KANSAS CITY, MO — Disruption in the supply chain is hitting all facets of manufacturing in every business realm. In a series following the impact on the baking industry, a group of industry suppliers, associations and consultants gathered with Commercial Baking to assess the situation and discuss potential solutions.
Here’s what they had to say as far as navigating shortages, long lead times and more:
While obvious components such as burners are impacting oven manufacturers, shortages of electrical components like microchips are creating a mass scramble and at times halting production of bakery equipment equipped with PLCs and other electronic features.
“If you have an oven but no burners, it’s just a box with a belt that really doesn’t do anything,” said Shawn Moye, VP of sales for Reading Bakery Systems. “Or if you have a motor that runs with a variable frequency drive and you don’t have the drive, you can’t run the motor.”
In some cases, lead times have increased to as many as 25 weeks for what used to be stock parts.
It can also limit flexibility for an equipment manufacturer’s overall process. Before these shortages, if there was an extended lead time for one component, a supplier could shuffle schedules for customers who were further along in the process or had a smaller project. Today, no project is safe, especially when bakery suppliers are essentially vying with manufacturers in every industry for the same microchips.
“Working with manufacturers in multiple industries, it’s quite clear that we’re all competing for many of the same materials, including computer chips and microchips,” said Lisa Anderson, founder of LMA Consulting and supply chain speaker. “It’s going to be quite some time before we can get the supply chain running smoothly, so there are some interesting waters to navigate.”
Expect the unexpected
At Benchmark, a ProMach brand, Vince Tamborello, VP of business development, noted that component availability is unpredictable, to say the least, causing a drastic shift in project planning.
“We’ve changed a little in how we do our engineering and procurement to get a sense of what the lead times could be,” Tamborello said. “From a practical standpoint, our applications group is quoting longer lead times on machinery because of the inability to predict items we used to have solid lead times on.”
Bakers who are planning to invest in new automation should be aware of the volatility in the availability of components. The impact to an installation is the result of suppliers — and their suppliers — battling a backlog of parts.
In the past, when straight-forward mechanical equipment was paired with a complicated controls order, there was time to flex the schedule. But in the current environment, it’s often a guessing game on what parts are available.
“We could release that mechanical component right away and then take two or three weeks to order the electronics and still have plenty of time to build it,” said Clay Miller, president of Burford Corp. “But with all the uncertainty, we can’t afford to wait; we’re working overtime to get the project through on the chance that some of those parts will be on the latest list of items that are delayed.”
Even with the chaos of delays, Miller looks for silver lining with projects that were already facing overall long lead times before the disruption took hold.
“Our 10- to 14-week lead times are closer to 20- to 24-weeks, but it gives us a fighting chance to get some of those long-lead-time parts like PLCs, HMIs and drives,” he said.
And the issue goes all the way to spare parts, Moye observed. If a baker doesn’t have a spare part sitting on the shelf, that could mean trouble should it need to be replaced in an emergency situation.
“Working with manufacturers in multiple industries, it’s quite clear that we’re all competing for many of the same materials, including computer chips and microchips,” said Lisa Anderson, founder of LMA Consultants
Rethink procurement strategies
It’s a similar situation for packaging equipment as well. Formost Fuji has focused on parts procurement as early in the process as possible.
“We make sure our engineering is done earlier so we can order electrical components in time to get them here and meet the deadline,” said Dennis Gunnell, Formost Fuji president. “If we ordered them three to four weeks out from we need them, we’d be behind. We have to get everything in the process sooner.”
Timelines have become a critical issue as many bakeries implement penalty fees for late projects.
“We’re scrambling to get the components here on time,” Gunnell said. “We have to stay in front of it and make sure we don’t let it slow us down.”
These days, collaboration has taken on a whole new meaning, whether it’s brainstorming new ideas for sourcing materials, working with different vendors or tapping into resources from partner companies.
“Manufacturers are looking at new, collaborative and innovative ways of working with different partners than they’ve ever worked with before to find ways to successfully navigate the microchip shortage and to better serve their customers,” Anderson said.
Tap into new resources
The economy is in good shape, but that means consumer demand has created bakery equipment needs that many suppliers can’t meet on their own … especially when the chip shortages spur hoarding. This is essentially putting all manufacturers in competition, whether it’s bakery equipment, automobiles or water heaters.
“My clients are proactively managing it by talking with their customers and suppliers to get a better picture of what’s really needed so they can better allocate what they have,” Anderson said. “They’re collaborating and partnering with other companies. If they can spread the workload across the supply chain in a smarter way, they can be more successful together.”
Access to additional resources isn’t always easy, especially for smaller supplier companies, but some are able to reach outside their own structures to find local distributors or other resources to tap some help when the larger conglomerates may be scooping up what few components become available.
“Some of the smaller equipment manufacturers are finding regional resources — not sister companies — but ones they’ve partnered with before,” said Kerwin Brown, BEMA president and CEO. “There might be a few units to share; I think there’s been some sharing outside individual corporate structure whenever it’s possible.”
Engage with customers and partners
With labor shortages at all-time highs, automation is more important than ever in every stage of the supply chain.
“Many of our members have said it’s a banner year,” Brown said. “That means ROI is changing. Bakeries are saying they have to automate … the ROI completely changes when they just can’t get labor.”
Increasing engagement across the supply chain is a great survival strategy in the near term, but it’s also a lesson that should be carried into the future. For example, many equipment manufacturers may find themselves rethinking stock agreements with their suppliers.
“Right before all of this, many of our customers had gone super lean and wanted to source motors, encoders and sensors directly,” Miller said. “In turn, we dropped our levels, and that created a situation where no one had much volume when the disruption started. I think that will shift as we come out of this.”
Moye noted that his company worked with a controls supplier to host that inventory through the RBS internal stock to use as needed.
“But when the disruption started, they had to start pulling from that inventory as well,” Moye said. “Having that access to inventory will continue to be a great asset in the future.”
To navigate these shortages and meet demand, bakers must stay wholly engaged with their suppliers to ensure project efficiency and a speedy ROI.
“We need to inform customers what’s going on as quickly as possible, so they know lead times are extended and they can prepare,” Tamborello said. “Our sales group will get in touch with customers who might have an order imminent and let them know what’s going on. Sometimes you can get started on a project sooner if the customer was holding off because they had an assumed lead time in their head.”
But the scramble coming from baking companies and their suppliers being busier than ever isn’t all bad.
“The high capacity, the banner year — and all the problems that come with it — are ultimately good things,” Miller said. “In other industries, they may not be having the kind of year we are, and that’s where the struggle could be much worse.”
Thinking outside the box and working together will be key to getting through the next 12 months.
“Expanding the ability to get components like chips will require companies to think innovatively and be willing to partner and even invest,” Anderson said.
