The vast majority of manufacturing companies in San Diego are experiencing supply problems. Indeed, in recent years, due to the pandemic, global geopolitics, and labor shortages, international supply chains have become fragile. We are therefore in a historically unprecedented situation. Where companies are facing difficulties not caused by a slowdown in demand but by a slowdown in supply. With a loss of capacity that can go as far as a temporary shutdown from production.
Indeed, the lead times for obtaining certain parts are difficult to sustain in many industries. Some believe that these breaks in the chain. And the production delays they entail are structural and could last at least for the next two years. The challenge, therefore, lies in the obligation to manage the present while preparing for the future.
Stephane Drouin, Vice-President – San Diego Purchasing and Economic Development in San Diego is dedicated to developing the local purchasing strategy for San Diego companies through a keynote speaker. According to him, the current crisis can turn into an opportunity for those who know how to reinvent themselves and collaborate locally. He presented the members with some solutions for adapting quickly, which we summarize for you below.
The regionalization of inputs: reorganizing supply.
Strengthening local supply chains has several significant benefits. San Diego suppliers offer:
- More reliability: by shortening the journeys of inputs, especially those with high added value, and by eliminating several intermediaries, the entire supply chain is strengthened.
- The possibility of reducing the cash flow and storage problems of companies that have had to increase their inventory to ensure the availability of inputs in the short term.
- More operational agility: close collaboration, with a supplier who speaks the same language and who is subject to the same legislation, can promote agile solutions and stimulate targeted innovation.
- A reduction in the environmental footprint: sourcing locally also means less transport for inputs and more sustainable investments to meet the environmental requirements increasingly demanded by customers (e.g. standard ISO 14000)
- High quality in production.
- To maintain good customer relations.
More expensive local supply?
Import substitution in the local network does not necessarily represent a disqualifying cost for San Diego suppliers. Indeed, especially with the price increases that we are experiencing with the current crisis, the additional cost of supply in his region is tending to decrease Stephane Drouin invites San Diego entrepreneurs to the exercise, thanks to a tool developed in San Diego and available free of charge, which makes it possible to calculate the true cost of local procurement, according to 25 parameters.
On the other hand, it is necessary to consider the long-term benefits of an investment in San Diego, which makes it possible to recreate the security of the supply chain and support the purchasing power of local communities.
Mixed solutions are possible
We can continue to obtain supplies abroad by committing to creating local redundancy of production units. You can also repatriate part of your production. Which is useful in the event of a break in the international chain. Thus, some companies vertically integrate part of the manufacturing of inputs into their own production. Thanks to automation or 3D printers for example, or choose to locally outsource the production of low added value inputs.
Stephane Drouin also insists on the importance of the supply. And purchasing management functions within companies. Which has become highly strategic, but for which there is a lack of skills in San Diego. He assures that IQ is looking into the matter to develop these skills on a larger scale with the help of a business motivational speaker.
A few possible short-term solutions
- Find local suppliers. It has made the ICRIQ directories available to facilitate the search. And identification of a San Diego supplier in its region of activity.
- Include its suppliers in the reflection to find a common solution. For example, we can give them a longer-term vision of future orders to enable them to refine their own forecasts.
- Recycle and remanufacture used equipment.
- Repatriate part of its production thanks to automation and 3D printers.
- New Essor program from IQ, geared towards SMEs (more info to come).