You’ll never hear your electrical infrastructure components shout for help. When they fail, they fail, and at the least expected moment. When it happens, the scrambling for replacements highlights how many operations are at risk due to supply chain failures. For facility managers and procurement specialists, understanding supply chain risk for critical electrical components has become more of a necessary operational theme than a could-be theme.
Costs of Component Shortages
The moment a critical electrical component fails is as soon as the need arises. Production halts, revenue stagnates, customers become unhappy, and whatever systems needed to be up and running now face pressures to be operationalized once again. Yet the longer that people remain in denial, the more supply chain vulnerabilities become apparent. Supply chain partners with 6 week lead times that seemed reasonable before are now unrealistic, and components expected to come in two or three weeks are now back ordered for months.
Expediting shipping costs money, and even if you pay up for the part, if the supplier doesn’t have stock, it doesn’t matter. Furthermore, when it comes to the hidden costs of lost time and resources – from maintenance crews going into overdrive with overtime payments to lost production quotas to customer penalties – it adds up fast. Since there’s no clear means through which to recover any of these losses, if a solution can be found at all, the easy math becomes challenging to overcome.
Single Sources
A business operates with multiple components from various manufacturers across different platforms because that’s what’s best for quality assurance. However, by securing like components from the same manufacturers across its operations, it reduces its inventory levels and creates a familiar environment for trained workers tasked with troubleshooting common problems. However, relying on a single source could quickly become perilous if there’s a manufacturing shortfall, quality failure, or manufacturer bankruptcy option. Many times, organizations have no choice but to go back to their original supplier; however, if the item is semi-custom or custom-built, they have no choice but to wait for re-engineering efforts – possibly out of state or out of the country.
For example, electric bus bar systems for power distribution are critical infrastructure parts that need specific manufacturing tolerances and appropriate finishing surfaces. If a company uses this type of solution from one supplier and experiences turnover at that supplier level, they cannot go to anyone else without compromising what’s already in place regarding safety and compliance.
Quality Control Compromises
When companies scramble to find other suppliers to get the parts they need fast enough so they never experience downtime again, they inevitably need to forego quality requirements. Not all manufacturers are created equal; just because the same product looks the same on paper doesn’t mean it will operate correctly once installed (and sometimes years later). For many components of power distribution systems, using subpar materials creates critical safety hazards and reliability issues.
The material used for conductors, dimensional tolerances, quality of surface treatment matter a great deal in electrical components due to performance and longevity concerns. A quality manufacturer will provide the appropriate surface treatment necessary to ensure oxidation resistance and longevity of low contact resistance over time; however, a cheaper manufacturer might utilize low-grade plating or ineffective surface treatments altogether. Supply chain purchasers prioritize price over quality – faulting themselves years later when there are no connection points on which to lean due to excess resistance instead of minimal connection costs.
If companies knew better about these quality variations upfront before the product failed or became apparent after an installation they’d pay; however, by then it’s too late as even warranty windows have expired, and the components have been licensed throughout facilities with no recourse for replacement.
Geographic Risks
Global supply chains operate due to geographic performance concentration; however, when there are natural disasters, criminal activity or geopolitical issues transpiring within those locations or countries known for producing certain materials, supply chains across the globe feel the strain when it’s not feasible.
The pandemic proved just how fragile some companies’ supply chains have become. Components that people assumed would be at their fingertips had lead times measured in quarters rather than weeks. Facilities that operated without policies of excess found themselves without operationally powered resources as spare parts were simply not available at any price.
The Supply Chain Inventory Equation
For many procurement specialists attempting to ease carrying costs, it makes sense not to hold excess inventory unless deemed necessary; however, specific critical components require a nominal price value compared to thousands of dollars associated with extended downtime or employee frustrations attempting to continue working without appropriate resources because time is wasted on component investigations when replacement policy could have already been implemented.
The key is what’s critical and at what levels? Considering the time it takes to procure excessive supply chain components with extended lead times or single sources over heightened production needs (thousands worth) determines what’s reasonable regarding spare parts.
Relationship Management
Companies with excellent relationships with their suppliers experience preferred access when shortages arise among buyers who sporadically source materials. Therefore, companies do best to look beyond transactional purchases if they hope to gain ground moving forward.
This means that buyers need to cultivate relationships through consistent purchasing and inquire about shipping recommendations that factor into appropriate lead times so that they’re neither surprised nor working against the clock when situations go awry. Those who use interchangeable vendors fall victim to their brands as line-star clients regardless of fair interest; however, those who foster these connections earn flexible margins when timing is consistently tenuous.
Testing Requirements
Those buyers who attempt to broaden their supply chains for critical components find that new suppliers are qualified through testing tolerances – and it’s safety-critical – and regulated assessment requirements with time and resources severely lacking while trying to remediate operational challenges.
Those organizations who plan proactively qualify backup suppliers before the fact; scoping out viable alternatives through testing tolerances and applying those tolerances even if projects are nominal scope unless they’re continually engaged. Therefore, it’s not an investment unless safety is promised highly precariously – but once a primary vendor goes south – and a backup is available – it was worth it after all.
Documentation Standards
When standards are used throughout industries rather than proprietary means, supply chain options increase easily across boards without delay. Standardized components have accessible parts through several sources and established supply chains; unique components severely tie buyers into proprietary sources guaranteed for vulnerability.
Clear documentation must exist regarding specifications, acceptable suppliers and tolerant requirements made known so support teams know where substitutes exist and what approvals will be necessary during emergencies – or else every emergency becomes research-oriented.
Monitoring Supply Chains
Supply chains benefit from proactive monitoring; keeping tabs on expenditures sellers within one’s industry in which industries have foreseeable difficulty based upon geopolitical locations helps get a head start before materials lose their edge and become critical failure options.
Some organizations actively ensure assessments that keep supply chains in check because certain elements become more vulnerable than others based on factors such as qualified part numbers available for units supported (are there too many?); concentration requirements due to demand (are there too few?); lead times and inventory sufficiency levels as well as potential runaway variables punish already vulnerable elements with impact unproven substantiated levels.
Vulnerability Assessment
Buyers should be more cognizant in assessing vulnerable components – those with extremely few qualified sources – geographically concentrated – with increased lead times – without adequate inventory levels available – and implemented lengths of time operated unnecessarily as well as safe power-on means standardized as safer alternatives?
Making Compromises Over Efficiency
Supply chain risk management is often balancing efficiency with redundant safety stock/elements with excellent reasons compelling single-sourcing just too good to pass up but creating complacency in operational environments instead of components/making sense through sustainable values for vulnerability adjustments.
It’s not possible – or even feasible – to eliminate all risk; instead it’s proper assessment where value storage/compiling makes sense where risk is well worth it payoffs associated aren’t as severe as plausible intersections.
Those organizations safe enough ahead prevent supply chain issues who’ve never considered these possibilities are forced on quick fixes others are prepared – and it’s not because they’re more efficient but because they’ve assessed their needs better beforehand.
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