The persisting crisis in the global supply chain has disrupted many small and medium-sized manufacturers (SMMs) and put a premium on problem solving and short-term solutions for getting parts and supplies. While there are no easy answers to untangling these global supply chain challenges, the dynamic has created opportunity and momentum for supplier scouting. It is possible to see how the focus on supply chain management strategies and total cost of ownership will lead to more reshoring of manufacturing.
In fact, the White House on January 25 issued the Executive Order on Ensuring the Future is Made in All of America by All American Workers; it establishes a substantial role for the MEP National Network™ in the Biden Administration’s plans to bolster American manufacturing. The MEP National Network’s supplier scouting service has already played a significant role in rebuilding the personal protective equipment (PPE) pipeline and will also be an asset in the Biden Administration’s reshoring effort.
Supplier Scouting Creates Opportunities
An SMM’s introduction to supplier scouting often comes in situations with one-time, short-run or custom needs. But it opens communication lines to much bigger possibilities. The scouting process raises awareness about companies and their capabilities, and regardless of whether the work is performed, there are benefits in terms of the networking involved. It takes effort to build and maintain relationships, but growth in supplier scouting will come from medium and larger manufacturers who invest more in smaller domestic suppliers to solve shortages and other arising issues. It’s an important part of the reshoring mindset — and realizing reshoring initiatives.
How Supplier Scouting Works
A manufacturer contacts its local MEP Center (such as NWIRC) when they need a domestic product or capability. The MEP Center shares this request or opportunity across the MEP National Network, which includes 51 MEP Centers located in all 50 states and Puerto Rico, with over 1,400 trusted advisors and experts at more than 385 MEP service locations. A synopsis is compiled with technical needs (applications, dimensions, certifications, tolerances, etc.), target price and timelines. The opportunity is posted and shared with the Network for 30 days on average.
MEP Center staff scout for domestic manufacturers within their state that have the capacity, capability and interest to meet the immediate need. Results are aggregated and sent to the requesting MEP Center so they can start a dialogue with the potential suppliers. MEP Centers facilitate company interactions.
The Forces Driving an Increase in Supplier Scouting
The global supply chain crisis has evolved from a cascading series of events that began with the shutdown of factories in China at the onset of the pandemic. Subsequent changes in buying behaviors and shifting demands have led to a variety of disruptions, including shortages of materials, parts and components, which in turn created shipping backlogs and bottlenecks that have impacted almost every industry.
Manufacturers have been forced to become more agile, from figuring out how to accommodate social distancing in their facilities to “future proofing” their businesses as much as possible by taking a more proactive approach to problem solving and risk mitigation. Finding reliable suppliers has been a big challenge and consideration.
When it comes to domestic supplier scouting, the MEP National Network provides value beyond the traditional private sector supplier matching services and their databases. Each of the 51 MEP Centers has staff working every day with manufacturers in their respective territories. MEP Centers also have connections with local, statewide or regional economic development organizations and trade groups. Several states such as Utah, Florida and Oklahoma, have created local supplier scouting programs.
Opportunities Are Leading to Organic Growth in Networking
The interest in supplier scouting has led to organic growth in networking. Manufacturers are reaching suppliers they had not connected with in the past, and their horizons are broadening beyond their typical niche. While MEP National Network supplier scouting clients are generally looking for short-term solutions, practitioners at the local level are seeing longer-term opportunities enter the discussion. It is not a stretch to see how these growing networks will help reshoring.
The supplier scouting emphasis also has helped MEP Centers identify trends and areas for SMM upscaling — what they need to do in terms of certifications, capabilities or technology investments in order to meet some of the expectations of potential matches. There is an appetite among SMMs to be more proactive and less reactive, from education to pivots in operations.
Perhaps the area most ripe for attention is supply chain optimization services, as many SMMs have seen how even one supplier can disrupt their business. Strategies include:
- Total cost of ownership (TCO) – TCO examines shipping costs, shipping time, quality costs, inventory costs and more. TCO is more of a consideration than it used to be, largely from early in the pandemic when low-cost bids from Asia were the first to become unreliable.
- Risk management – This could be strategic in nature, such as supplier redundancy or alternatives, or involve investments, such as cybersecurity.
- Value chain development – This includes research and development, product design, process optimization and distribution management.
Supplier scouting assistance is one of the many tools that the MEP National Network has to connect SMMs with local, made-in-America supply chains. Learn more by contacting one of our Strategic Business Advisors.
By Samm Webb, Project and Resource Coordinator with the NIST MEP Extension Services Division (ESD)
Original Source: https://www.nist.gov/blogs/manufacturing-innovation-blog/how-supplier-scouting-could-lead-manufacturers-reshoring