Blog: Supply chain challenges addressed at Future Mobility event
Members of the Silverstone Technology Cluster Future Mobility Special Interest Group (SIG) met at the Silverstone Innovation Centre last week for a morning of insight, experience & discussion around supply chain challenges felt by businesses over the past two years.
A broad range of perspectives were shared by a panel made up of experts in legal, engineering & manufacturing sectors:
Garry Myatt, Director at PPC&A
Mike Hayward, Partner at Woodfines Solicitors
Rob Parr, Engineering Manager at Partner Electronics
Wayne Clark, Head of purchasing at RML Group
Nigel Seamarks, Operations and Manufacturing Director at Cosworth
How was your supply chain affected by the pandemic?
Garry: This was a global issue – we turned the lights off throughout pandemic, then when we switched them back on, we were faced with scaling up production and switching supply chains back on too. Then as we launched into 2021 we had Brexit, with all the European workers who went home and didn’t return. Large logistics companies couldn’t find people to replace them. So challenges we faced were identified and hard to solve – compounded by scaling up, getting hold of parts and fortunately for us, order books exploding for UK manufacturing. We were so fortunate to have this extended order book but could only manage it if we could get hold of parts.
Nigel: We have strong relationships with semi-conductor manufacturers, where they had no issues. When they got into using world-leading distribution arms, they were suffering just like the rest of the marketplace. In automotive lines they had the power of their customer, who joins the meetings & have a great pulling power in terms of the allocated devices, using other vehicles and pushing them towards more favoured vehicles. 2021 was more about people, and 2022 should be another people year. One thing we are noticing is that people are getting tired. Not only do you have problems with physical supply of products, we’re finding that people are burning out in the different arms and not looking forward to 2022, and they know the same thing will happen in 2023 too. I think we all know that getting back to normal will be about 2024 through to 2026.
Rob, have you seen the same sort of things?
Rob: We saw it more as our clients having issues with getting their products made. They were coming back to us saying: “This company told us they can’t make our order”. To start with there was extra work which we weren’t expecting, either finding replacement parts that would do the job, or redesigning to use products which could be bought. There were scenarios where some customers wouldn’t have a product to sell for over a year, which makes their company unviable. There were a few options – redesigning, which engineers & customers didn’t want to do it because they already had this product designed, it wasn’t a new product. Some suppliers were encouraging them to pay over the odds to get a component as it was cheaper than getting the component redesigned. 1) identify alternatives 2) identify new supplier 3) redesign work – no one wanted this but it had to be done to keep some businesses trading.
There was another scenario, where we saw the ‘toilet roll situation’ – people were hoarding components. I’d never heard of some of these companies but they popped up and sold components for 10x the original cost, profiting from the situation in this way.
Can you talk about government & suppliers?
Mike: We work very closely with the government & industry. This enabled us to have an insight & a voice. This has been a collaboration of organisations, cluster groups and businesses joining together and asking “How can we do this better?”. The components I deal with are the people driving the lorries, the directors & the operators. We’ve focused on these components for the last few years. Driver shortage is not due to Covid or Brexit – it’s because of the aging workforce, so I try to encourage people through this course, talking at schools. Let’s encourage people in, give support (like apprenticeship levies). But what a few years – driver shortage, fuel shortage, Brexit, Covid.
The agility shown by the industry has been very positive and is something to celebrate. Recognition needs to be shown, people working in this area want to be appreciated, their belonging and recognition is what they need.
When I deal with government, officials, undertake regulatory work with HSE – I work with compliancy offers to simplify processes and make regulations easier. I’m lucky to be able to work to that extent in relation to the legal process and be that voice. Our work has been driving licence changes, changes to vehicle testing, trying to reduce regulatory burden on drivers – as when they’re off the road, they aren’t being paid.
Wayne: We’re seeing all of the above – material crisis, availability. On the logistics side, it’s costs and port disruptions. We had incident a few weeks ago, where we were buying a product in the UK but supplier is buying from the US and that product is being imported into the States. The part we needed was waiting on a boat with no definitive date as to when that would be offloaded into the US. So, we had to find an alternative, to reengineer. It’s those sort of things in some cases you aren’t expecting. The idea of doing a risk assessment on your supply chain was nowhere near like what it is today.
