Supply, not demand, the main concern for manufacturers

December 24, 2012

While U.S. manufacturers have gone on record as being cautiously optimistic about the forthcoming year, the global market has been less forthcoming about its prospects.

Economists believe that this can be linked to a number of high-profile events that are well beyond their control. One of these is the fiscal cliff, which U.S lawmakers are either desperately trying to avoid or resigned to falling over, depending on individual perspective, while the slowdown in growth in traditional offshore manufacturing partners has put the spotlight firmly back on domestic productivity.

As reported on Manufacturing.net, the release of the annual ASQ Manufacturing Outlook Survey makes interesting reading, with a number of U.S. manufacturers included among the 1,250 global manufacturing professionals surveyed by the Milwaukee-based knowledge network. The key finding of the study centers on suppliers, with quality management in manufacturing split seemingly over dislocated supply chains.

According to the report, 75 percent of suppliers are confident that they will be able to meet demand in 2013, despite 33 percent of companies responding that they expect any problems to come from problems with suppliers. This apparent dissonance is reflected by 42 percent of respondents who revealed that their companies are working to address any potential problems, while 26 percent have said that they are already working with a supplier's competitors.

"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, an ASQ Fellow and one of the authors of the report.

One other interesting aspect of this situation is how manufacturers are already putting systems in place to deal with potential supply problems. Some companies are stockpiling parts in the event of an unforeseen break in the chain, while others are either expanding facilities to make the parts themselves, or moving away from lean enterprise and increasing their workforce as a result.

Away from the issues of demand and possible supply, global manufacturers are becoming more confident that the economic downturn is moving further away. Almost 65 percent of respondents believe revenue will increase in 2013, with 70 percent admitting that this had already happened in 2012.

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