Moving the Chains: Lessons Learned to Effectively Manage Our Supply Chain
Supply chain management is not a new topic, but it has received renewed attention in the wake of the COVID-19 pandemic. Regular news coverage of port closures, product shortages, and shipping delays has moved this important issue higher up the chain of priorities for many companies—highlighting how critical the supply chain is to a company’s long-term growth.
While some pressures on the global supply chain are easing, industry reports still point to continued challenges. COVID is still impacting the world, with cases rising in some areas of the globe and impacting manufacturing. There is economic uncertainty across regions, as well as ongoing geopolitical conflicts and the constant threat of cybersecurity and ransomware attacks. These are only a few of the reasons why supply chains can suddenly grind to a halt.
While no one can ever accurately predict these conditions, there are several preemptive steps companies in any industry can take to ensure their supply chains remain as intact as possible.
The past few years have created challenging business conditions for everyone in security and surveillance, and Hanwha Techwin is no exception. However, we took several impactful actions to ensure we could continue shipping products on time to meet customers’ and partners’ needs.
Direct manufacturing is one of the best methods for ensuring effective supply chain management. It gives a company greater control over production, compared to commissioning production from third parties. It also helps in terms of buying materials at wholesale and in advance, enabling research and design teams to quickly redesign a specific product if required when certain raw materials are in short supply.
It is easier to do this when a company owns the entire manufacturing process for its products. This includes designing and making cameras and chipsets; or assembling, designing, fabricating, and laying out the circuit boards. Controlling all—or as much—of the process as possible puts a company in an advantageous spot when supply chain conditions worsen, compared to manufacturers who depend on original equipment manufacturers (OEM) or rely on third parties for their key components.
It’s also important to establish the engineering resources that have the agility to redesign products in the event of a looming global component shortage. These shortages could impact the availability of everything from system on chip development to plastics to resins.
During the pandemic, for example, our supply chain team in South Korea identified about 25 components in our lines that were experiencing shortages or inventory issues. They then analyzed how to redesign those products quickly with a different chip, component, or material, while keeping the same performance profile of the product. As a result, we were still able to bring several products to market in a timely manner and still fulfill customer orders.
In another instance, there was a limited supply of chips for a specific camera model. To maintain production, we determined that audio was not a critical requirement for this camera, so we redesigned it with a different chip that did not have audio capabilities. Customers who needed audio were still able to purchase the previous model, and we were able to keep the manufacturing process moving.
Always Look for Options
Different times call for different measures and that certainly applies when it comes to getting product from A to B. Faced with difficulties in transportation and the freezing of shipping routes between Korea and Europe, Hanwha invested in alternative shipping methods, increasing air transport and other special transport options.
For example, in the United States, Hanwha increased truck transport over train, which meant higher costs but also a higher degree of certainty that customers, distributors, dealers, and installers could continue to source their required products.
Supply chain management is a team effort, and no one can achieve success without close collaboration among factories, headquarters, and regional offices, partners, and customers. Establishing this type of network is an invaluable resource for keeping a supply chain moving smoothly and helping in every aspect of project design, system installation, and product delivery.
Our team worked closely with headquarters staff in Seoul and our factories throughout South Korea and Vietnam on product allocations and expedited shipments to minimize backorders and meet most project delivery schedules and deadlines.
Maintaining open and direct communications with customers also helps. For example, a retail chain or large bank may have plans to upgrade their camera network at 6,000 locations. In reality, no customer is ever likely to do all 6,000 upgrades at one time, so it’s important to work with the customer to plan out an appropriate phased deployment strategy. If their plan is to roll out 400 locations a month, plan that out with them and send cameras as needed according to that plan.
As the name implies, supply chain means many companies working together. Choosing your partner companies is equally important as managing inventory and allocations.
It’s important to select and manage vendors based on a policy of transparency and fairness and hold them to the same standards of accountability and ethics as you would your own internal team. Designate specific criteria that suppliers must meet, such as purchasing, quality controls, product/technology selection, compliance management, and even social responsibility issues.
Finally, clear communication is essential for keeping everyone informed when issues arise (or ideally before they do). There are many more methods available for maintaining open dialogues with factories, customers, and partners: social media, video communications, and even simple texts.
Keeping everyone updated on availability, supply, potential logistics challenges, and reports of customer dissatisfaction is crucial. You can also create automatic reports for all these instances, for example, through a partner portal.
That’s the future direction of supply chain management: streamlined, automated, open, and transparent to avoid any potential vulnerabilities for you and your customers.
Miguel Lazatin is senior director of marketing at Hanwha Techwin America, responsible for brand strategy, product marketing, digital marketing, advertising, and public relations. Lazatin has a proven track record of success driving the growth of global electronics and security companies through effective product launch and market development strategies. Prior to joining Hanwha Techwin, Lazatin held a range of product, sales, and corporate marketing roles at Sony Electronics and Panasonic Security Systems. Lazatin holds an M.B.A. from Boston University’s Graduate School of Management.
© 2023 Miguel Lazatin, Hanwha Techwin