The novel coronavirus and the metal fabrication supply chain
“A containership showed up at the Port of Los Angeles [on March 9]. You would think this would be a nonevent at the Port of Los Angeles, except this containership was the first to show up from China in almost 10 days. It was sort of like the Navy coming into an 18th century port, and boy, people were excited.”
Phil Palin, author of Supply Chain Resilience and consultant focusing on catastrophe-preparedness, told this story on March 10 at the MODEX material handling tradeshow in Atlanta, during an extraordinarily timely panel discussion. The focus, of course, was on COVID-19 and the supply chain.
“We’re now seeing a ripple effect within China,” said fellow panelist John Paxton, COO at MHI, the material handling trade group. “We see factories back up and running, but then they can’t find truckers. When that problem is solved, the issue moves to the ports. And soon you’ll find that ripple coming over to companies here.”
Panelist David Shillingford, chairman of Resilience360, a platform from DHL that maps supply chain risks, described two Tier 1 automotive suppliers. “One of them put systems in place to map out their supply chain following the tsunami in 2011 in Japan, another terrible human tragedy that hit the automotive industry very hard. They started looking at [the coronavirus] at the end of last year. They’ve been working out what they need to do, where their inventory is, and discussing strategy with clients and partners. Their resilience goes beyond their four walls. It doesn’t matter if they could predict whether this would turn into a pandemic. They were ready for it.
“Meanwhile, we got a call from people from another automotive company a week ago, asking us, ‘What are we going to do about this?’”
Palin chimed in. “If anyone tells you this was a black swan, say ‘shame on you.’ In 5,000 years of recorded human history and biological forensics that go back before that, these events recur and recur. This has been talked about. This has been researched and anticipated … It was not a black swan.”
Shillingford described two factors that will drive manufacturing supply chains, especially after this not-a-black-swan event subsides. “One is having visibility through the entire network. Two is having the right data to know what the right balance is between just-in-time, lean inventory, and resilience … The future of supply chain resilience is agility, not necessarily more inventory.”
Within the past week of this writing, many metal fabricators have changed their forecasts dramatically, especially considering COVID-19’s effects on both the supply and demand sides of the global economy. The next few months will be harsh, regardless of how agile a fabricator is. It might well spur historic change in global manufacturing supply chains.
Regardless, the long game might not change: the need for agility to handle the ripples (or in this case, tidal waves) spurred by uncertainty. Therein lies the value of quick response and keeping jobs on the move, from raw stock to the shipping dock. The aim is to keep inventory turning and cash available. As Lisa Lang, theory of constraints consultant at the Science of Business Inc., put it in her March 16 newsletter, “A company can operate at a net loss almost indefinitely and still survive if it has enough cash. But even a profitable company may not survive a cash crunch.”
Booths on nearly every aisle of the MODEX exhibit hall showed automated guided vehicles (AGVs) of some sort. Many have become less expensive and easier to integrate than ever. It’s now a mature technology. Imagine a future where every denested part from a laser or punch is stacked not on a wooden pallet but on an AGV smart enough to sense what it’s holding and where it needs to go. That’s agility.
Now imagine farther into the future. Several vendors at MODEX showed off concepts that could point to how truly automated even the most complex, high-mix manufacturing and distribution facilities will become in the years to come. The aptly named Agility Robotics introduced a humanoid robot that can lift and literally “walk” a package to another location.
That’s an entirely new level of pick-and-place automation that could be on the horizon. Combine that with actionable data and human intelligence, and you’ve got quick, flexible response to handle any ripple or wave (or tidal wave) that could otherwise utterly destabilize the supply chain.