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Manufacture This

The blog of the Alliance for American Manufacturing

MForesight looks at the importance of suppliers to manufacturers.

A chain is only as strong as its weakest leak — and that's definitely true in manufacturing.

MForesight: Alliance for Manufacturing Foresight, a federally-funded national consortium focused on enhancing U.S. manufacturing, on Tuesday sponsored a discussion on Capitol Hill on its new report, Ensuring American Manufacturing Leadership Through Next-Generation Supply Chains.

The report examines the changing (but ever important) relationship between many manufacturers and their suppliers. As MForesight wrote on Medium, “manufacturers are coming to view their suppliers as genuine partners—sources of ideas and feedback on design and engineering—not just external contractors that can cheaply provide the needed part.”

Tuesday’s event offered insight from four panelists, including Bill Donohue, director of Genedge; Susan Helper, professor of economics at Case Western Reserve University; Thomas Mahoney of MForesight; and our very own Scott Paul, president of the Alliance for American Manufacturing.

Mike Russo, director of government relations at GLOBALFOUNDRIES, hosted the event.

Donohue started the conversation on supply chains, as he emphasized the direct effect that they have on a company’s ability to manufacture goods within a timely manner.

A company in Virginia that manufactures vehicles can complete the construction of a vehicle within 14 weeks using the present global supply chain, Donohue said. But if the supply chain was located in the United States, construction could be completed in three days. That 95-day difference is significant to U.S. productivity and shows that the buffer in the current global supply chain is weak. 

Donohue also advocated for exposing young people to the modern-day manufacturing industry. He believes that showing what the “new” manufacturing world is all about will motivate future generations to think about career options within the manufacturing industry. 

A company in Virginia that manufactures vehicles can complete the construction of a vehicle within 14 weeks using the present global supply chain. But if the supply chain was located in the United States, construction could be completed in three days. 

Helper, meanwhile, argued for a better connection between private manufacturing firms and their suppliers. In other words, there needs to be a more efficient and transparent way to purchase and deliver products, as 60 to 70 percent of a firm’s expenses is supplies.

Mahoney mentioned that companies think that they can't afford new technologies — but these new technologies will end up saving them money because the supply chain process will become more simplified.

Mahoney added that the best supply chain processes have already been done; they just need to be replicated and repeated.  He said that companies need to understand the benefits of an efficient supply chain and "get the incentives."

AAM’s own Scott Paul said that the supply chain process is undervalued, comparing it to an offensive line in football — a team can’t win without having a good one. Paul also said Congress should continue to fund the Manufacturing Extension Partnership (MEP), which helps small and medium sized manufacturers with new technologies and resources on supply chains.

Paul also said that tax policy reform, infrastructure investment, and workforce development will be essential to improving manufacturing supply chains and strengthen American manufacturing overall.

While "you will never break the chain," the next-generation supply chain should be simplified to reduce delivery time, increase business connections, and strengthen the manufacturing industry.

Click here to read the full report.

This blog post was written by AAM interns Erica Maddox and Megan Salrin.