Assurance of supply

Your supply chain needs to be resilient, reliable, and resolute.

Ideally, it would be unbreakable.
man in a warehouse managing inventory or outsourcing for assurance of supply

In today’s global manufacturing marketplace, you simply can’t afford a weak or broken supply chain. You need superior supply chain reliability so you can deliver quality products without delays or interruptions, offer consistent service, and reduce risks that can clog, kink, or break the chain.

Sometimes you need a partner to worry about unreliable suppliers and disruptions so you can focus on what you do best. Nelson Miller Group’s customized supply chain solutions make your business run more smoothly and your customers happier.

Understanding the risks of an ineffective supply chain

Inconsistent service levels throughout your supply chain lead to costly delays and disruptions, which hurt your brand reputation and diminish customer loyalty and satisfaction. Unreliable suppliers affect the quality of your parts, components, sub-assemblies, and complete assemblies, and they can result in worrisome inventory issues, such as component shortages or excess inventory.​ Sole sourcing has the potential to cause an unpredictable supply chain, which, in turn, puts your business at risk for unnecessary adversity and drains your valuable internal resources that could be used to manage suppliers and crisis situations.

A delicate supply chain is hazardous to your bottom line. Preventing it by holding more inventory on your own constrains your cash flow, and your costs increase to finance and maintain this inventory.​ That’s where we come in. When you outsource your manufacturing with NMG, we take the stress out of your supply chain and ensure there are no disruptions—at no additional cost to your organization.

Second- and multi-sourcing for assurance of supply in turbulent times

If there’s one thing the last few years have taught us, it’s to expect the unexpected. A global pandemic, geopolitical conflict, driver strikes, a ship stuck in the Suez Canal—whether short- or long-lived, these events can be impossible to predict, create far-reaching supply chain challenges, and put your business at risk. Consistent suppliers, even whole countries, that were once your most reliable partners are suddenly experiencing disruption and volatility. How do you ensure business continuity in such tumultuous times?

A history of second- and multi-sourcing

Recent supply chain challenges have reinvigorated OEMs’ interest in maintaining additional providers for their parts or components. Second sourcing, in which two vendors are contracted to fulfill a company’s production needs for a given part, and multi-sourcing, in which three or more vendors are utilized, are hardly new concepts. Increasing supplier competition and the globalization of manufacturing beginning in the 1980s gave birth to modern procurement. Procurement managers with access to additional suppliers incorporated second-sourcing and sometimes multi-sourcing strategies to resolve supply issues with their traditional providers, reduce costs, and improve the customer service they receive from all providers.

Barriers to second- and multi-sourcing

Fast forward to today: Although second sourcing and multi-sourcing are somewhat common practices in procurement, there are a number of reasons that organizations may not be leveraging these strategies to their fullest potential:

  • Specialization. The more highly customized the component, the more difficult it may be to find multiple vendors who can support its production. Out of ease or, in some rare cases, necessity, the manufacturing of a specialized part may be limited to one provider.
  • Lack of resources. Finding and vetting additional suppliers and maintaining the associated contracts and relationships requires time and manpower that many OEMs don’t have.

  • Loss of control and/or quality. With additional supplier relationships to manage, it can be more complicated to maintain control over production and logistics across different facilities. In addition, many OEMs fear they will be unable to focus on or control quality across multiple vendors, choosing instead to stick with one trusted provider.

  • Cost concerns. In some cases, adding a supplier creates incremental costs (for example, additional quality or safety testing for components produced by a new vendor).

In most cases, an experienced supply chain partner like NMG can eliminate the above concerns. Through our extensive manufacturer relationships, we can help source providers that are capable and trustworthy, have appropriate customer service and quality standards, and can compete on price. This removes much of the responsibility, and extra work, of second sourcing from your plate.

 

Benefits of diversified sourcing strategies

While not all the barriers listed above can be fully eliminated in all instances, the advantages of moving beyond single sourcing nearly always far outweigh the downsides. The primary benefits of second- and multi-sourcing, while well-known across the purchasing field for many years, have been magnified following the onset of COVID-19 and subsequent supply chain crisis:

  • Assurance of supply. Contracting with multiple suppliers creates redundancy in case of issues with a primary provider, such as an unexpected line down situation. Having access to multi-sourcing, not just for standard components but also for more strategic and customized ones, allows production to continue when a supplier is offline.
  • Increased production capacity. Having access to additional suppliers creates the ability to increase production, often by large quantities on somewhat short notice. This can be especially helpful in case of an unexpected spike in demand for your product, or if you wish to scale up production beyond the capacity of your primary supplier.

