Paul Currie, Director, MPE Ltd provides commentary on the current supply chain challenges being faced by manufacturers.
I am sure that there are times when we have all waited at home expecting a service provider or goods delivery to arrive on a pre-confirmed date or in a certain time window. I am also equally sure that we have all experienced the annoyance when the delivery or service provider has not turned up as arranged. Moreover, I would also hazard a guess that many of us will have encountered this without any communication, prior warning or explanation from the provider . . . aarrgghh!
Whilst we can of course rearrange the delivery, as a minimum we have wasted our valuable time. If time has been taken off work to attend the scheduled delivery or service, then there may be a financial loss and so an increased level of annoyance. It is worse still where the delivery or service is critical. Think about those last-minute surprise birthday gifts, or perhaps a heating engineer, electrician, or plumber, where the delay or no-show has a huge personal impact, or where it is simply not an option to rearrange the date.
The significant cost increases that the world is currently facing have been widely reported across the media. Affecting every one of us to a greater or lesser extent, the continuing price rises span many markets from consumer and household goods through to industrial manufacture and are seen equally in mass-produced, commercial-off-the-shelf (COTS) products and bespoke, made-to-order products.
However, as well as these price pressures, the effects of the global Covid pandemic continue to ripple through supply chains the world over, with consumers experiencing extended lead-times for supply, product shortages and disruptive last-minute changes to schedules. Perhaps the market where this has been most visible is the car industry, where lead-times for a new vehicle can easily be six to 12 months from the date of order.
Arguably, ‘just-in-time’ practices have had their day in automotive production. For starters, we have accepted production delays caused by the limited supply of components and subsystems required for assembly.
In particular, a shortage of semiconductor chips, as used in a new car’s myriad computing systems, has restricted the number of new vehicles coming off the production line. Hence long delivery times have become the norm and widely accepted as a fact of life, thereby pushing up prices in the used car market.
What I am sure we will all have felt is that, since the start of the Covid pandemic, such instances of extended lead times, uncertainty or failure to arrive as promised have become far more commonplace and increasingly annoying and problematical. Therefore, let me pose the question: “Is on-time delivery a thing of the past?”
These same extended or uncertain lead times now present significant challenges for manufacturers such as MPE, operating in markets where integrators must construct detailed project schedules around the estimated arrival dates of key components or services. Whilst project schedules can in many cases be revised if components or services arrive later than originally planned, the knock-on effects and impacts on associated works can be huge and, in some cases, catastrophic.
In a recent example seen by MPE, some material components procured by MPE that had an average 12-week lead-time before the pandemic now have an average waiting time of 23 weeks. Mainly, these extended lead-times are the result of manufacturing backlogs, oversubscribed demands for shipping slots and continued shortages of trained staff.
MPE Ltd is a manufacturer of electromagnetic compatibility (EMC) and electromagnetic pulse (EMP) protection filters, regularly exporting products in volume to some 28 different export territories. Bucking the worldwide trend, since 2019 MPE has experienced a significant growth in its business, particularly in export territories, with levels of manufacturing almost doubling across the past few years.
Price and supply chain pressures coupled with this unprecedented period of growth have presented some of the greatest challenges that MPE has ever faced. Yet since 2019 MPE has worked long and hard to mitigate the impacts that these pressures have exerted on its international and UK client base.
For manufacturers such as MPE, the various Covid-related lockdowns and restrictions, seen the world over since early 2020, have demonstrated the critical importance of a robust supply chain and the importance of established relationships with suppliers. Effective communication with materials suppliers and a clear understanding of the status of key component suppliers in real time have been absolutely vital.
MPE’s well-established and trusted supplier relationships have enabled two-way candid and open discussions on questions of stock availability, lead-times, and any potential sourcing issues. During the pandemic the use of video conferencing often provided an invaluable communications tool, facilitating these discussions and maintaining regular contact with suppliers. Nevertheless, such a virtual medium can never fully replace the need for face-to-face meetings and audits.
Keeping in close touch with critical suppliers every step of the way has allowed MPE to plan its own procurement and stockholding with accuracy, ensuring that manufacturing schedules have been maintained.
MPE has also sought to expand its supply base and migrate to more local suppliers wherever possible. Such expansion has proved to be a key element in mitigating the risk of stock shortages or manufacturing issues. Furthermore, a more local supply base is always helpful in reducing the risks of delay associated with goods shipments from long distance. Following an extensive period of procurement investigation and new supplier evaluation, MPE now has multiple supply sources for almost all of the critical components that it regularly consumes.
The realisation of some of MPE’s high-performance product solutions does naturally call for some custom or niche components only available from a single source. In such instances, following careful analysis of historic usage, current trends, and forward forecasts, MPE increased its stockholding of these single-source or long lead-time components. In some cases, this has seen MPE doubling its stockholding, to provide almost a year of component cover. This buffer stock is retained either at MPE’s facility or at the supplier’s premises, where dedicated, segregated stocks can be allocated to MPE.
The shipping of component materials to MPE and of finished product to clients have presented further issues for MPE. Shipping times have now significantly increased when compared to pre-pandemic times.
The reasons for this are multi-layered. We have seen the 400-metre-long cargo ship, the Ever Given, stuck in the Suez Canal in early 2021. But aside from transportation issues, there is an ongoing worldwide shortage of shipping containers, owing to the growing backlog of orders awaiting shipping. On top of all that, there is both a significant lack of trained staff and increased protocols at dockside which delay the unloading of cargo vessels.
Whilst alternatives may exist – transport by air not sea, for example – these are not always feasible owing to physical or financial limitations. In such instances, an accurate picture of the current shipping schedule is again vital. Weekly and in some cases daily updates on shipments in transit have been necessary, with MPE now using ship tracking applications to provide up-to-date logistics reports.
With regard to communication with clients and integrators of MPE’s solutions, regular dialogue has been critical. Whilst any extension of delivery lead-time has been minimised by the supply chain measures undertaken by MPE, some lead-times have unavoidably been extended, and so the accurate scheduling of multiple and concurrent projects and the management of client expectations have never more vital. On occasions the manufacture and delivery of product to programmes have been split into smaller, multiple tranches to ease some of the pressure placed upon MPE’s manufacturing and in turn its supply chain.
Despite the effects of the Covid pandemic, the UK remains the world’s ninth largest manufacturer by output. Somewhat bucking the recent trend of contractions, since the start of 2019 MPE has experienced an almost 50% increase in its overall production.
However, even with this significant increase and despite the immense challenges described earlier, across 2021 MPE achieved a 94% on-time delivery in full to the day and a 96% on-time delivery in full to the week, when compared to the original acknowledgement dates provided to its client base.
Whilst 100% on-time delivery in full is of course the ultimate goal, in practical, real-world terms where unavoidable incidents happen, this circa 95% on-time delivery rate means that MPE has continued to fulfil almost all orders on schedule and without disruption to the client. This has been made possible only by the recent and ongoing steps undertaken by MPE, which in most cases are completely unseen by its clients. The analogy of the swan swimming gracefully across the lake, but with its feet paddling like crazy below the surface, would be very apt.
Therefore, whilst significant supply chain challenges currently exist and are set to continue for the foreseeable future, with the appropriate actions, communication, and due diligence, MPE is proof and testament to the fact that these factors do not always cause annoyance and disruption to the end-user. We can therefore happily and safely conclude that on-time delivery is certainly not a thing of the past and indeed should not be.