Changes in supply chain management are now being called for; Covid-19 was a wake-up call for many companies. Many of them have realised that they need to fundamentally rethink their supply chain management, Orderfox.com suggests.
Says Wilfried Sihn, professor for Industrial Engineering and Systems Planning at the Institute for Management Sciences at the Vienna University of Technology: “The coronavirus pandemic has shown us that our supply chains are unstable, and that the paths we have taken in the past are dangerous. In the context of globalisation, many companies have concentrated primarily on lowering prices and have often opted for a single-sourcing strategy.”
This is now becoming a major problem, as these supply chains are beginning to collapse. Due to closed borders and interruptions in production, supply from these individual sources can no longer be guaranteed.
Continues Sihn: “A new concept is being discussed in science: Glocalisation. This refers to the combination of globalisation and local procurement. It is important not to overlook local procurement and thus improved supply security.”
In order to diversify their risk, companies should consider moving their production to another location. Production costs may no longer play a major role in the selection of the production site, Orderfox suggests.
Says Oliver L?dl, CSO of Orderfox.com: “We have seen the effects of cutting off transport and production routes. The importance of production in our own country or in Europe is unmistakable. The coronavirus will influence the global situation. I therefore assume that many production steps will return to Europe. Companies will consider whether they will continue to outsource everything in the future or whether it might be better to procure in close proximity at a minimally higher price.”
Many CNC part producers are small- and medium-sized enterprises that rely on traditional procurement strategies that are time-consuming and quickly becoming obsolete, it is suggested. In many cases, these producers are highly dependent (more than 65%) on their regular customers, while only around 30% of their turnover is generated from newly acquired customers (Source: Orderfox Customer Research). Customer acquisition is often difficult and time-consuming. And now that numerous industrial trade fairs have been cancelled, new acquisition channels are urgently needed.
It is not easy for component buyers to fill the gaps that have arisen and find alternative business partners. Many part producers don't have their own website and therefore can't be ‘Googled’. Most industrial fairs, which have been a reliable source of business contacts for many years, are expected to be cancelled in 2020.
Without these familiar events, where new contacts are made and business networks expanded, the digital world is a welcome alternative. Thanks to online platforms, it is possible to establish new customer contacts, independent of time and place, whether on a local or global level. There, CNC part makers and buyers can easily find each other with just a few mouse clicks.
Orderfox.com claims to be the only global platform that believes in a direct relationship between buyer and manufacturer. While other platforms hide manufacturer information and supplier procurement takes place in a ‘black box’, Orderfox.com enables direct communication between the two parties. This creates maximum transparency and mutual trust. At the same time, the price pressure on manufacturers is alleviated, as the latter can also differentiate themselves from their competitors by means of quality attributes.
Concludes L?dl: “Once the crisis has passed, when all equipment is put back into operation and we have to compensate for the demand of the past months, online procurement tools will be crucial. Even when things are running normally, newly purchased machines are only utilised at 70 - 80% of their capacity. Orderfox.com is able to increase their utilisation to 100%”.