When the Covid-19 dust settles, what will the industrial supply chain look like?

These include short term disruption from extremes of weather, for example, Hurricane Irma is estimated to have cost companies in the supply chain around $61 billion in lost revenues, with businesses affected taking an average of 33 weeks to return to normal trading conditions.  Longer term threats include climate change, with increasing frequency of extreme weather, plus trade wars, tariffs, regional political instability and ongoing events such Brexit, which is unlikely to be resolved satisfactorily for some time.

These challenges will remain, even after COVID-19 has faded to a distant memory.

Supply chain fragility

Although the impact of COVID-19 has been exceptionally painful for almost every business, it has shown how easily global supply chains can be disrupted.  In turn, this has prompted OEMs to take rapid action to find alternative sources of supply and, in many instances, to question the nature of the traditional extended supply chain model.

For many UK-based OEMs, the process of urgently finding alternative suppliers of critical parts and components invariably started close to home.  Perhaps the major catalyst for this was the Ventilator Challenge, together with the drive to produce growing volumes of PPE.  These initiatives brought together a range of companies from diverse sectors and demonstrated (especially to the media and wider public) the many strengths of the UK manufacturing sector.

Finding the right supply chain partner

The process also underlined the importance for OEMs of finding the right supply chain partners.

The consortium of OEMs that formed part of the Ventilator Challenge identified early on that a range of specialised seals and gaskets would be required.  Although only small components, these were nonetheless critical parts if the ventilators were to function reliably.  Orders were placed with major suppliers that, despite the best of intentions, were unable to meet their initial commitments.  This was due to a combination of factors: these businesses were setup up to service the MRO (maintenance, repair and overhaul market) rather than meet the volume needs of OEMs; they were over-reliant on extended supply chains, so were unable to source quickly or in volume from local stocks; and they had no local or regional manufacturing capability that could be brought onstream at short notice.

This is where ERIKS was able to step in. 

Dedicated supply and contract manufacturing

Uniquely, our business model is based on a diversified supply chain, from multiple sources and multiple geographies, to ensure resilience against supply-side shocks.  This is combined with extensive buffer-stocks of standard industrial parts and components in the UK and Europe, plus, most importantly, a network of specialised local manufacturing facilities to meet short term peaks in demand or to engineer customised solutions. 

As a result, for the ventilator challenge we were able to source, bag, label and supply 8,000 standard seals and O-rings in less than 24 hours.  One of the O-rings, however, required specialised materials that would normally involve longer lead-times.  Due to the urgency of the project, this was impractical, which is where our ability to manufacture locally, combined with our knowledge and experience of materials technology, came into play.  Again, we were able to produce tooling, mould, post-cure, de-flash and deliver parts almost overnight to meet our customer’s manufacturing deadlines.