Diversification of Supply Chain, Customer Base Crucial During COVID-19

As reported on searchautoparts.com

Supply chain and customer diversification are important for manufacturers in any economic climate. Today, it is critical to companies around the world as the pandemic has drastically affected operations in the auto industry among many others over the past six months. We’ve seen large scale suppliers file bankruptcy, go through heavy debt restructuring, and get turned inside out as the trickledown effect of the economic shutdown halted consumer spending overnight. Production was shut down, jobs lost, and global manufacturing giants were running at bare minimum capacity to try and make it through.  Many companies are still struggling to return to full production capacity and continue to run with skeleton staff support due to their mandatory departmental cut philosophies. The shock is likely to impact the supply chain for years to come.

What we know today is the manufacturers that were diversified – both across industries and geographically – not only survived, but may have come out stronger.  T/CCI is one of those companies, and lessons learned over that last 35 years of economic fluctuation, recessions and market shifts have contributed to our strength and stability today as a global supplier of compressors.

Our roots are in the auto industry, we purchased the York Compressor division of Borg Warner in the mid-80s and have continued to transform the mobile a/c market. Through strategic investment in expanded global facilities, product advancements, R & D, global design unification, and a customer driven philosophy we have come full circle. Now, as the global supplier for Traton Group and OE supplier on several new electric compressor and variable programs we are helping the industry advance the needs of the global supply chain.

We can’t speak for others, but over the last two decades making decisions in key areas early and managing those decisions daily have helped guide the long term strategic growth of our operations.

Supply chain diversification is a key strategy to hedge against natural disasters or other unexpected disruptions like a pandemic. If one country or region shuts down due to massive natural disaster, war or viral outbreak like COVID-19, a properly diversified company can be nimble and prepared to ramp up operations elsewhere.

We have seen firsthand the value in having operations in North America, South America, Europe, India and China. From trade impacts and currency fluctuations to pandemic realities. Diversification and localization have helped us help our customers manage through the crisis as a partner, focusing on supply chain needs and cost relief programs.

Additionally it is critical to keep engineering teams focused on new program development.

This approach allows critical support to OEM customers rather than being crippled by disruptions outside of their control. Manufacturers should be nimble enough to understand what is going on in various parts of the world and keep program and product advancements moving forward in tandem with managing logistics and inventory.

Diversification of customers and industries is just as important as geographic diversification.

By serving a variety of markets like automotive, heavy duty trucking, agriculture and construction, OEMs and aftermarket suppliers can lean on one part of the portfolio when another is struggling. Even as an essential product, the market uncertainties cause a major disruption in the midst of the traditionally high need, high volume summer seasons.

As the rest of the year plays out, watch to see which suppliers are laying people off, shutting down plants and struggling to survive. Chances are, they are beholden to high debt, poor inventory management, high production costs, lack of diversification and a non-responsive partnership philosophy.

By preparing for these unexpected scenarios, suppliers can actually expand and reinvest in people and technology during economic downturns.

Companies that do it best will earn the trust of customers and come out the other side with higher market shares. Customers need to know their suppliers can deliver in any business climate.

Richard Demirjian
President of T/CCI Manufacturing

T/CCI Manufacturing is a world leader in compressor technology including reciprocating, swash plate, wobble plate, variable compressor and air brake compressor designs.