  • Cost savings and service improvement. When suppliers are competing against one another, they have additional incentive to lower their costs and improve their service. Consider awarding a greater portion of your production to the vendor who provides the highest level of service at the best pricing.

While single sourcing may have worked well for an organization during times of predictable supply and demand, the potential downsides in today’s ever-changing environment have become increasingly threatening. As a result, many OEMs have adopted multi-sourcing strategies to mitigate risk and maintain flexibility during uncertain times.

Optimizing your sourcing strategy

While adopting a second/multi-sourcing approach brings some benefits inherently, some OEMs find more success with these approaches than others. NMG can help you implement several strategies that will help you extract maximum value from your sourcing:

  • Be proactive. Many OEMs rely on second sourcing as a fallback, only switching production away from the primary provider in the event of a disruption. But, as in many other areas, it’s important to take a more proactive approach. Keeping suppliers interested by giving them a portion of your production can keep them engaged and avoid unexpected unavailability. While this strategy may increase your costs slightly, they’ll help you avoid extremely costly issues if and when the unexpected happens.
  • Ensure geographical diversity. Having multiple suppliers in the same state, country, or region may prove to be just as risky as single sourcing. For example, let’s say you produce semiconductor chips across several facilities in central and eastern Europe. These factories all source neon gas from Ukraine, production of which virtually halted overnight following Russia’s invasion in February of 2022. Although your chips come from multiple providers, none of them can fulfill your orders due to this unforeseen conflict. A more geographically diversified approach to sourcing, perhaps including some production in Asia, could help avoid a disruption during a regional crisis.
  • Leverage technology. In our rapidly changing world, having real-time visibility into your supply chain is critical for making informed decisions. Access to an Enterprise Resource Planning (ERP) system, such as that which NMG employs, facilitates full process transparency, provides more accurate demand forecasting, and can help identify additional providers to bolster your AVL.
  • Stress test your supply chain. An important and often overlooked aspect of sourcing is understanding your risk and identifying areas that may need attention, before the next disaster strikes. Harvard Business Review advocates understanding your supply chain’s Time to Recover (TTR), how long full recovery would take after a disruption somewhere along the chain, and Time to Survive (TTS), the maximum amount of time your supply chain can meet demand after a disruption, for different scenarios. As one example, “if the TTR for a given facility is greater than the TTS, the supply chain will not be able to match supply with demand unless a backup plan exists. This approach provides companies with a way to financially quantify the cost of disruptions and prepare mitigation plans for the most critical parts of the supply chain.”

Let’s face it: supply chain management is complicated, and being prepared for the next black swan event could mean the difference between your organization’s success and failure. When disruptions happen (and they will happen), you can’t afford to wait, and you can’t afford substandard quality. A good second/ multi-sourcing strategy goes beyond mitigating risk and creates calculable value for your organization. NMG uses our extensive industry knowledge and relationships to implement sourcing strategies that are appropriate for your business, adding redundancy to your supply chain, lowering your costs, and creating a higher level of service.

supply chain diversification

How you benefit from greater supply chain reliability

When you streamline your supply chain with NMG, you unlock a number of benefits that boost efficiency and increase your organizations’ valuation. Keep reading to learn more about what a reliable supply chain means for you.

Mitigate risk.

One key benefit of SCM outsourcing is supplier consolidation. Rather than spending time dealing with various suppliers, consolidating your supplier list mitigates risk to your company by reducing the number of contact points. This shouldn’t be seen as sole sourcing—the principle is to streamline the number of vendors you have to coordinate with for a build.

NMG takes over the complicated supply chain with multiple suppliers. In return, you have just one contact who brings you a critical view throughout each stage of the supply chain process, making it much simpler for you to manage. We take care of your supply chain so you can focus on your core areas of expertise. We utilize our expertise and sourcing relationships to ensure you don’t face disruptions and inventory issues. We free up your time and resources so you can ensure that your customers are satisfied and your financial goals are being met.

Find and retain the right suppliers.

Relationships are key to business and maintaining good relationships—particularly with your supplier(s)—should be high on your priority list. When you’re working with multiple suppliers, you lose the personal aspect that comes with partnering with a few valued suppliers. You can develop closer, stronger relationships that you would not have the time for when juggling numerous suppliers.

