Releases Manufacturing Survey and Rings the Supply Risk Alarm Bell

For those of you unfamiliar with you might want to read their brief quarterly survey of North American manufacturers. The study splits questions for two distinct groups: “buyers (large manufacturers and OEM’s and “suppliers (small to medium sized manufacturers). Truthfully, we haven’t followed their quarterly surveys as faithfully as we would like but luckily for us, they posted the previous three quarters worth of data as well as the current quarter’s data. This quarter’s report (conducted in June) provides some interesting data we thought metal-buying organizations might want to take a look at. The first area of interest involves supply chain disruptions both buyers and suppliers reported an uptick in disruptions forcing organizations on the buy side to seek new suppliers and on the sell side, an uptick in the number of inquiries or new orders from companies who had been affected by supply chain disruptions. The second data point we found interesting involves the uptick reported by both buying organizations and selling organizations in “back-shoring and/or “near-shoring (e.g. bringing production into or closer to North America).

We’ll start with the second and move to the former. asked buying organizations whether in the last three months they had returned any of its production from low cost countries to North America. In the first quarter, only 12% had made the move but in the second quarter, 21% made the move. On the supply side, when asked a similar question, supplier organizations reported 38% had moved production to North America whereas 31% had said so for the first quarter. Does this mean companies perceive more risk exists in doing business overseas or is the switch due to declining cost advantages? We’re not sure, perhaps some of both.

The issue we also find timely and of interest to metal buying organizations falls straight to a topic we will address in a webinar later this morning on Supply Risk Management. According to the survey, 51% of buying organizations faced a supply disruption during the past three months whereas 44% said so during the first quarter. These numbers have risen from late 2009 where 37% (Q3 ’09) and 35% (Q4 ’09) of buying organizations faced a supply disruption. The numbers also went up from a supply organization standpoint meaning these organizations received either additional inquiries or orders from companies in which a supply disruption has occurred. 42% of supply organizations in Q2 as opposed to 36% of supply organizations in Q1 saw this type of activity.

How shall we interpret the data? Clearly supply risk management appears to have increased (and may still be on an upward trajectory). It’s not too late to join us for a free webinar hosted jointly by MetalMiner and SpendMatters with a case study on ArcelorMittal:

Real Time Supply Chain Risk Webinar Thursday, July 29 at 10:00am CDT. Click to register for this free webinar here.

–Lisa Reisman

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