Weathering the COVID-19 storm with a different business model
The COVID-19 pandemic has highlighted the global manufacturing supply chain’s reliance on countries like China. Here, Mark Bailie, European Operations Manager at PEI-Genesis, explains how the company’s different business model inadvertently helped it weather the COVID-19 storm.
As a result of the pandemic, we’ve seen a reduction in supplier deliveries and a reduction in orders of some product lines. The bulk of our business has come from continuing to fulfil existing customer orders for replenishment purposes.
This crisis has highlighted a weakness in the disaster recovery strategies of many businesses. Companies who source their components from a limited number of suppliers, say from China or from the US, quickly found that when factories were closed, their supply of parts stopped overnight.
Even companies that have measures in place, such as dual-sourcing arrangements - where suppliers offer equivalent parts with the same specification and compliance - couldn’t get parts delivered because couriers were facing severe delays or restrictions.
It seems our novel business model inadvertently helped us weather the storm. Our European manufacturing facility based in Southampton stocks 16 million components in some 80,000 stock locations within our warehouse. We don’t hold inventory of finished products, and instead use a highly automated process to assemble and deliver a product within two days of the order. This model also allows us to offer a minimum order quantity of just one.
This setup also meant that we continued to operate throughout the crisis, at a time when others were halting production. What’s more, because we’re licensed to produce connectors from our partner brands, including the likes of Amphenol, Souriau, Conesys, Deutsch and ITT Cannon, we were able to maintain short turnaround times and avoid the growing lead times of around 8-16 weeks that many parts of the industry now face.
However, no amount of inventory is useful if you don’t have the trust and availability of your workforce. We put in a series of measures to incentivise our workforce and to ensure their safety and confidence at work.
We purchased Personal Protective Equipment (PPE) and a temperature checker from the PEI-Genesis facility in Zhuhai, China. We also introduced a two-shift system to allow staff to maintain social distancing inside the UK facility in Southampton.
To create a safe, healthy and positive working environment, we reduced the shift from eight hours to six hours, while simultaneously increasing the hourly rate of pay. Upon entry into the facility, staff had their temperature checked and were issued with a new face mask at the start of every shift.
Not only did these measures ensure the safety of our workforce, it cemented their confidence and gave them an incentive to work through what was an uncertain time for countless families across the UK. The facility continues to operate in this way and we’ve introduced a thorough cleaning routine four times a day, with a deep clean over the weekend.
My advice to manufacturers struggling during this crisis is to take this time to rethink your supply chain strategy, diversify your sourcing and stocking methods and make your business more resilient as a result.