The key to outsourcing is guaranteeing the service levels you have are second to none. It doesn’t matter how varied a product choice is if the product is out of stock or the supplier doesn’t deliver within your time constraints. Look for a supplier with logistics and warehousing capabilities, like NMG, that meet or exceed the needs of your business.

NMG delivers the quality you expect. With our extensive supplier network, we ensure that you have suppliers that not only achieve your organizational goals but also meet rigorous quality expectations and inspections. We know the players in manufacturing. We have a global team of experts in close contact with suppliers at your source and destination market. 

Increase redundancy and diversify your supply chain.

A lot of different infrastructure is utilized during the supply chain management process. A third party can properly outsource appropriate steps in the process rather than handling it all in-house. The benefits include improved supply chain reliability and availability of the system.

The benefits of supply chain outsourcing are most pronounced in times of difficulty. While the supply chains of most manufacturing firms are fairly siloed, meaning that there are few connections or relationships maintained outside of the direct supply relationships, outsourcing partners like NMG specializing in supply chains and distribution channels cultivate robust and expansive working relationships with suppliers across regions.

This network offers manufacturing firms a much higher degree of redundancy, which is a critical component of resilient supply chains. Redundancy refers to the number of suppliers for a particular material or part. The more suppliers, the more access to a particular input. The redundancy enjoyed by SCM partners allows them to leverage their supplier relationships, not only empowering them to negotiate better prices, but also equipping them to bypass supply chain interruptions as they occur.

Once you hit critical mass, you should never put all your eggs in one basket. Diversifying your supply chain can help protect against complacency from your existing supplier(s) and a host of other unknown issues. NMG can exert our influence over manufacturers and identify alternative suppliers so you’re not at the mercy of a single supplier.​

Alleviate quality issues.

When you pick an appropriate 3PL or 4PL for your supply chain management, you’ve opened up to their network, industry experience, and web of resources you would not be exposed to otherwise. Outsourcing supply chain management allows businesses to tap into the specialized knowledge and capabilities of logistics experts who have a proven track record in navigating the intricacies of the supply chain landscape. These professionals are well-versed in the best practices, industry standards, and emerging technologies, enabling them to implement robust quality control measures. By leveraging the expertise of third-party providers, companies can often identify and address potential quality issues at various stages of the supply chain before they escalate into larger problems.

Furthermore, outsourcing supply chain management facilitates enhanced visibility and transparency throughout the entire process. NMG employs advanced technologies and analytics tools that offer real-time insights into your supply chain, enabling proactive monitoring and quick identification of any deviations from quality standards. The external perspective and dedicated focus on supply chain intricacies that outsourcing provides can lead to more efficient risk management and a proactive stance in quality assurance, ultimately minimizing the likelihood of quality issues and contributing to a smoother and more reliable supply chain operation.

Coordination of supply of goods showcasing the operations and scheduling of inventory

Increase on-time delivery and achieve uninterrupted service.

A streamlined process for your supply chain includes fewer errors and delays. The processes used within your business should cut out inefficient tasks, save time, and increase productivity.

NMG will assist you to monitor product usage and suggest ways to reduce costs across your business. Using our industry-leading ERP software, we manage the flow, stock levels, and warehousing of your components and your build. Overall, you’re mitigating risks across the entire span of the supply network.

You can rely on NMG to ensure there are no preventable disruptions in your supply chain. This assurance of supply provides you with peace of mind, protects your reputation, and enhances your brand.​

Secure expert oversight for your inventory and demand planning.

You may not know what to look for, but you know that you need a level of oversight that your business cannot adequately provide. Highly skilled SCM partners know what to look for and how to address problems.

NMG offers you real-time tracking, sales review, and personalized inventory management strategies.​ This helps you mitigate unforeseen market disruptions and avoid down lines and ill-timed stock-out situations.​

Having a strong, solid supply chain means you have more working capital, you can optimize warehouse space, and you can secure order financing. By combining all these factors, you can increase the valuation of your organization and operation.

Why NMG for assurance of supply?

With so many ways to approach supply chain management and logistics, it can be difficult to know which strategy (or combination of strategies) is best for your organization. NMG approaches every customer conversation with an open mind, creating solutions that are customized to the unique needs of each business. From sourcing a single component or part to managing your entire supply chain, we have the tools and know-how to achieve assurance of supply and make your project a success.

Ready to start a project today?

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