A global recovery means it's time for frank discussions with your suppliers

Office for National Statistics figures: Index of Manufacturing

Maintenance is one of the first to suffer when recession hits, downward price pressure inviting production managers, engineers and machine operators to coaxmachinery into keeping running without spending money on it.

Inventory also comes under severe pressure, for both production stock and MRO consumables; the overall result is a greater risk of operational downtime if something does go wrong and interruptions in supply hit just when companies need to be able to deliver.

Some businesses are already exceeding previous productivity levels and extended lead times are proving that products that were easy to remove from stock are now far harder to replace, lead times on some critical items are extending to several months. many component manufacturers that rely on highgrade materials are already issuing official and unofficial statements warning of limited supply, so the time to act is very much now.

Those of us who remember the last recession will probably recall the crisis that hit rolling bearings as the market began to recover. some larger sizes and less commonly used configurations were on 12 month lead times overnight, manufacturers failed to deliver even pre-ordered products, and this slowed the production of large items such as wind turbines, it also caused major downtime events for heavy industry users.

In order to offset some of the recessionary damage to the economy, and as the cycle begins to swing the other way into positive growth, communicating predicted production schedules to your suppliers and updating maintenance schedules is one of the best ways to avoid supply issues as the recovery takes hold globally.

Businesses that are able to react quickly to market demands and continue to provide uninterrupted supply as demand grows again will be in the best position to take advantage of growth, improving their market position and increasing profitability. manufacturing and process companies can only be sure of this if the supply chain is healthy and robust and the production environment is fit for additional capacity, so what is to be done?

As one of europe’s largest component manufacturers and suppliers, both to industrial oe and mro customers, eriKs has taken action to counteract possible supply issues caused by the global economic recovery. By talking to it’s suppliers and providing an honest and open estimate for expected volumes the company has been able to work in partnership with suppliers allowing them to do the same and provide a better picture of requirements moving forwards.

Even though eriKs, as europe’s largest distributor, has more leverage than most with suppliers to secure vital stocks for customers and also has the advantage of its own extensive manufacturing facilities to plug-the-gaps, ERIKS is still recommending that any business working with them opens a dialogue now to protect their own supply chain. having an open and frank discussion about production planning and maintenance requirements is the best way help guarantee
supply and avoid sharp price increases where possible.

In a classic case of the supply-and-demand cycle at work and given the steep global economic downturn experienced in 2009, price increases for critical feedstock materials published earlier in 2010 signify an increase in volume demand for metals at a rate that cannot be readily absorbed by a supply chain that is running lean. This is being compounded by transportation cost rises due to exponential fuel price rises.

Reports from the electronics manufacturing industry for example show the average price for critical materials such as copper and zinc has already exceeded 2009 levels, when the global economy and materials demand was more robust. The primary reason identified for the increases, apart from financial speculation, is that many of the keyproduction sites have been turned-down in an attempt to save money, and their ability to turn capacity back on remains uncertain.

ERIKS is actively working with customers to develop maintenance schedules and meet future production schedules with appropriate supply volumes by ensuring that the right stocks are in place, and would encourage any UK based industrial company to adopt this policy as best practice as soon as possible.