One Manufacturer’s Lessons For Handling The Supply Chain Shock Of 2021
One Phoenix-based manufacturer has endured the pandemic relatively well, all things considered. This story from Forbes highlights the experiences of National Safety Apparel, and how their established agility and preparedness gave them a leg up throughout COVID-19.
A recent trip to Phoenix gave me a direct view of the issues plaguing global supply chains – but I didn’t get this perspective from a factory floor. It happened when my Lyft driver told me about his day job as a salesman for a company that makes equipment used in semiconductors.
“You know what the worst part is?” he told me. “We have supply chain problems getting the chips to put into our own equipment – equipment that would go into the factories to make the equipment to make more chips.”
That should help illustrate the interconnected nature of the supply chain disruptions wreaking havoc around the world, which will likely be with us for a while. If you need even more convincing, one executive I know recently told me that he thinks we’ll be dealing with supply chain issues deep into 2022 – and that some of his suppliers are now scheduling orders for 2023. Others have told that same executive they don’t have any inventory to provide, only to deliver hundreds of their products just days later.
It’s not an exaggeration to call this chaos, with some experts advocating for localizing and regionalizing production as a solution. And while some of those ideas have merit, the systemic changes we truly need will take years to implement. That means that most manufacturers, at least for the moment, must look for solutions from within – or perhaps learn from similar companies how to navigate rampant disruption.
A Company That’s Weathering The Storm
At least one manufacturer I know has weathered things pretty well. The company, National Safety Apparel (NSA), a fourth-generation, family-owned company based in Cleveland, was founded during the Depression when Walter “Wally” Grossman began manufacturing heat and thermal protective apparel for foundry workers, steel pipe manufacturers and welders in his father’s basement. NSA has grown over the years to more than $100 million in annual revenue and nearly 700 employees, mostly in Cleveland and Chicago, serving a variety of industries, including manufacturing, food safety, oil and gas, and construction.
Because of its family ownership and some smart decisions made a few years ago, NSA was better positioned than many manufacturers for the current crisis. Additionally, the company’s supply chain is almost exclusively based in the U.S., though that hasn’t made NSA immune to recent challenges.
For instance, when one of their suppliers in the Dominican Republic ceased production for 12 weeks during the heat of the pandemic, NSA pivoted to automated production to pick up the slack. And while their suppliers have struggled to hire workers, NSA has staved off the worst through its extensive training programs, including partnerships with resettlement agencies and their own sewing school across the street from their factory in Cleveland.
A Pre-Covid-19 Lesson In Supply Chain Resiliency
Despite these efforts, NSA is still facing slowdowns. The domestic labor shortage and systemic supply chain issues now mean that some components that used to get to NSA in six to eight weeks are taking a lot longer — sometimes up to 26 weeks or more.
But generally speaking, the company’s growth trajectory has continued relatively unshaken, in large part because of a lesson NSA leaders learned the hard way four years ago. As difficult as that was, it was a lesson that other manufacturers probably wish they’d been forced to learn in a less chaotic moment.
“We’ve had several acquisitions that exposed us to situations where we had single-source suppliers, and that really impacted us,” Toby Bielenberg, NSA’s executive vice president of operations, said. “We had a major supplier close its doors a few years back – that was a catalyst for us to say, ‘Well, we can’t put ourselves in that position ever again.’”
After that supplier closed, NSA executives diversified their supplier network. That paid huge dividends in recent months, even if it somewhat bucked the popularity of just-in-time models of recent years. Of course, with supply chain issues now on seemingly every business leader’s mind, those models have lost some luster.
Resilience Through Forward Thinking
Bielenberg and Sal Geraci, NSA’s COO, are quick to note that adding some redundancy to the supply chain isn’t the end of the story. When they and other company leaders saw broad supply chain problems percolating early this year, they began looking much further out than they had historically needed to. This included long-term forecasting and blanket purchase orders, with some orders securing products into the spring of next year. Geraci recalled a recent conference call with one of the company’s biggest suppliers, which used to have a turnaround time for orders of two weeks.
“They had been anticipating and staying ahead of our orders, but they’re just not in a position to do that anymore,” Geraci said. “Now, they’re trying to get us to place blanket orders, which, in the 30-plus years that I’ve been dealing with that same vendor, has never, ever been the case.”
As part of efforts to broadly compensate, NSA has gotten creative about forecasting and stretching out supplies, pivoted production at times to compensate for what they have in hand and developed ways to automate certain production tasks. Work has largely continued unabated, something a lot of manufacturers can’t say, and Geraci and Bielenberg point to one other thing that has helped: maintaining close relationships with key suppliers – many of whom are struggling due to a reduction in available suppliers, especially amid industry consolidation in recent years.
“We engage with our supply chain partners on a regular basis and know what’s going on with their operations,” Bielenberg said. “We’re really collaborating closely with them to better understand what their challenges are so we can adjust our plans accordingly. Because of these relationships, our suppliers will work much more closely with us to support our needs when things go sideways.”
NSA’s story and its particulars might not provide learnings for all manufacturers. But as businesses around the planet try to cope with the supply chain craziness of 2021 and beyond, trying to learn from any success story certainly can’t hurt.