It seems almost impossible at the moment to have a conversation about manufacturing without supply chain challenges becoming a discussion point. From large to small, manufacturers are dealing with material and component shortages, rising prices and difficulty getting their products to their facility.
Mix in labor challenges and skyrocketing demand in some sectors and running a business becomes pretty complicated.
Or maybe it isn’t. When the COVID-19 pandemic hit, Mike Steger focused on the basic blocking and tackling of running a company to navigate through the uncertainty.
“You’re monitoring your cash, you’re reducing your working capital, you’re making sure your (accounts receivable) is on top of it, you’re increasing efficiencies out on the floor, and you’re just trying to capitalize on some of the opportunities. It was going back to the basics,” said Steger, president and chief operating officer of Waukesha Metal Products.
Focusing on the fundamentals is important, but there are still plenty of complexities to navigate. Steger will be part of a panel discussion at the BizTimes Media Next Generation Manufacturing Summit from 2-6:30 p.m. on Oct. 12 at The Ingleside Hotel in Pewaukee. He will be joined by Bob Gross, president and CEO of Gross Automation; Ryan Reigle, president and CEO of Regal Ware; and Jim Schneberger, president of New Berlin Plastics. Carol Crawford, senior consultant at WMEP Manufacturing Solutions, will moderate the discussion.
Steven Richman, group president of Milwaukee Tool, will also participate in a keynote conversation, discussing the company’s growth, manufacturing operations and innovation-focused culture.
The Next Generation Manufacturing Summit is sponsored by WMEP, BMO Harris Bank, CG Schmidt, CLA, Davis & Kuelthau and supporting sponsor Vistage.
While focusing on fundamentals may help in navigating the challenges of the pandemic and now supply chain disruptions, that focus alone doesn’t make things any easier, especially when it is unclear how long the issues will stick around.
Steger said he expects the supply chain challenges to continue into the first quarter of next year. His company makes parts for the automotive industry, and he is expecting strong demand in the coming years because there are so few cars and trucks available now.
Gross, on the other hand, said he is expecting supply chain issues to continue into 2023. Gross Automation is a distributor of automation products. Part of the problem, Gross said, is that large players in the automation industry have faulted the distribution channel for not stocking enough inventory. As a reaction, the large players have directed companies like Gross to purchase large quantities of certain parts.
Gross said that creates artificially increased lead times and puts products in the channel that may not sell, which means distributors will eventually return them.
“They’re going to be inundated with all this stuff that didn’t sell, and we’re going to crash again,” Gross said.
He added it will “be an interesting and wild ride for the next year and a half” and said the solution is “to forecast better than we’ve ever forecasted.”
Schneberger said in the plastics industry there weren’t necessarily obvious threats to the supply chain, but a multitude of issues had converged and the issues “just kind of snuck up as demand skyrocketed.”
Part of how Schneberger and New Berlin Plastics are managing through supply chain issues is more tied to company culture than any specific tactic.
“If you have expectations about what next week is going to look like, don’t do that to yourself. Have expectations about what the next 24 hours are going to look like and manage to that,” he said. “Most people get frustrated and upset when their expectations aren’t met, so you just keep the expectation scope short, the time of those expectations shorter.”
Schneberger has also done tactical things, like reviewing which customers the company should be serving. In one case, he had to let an $11 million, long-term account go. It was difficult to do and the customer was upset, but Schneberger said he told the customer he could lie and say the company would get to their work the next week or the week after, but it was better to be honest and say “we’re never going to get to it, and we need to help you find a new home.”
“It was the right thing to do for our customer and the right thing to do for our business,” he said, adding that New Berlin Plastics sent employees to the new supplier to help them get started with the customer.
Schneberger also said he has been aggressive on seeking to get price increases from customers, although he noted it is important that he take on the responsibility of that work as a leader.
“You’re kind of poking at the relationship a little bit, and you can do some damage,” he said. “The other thing you have to realize is that everybody is doing it, and if they’re not, they’re fools. So you’re not the outlier out there that’s making noise in front of the customer because their entire supply base is erupting right now, and if you’re not in on it then you’re missing out.”
