ASQ survey: Suppliers confident, manufacturers concerned about supply chain

While more than 75 percent of suppliers are confident in their ability to meet their customers’ needs in 2013, one-third of respondents to ASQ’s 2013 Manufacturing Outlook Survey say they anticipate a problem with a supplier next year, resulting in a shortage of parts or services.

Of the respondents who anticipate a problem with a supplier, 42.1 percent say they are working with partners on process improvements to mitigate volume capacity, while more than 26 percent are working with their suppliers’ competitors. Other manufacturers said they are stockpiling parts in advance of the issue and expanding facilities to make necessary parts themselves.

More than 1,250 manufacturing professionals from around the world responded to ASQ’s 2013 Manufacturing Outlook Survey, which was conducted online in November during World Quality Month, an annual, worldwide celebration of quality and its impact in the world. ASQ is the leading authority on quality in all fields, organizations and industries.

In addition to questions about their organization’s supply chain, the Manufacturing Outlook Survey also questioned respondents about their financial outlook for 2013. The results were nearly identical to last year’s responses.

Nearly 65 percent of respondents say they anticipate an increase in revenue in 2013, and 70 percent said they experienced revenue increases in 2012.

In comparison, and in the survey conducted last year in anticipation of 2012, 66 percent of respondents expected revenue growth in 2012 and 70 percent of respondents last year said they experienced revenue growth in 2011.

“It’s encouraging to see such optimism in manufacturers about their outlook of revenues for 2013,” said ASQ CEO Paul Borawski. “Manufacturing is a key driver of economies worldwide, and their health is important to businesses, communities and individuals that rely on them.”

Suppliers’ competitors part of Plan B

According to the 2013 Manufacturing Outlook survey results, 33 percent of respondents anticipate a shortage of parts due to a problem with a supplier in 2013, while 37 percent say they don’t expect an issue, and just less than 30 percent of respondents aren’t sure.

When asked about the past, 80 percent of the respondents say they have been adversely affected by a supplier’s inability to meet their needs. Of those negatively affected in the past, 25 percent went to their suppliers’ competitors to get the needed parts. Just more than 30 percent worked with their suppliers on process improvement to mitigate volume capacity constraints. Other manufacturers worldwide used up available inventory, manufactured the parts in-house, shut down production, or refocused efforts on other production areas.

“Any shortage of parts or services can have a dramatic effect on a manufacturer so it’s important for companies to communicate openly with suppliers to avoid any disruption in production,” said Dick Gould, ASQ Fellow and supplier management trainer and consultant. “Conversely, it’s important to suppliers to work with manufacturers to provide them with the quality parts or services to ensure a long-term relationship.”

Manufacturers: Communicate, address potential risks

To ensure continuous operations and to alleviate supply chain disruptions, respondents said manufacturers should keep all options open and make sure to have a back-up plan for catastrophic events. Other respondents said working hard to keep suppliers informed was key while others advised manufacturers to work closely with suppliers to mitigate disruptions.

Of the survey respondents, more than 60 percent say their organization has a formal process in place to address supply chain risk. Nearly 28 percent say they don’t have a process in place.

“It’s important to have a thorough and formal process in place to address supply chain risk,” Gould said. “Put in place the pieces needed to continue operations in the event of a sudden disruption in supply chain and know the process.”

Quality parts are key

Survey results show the quality of materials trumps availability, price, and customer service when manufacturers consider suppliers. And according to the results, most manufacturers are satisfied with the quality of materials they receive from their suppliers.

According to the results, 81 percent of respondents have a favorable view of the quality of the parts they receive from suppliers. Similarly, 80 percent of respondents say they are content with the availability of parts, whereas 67 percent say they are satisfied with the price of the parts and services provided by a supplier.

About ASQ

ASQ is a global community of people dedicated to quality who share the ideas and tools that make our world work better. With millions of individual and organizational members of the community in 150 countries, ASQ has the reputation and reach to bring together the diverse quality champions who are transforming the world’s corporations, organizations and communities to meet tomorrow’s critical challenges. ASQ is headquartered in Milwaukee, Wis., with national service centers in China, India and Mexico.