A lot of people have learned to be pessimistic – if you start a risk assessment being optimistic, you’ll miss quite a few of the risks.
I think that’s driven people to where they are. At the short time I’ve been at RML Group, another thing I would say is the restrictions of the suppliers. If we stay in automotive, we wouldn’t need to restructure, but to move to low-volume manufacturing, I’m seeing challenges in terms of the supply base we have and our expectations and communications with them.
Mike: We feel like we’ve been in a fog. Uncertainty creates concern, destabilisation. As we get out of this fog and emerge, we need to discuss things to ensure mutual success, to ensure the wheels keep turning. Transparency in communications & relationships is key. We’ve been bombarded with Health & Safety Executives wanting to check Covid compliance. We’re saying to businesses “look at your specific industry” and use this to assure businesses you want to work with that you are compliant. It’s suffocating- ALL of these regulations were landing. Dump as much as you can of these regulations which may not apply to you. We’re encouraging an opening up, can we work with you and share your worries? My advice is to talk your way through these years. The businesses who have done this are the ones who have done well, not those who feel they can’t raise their head above the parapet and talk about this.
Do you think vendors and suppliers could use Covid as an excuse not to deliver?
Nigel: Obviously they could, I’ve never seen as many messages in my inbox from multinational companies citing this as a reason for delays in 2021. If you take most microprocessors, they start life in Taiwan, they probably go off to Malaysia for packaging, they may touch back down in Vietnam for tests, or Taiwan, before going off and joining the queue at LA ports. So, is Covid a justifiable reason for delays? It probably is because although we all know that Taiwan has been quite resilient to Covid, Malaysia has had various lockdowns which are well-publicised, government requirements. They had to drop their workforces to 20% then build back up to 40% and then up to 80%. Suddenly parts go from being a 10 day thing to an 8 week thing. Understand your supply chain, where and how your parts are being made. Some people say you don’t need to know that – but I want to know the major steps. Having come from the TI, a little black thing with gold legs has been through 6 countries, you need to understand where the problems may be and how you can influence those factories to then push through your product before somebody else’s. So it’s understanding the supply chain.
One of the great resilience’s I’ve seen this year was when I woke in DC to find the tri-state region in US was hit by the biggest tornado. It missed my car plant by 500m, CEM by a few miles. The whole supply chain was down for one week – that was great resilience because when you look at the TV screen there was wood everywhere –
I can’t emphases enough you need to understand your supply chain in such critical times.
People in the electronics industry, started just before Covid with a fire in Japan which took out a factory, which manufactured so many start parts & chips – it’s that importance of understanding where the pinch points are coming from. Two years down the line, the problems you have is that cupboards are bear. I don’t think they’re using Covid as an excuse, I think it’s a fair excuse. One big positive from 2021 is you kind of have to ditch email and start talking. It’s a generational thing, some people of a certain generation prefer emails & social media, other generations prefer talking. It’s extremely important to talk.
Do you have any final words of wisdom to share?
Mike: Look ahead, see what could be round there – preventative dentistry is better than painful extraction! Put those measures in place & manage expectations.
Garry: Several – order books, look over this and re-educate your customer. Get forecasts from customers, talk to them and if the product is stable, place those orders. Try and design as many alternatives as you can so you have options, in case you can’t get one part. Understand your supply base, engage & communicate with them. Make sure they know what you expect of them & be open.
Rob: Communicate up and down – with clients and suppliers, build trust.
Nigel: Have your leadership team on side & always understand the MD of your suppliers. Do send thank you emails to the MDs of those organisations highlighting what people have done beyond the norm.
Thanks to Silverstone Technology Cluster for hosting this event, for allowing us to sponsor the Future Mobility SIG, and to the panel speakers for their valuable contributions to the discussion. To watch the full recording, visit the STC YouTube channel.
For more information on the Silverstone Technology Cluster, or to register for one of their upcoming events, visit their website.