Supply chain volatility and unplanned outages: what you need to know and how SAMCO can help
Unplanned downtime has always been a costly issue for industrial facilities, but current supply chain disruptions threaten to make the problem worse. In an era of uncertainty stemming from extended lead times and limited supply, manufacturers will need additional foresight to maintain their spare parts and supply inventories. Here, we’ll take a look at the reasons behind the current supply chain crisis, and discuss things you can do to minimize its effect on your operations.
Supply chain volatility
Recently, manufacturers have had to face a number of challenges, including supply shortages, long lead times for materials, higher prices, and logistical challenges in shipping goods and products. In fact, for the month of October 2021, the Institute for Supply Management (ISM) reported that manufacturers experienced a record-breaking 49 days of lead-time on average to source supplies for operations and maintenance activities, while lead times for raw materials used in production were nearly twice as long.
The supply chain volatility that we are experiencing today originated from a rash of plant shutdowns early in the COVID-19 pandemic, but that’s not the only explanation. Rather, there are several interrelated causes and factors that will likely continue to cause disruptions for some time yet. Among these are a number of complex economic issues, such as a sudden surge in demand following a briefer-than-expected recession, instability due to panic buying, and labor shortages. Additionally, severe weather events have been increasingly disruptive to the supply chain, especially in the Gulf Coast, where much of the United States’ petrochemical and plastics production is located. Over 2020 and 2021, Texas and Louisiana have seen severe impacts from flooding, power outages, and wind damage from several major storms, including hurricanes Laura, Zeta, and Ida, tropical storm Nicholas, and the Texas winter storm of February 2021.
Supply chain chaos is perhaps most visible at US ports, many of which have faced moderate to severe congestion in recent months. The most significant backups are at the Ports of Los Angeles and Long Beach, where ships waiting to dock and offload have numbered in the dozens every day. According to a Goldman Sachs report, 33% of container ships have waited for five or more days to offload in September 2021—up from less than 10% in the years prior to the pandemic. Even when ships do get offloaded, trucker labor shortages, and lack of sufficient warehousing space, are causing further delays in the transport of goods and materials.
While no one can predict with certainty what the future holds, a recent projection by Moody’s Analytics suggested that supply chain disruptions will persist well into 2022 at least. So, given that supply chain volatility is likely to stick around, it will be in the best interest of industrial facilities to plan ahead to account for several weeks or more of lead time and shipping delays, not just when sourcing raw materials for production, but also for spare parts and supplies needed for routine and emergency maintenance.
Unplanned outages and the supply chain
One ripple effect of supply chain volatility is its potential to exacerbate a problem already well known to manufacturers: unplanned outages. A study by Vanson Bourne and ServiceMax suggested that downtime incidents are both common and costly, with 82% of manufacturers reporting that they had experienced one or more downtime incidents over a three-year period, with each incident averaging four hours in duration, and costing $260,000 per hour on average. Similarly, a 2016 study by GE reported that offshore oil and gas operations averaged $49 million each in annual losses due to unplanned downtime. The cost of downtime is challenging to quantify exactly, but even before the pandemic, unplanned downtime was estimated to cost manufacturers an estimated $50 billion annually. And this figure is only expected to rise in coming years.
The causes for unplanned downtime can include jams, leaks, and electrical or part failures, although a proper maintenance regimen can significantly reduce unplanned downtime incidents stemming from any of these types of issues. To mitigate the risk of unplanned downtime, facilities typically rely on a mix of scheduled inspections and maintenance, as well as repair and parts replacement on a reactive basis. However, as shown by the supply chain disruptions we’ve seen recently, industrial facilities can no longer depend on short lead times and abundant spare parts inventory in an emergency, as doing so poses the risk of a prolonged outage. What’s more, as ServiceMax reports, 88% of industrial facilities believe that their organization could do more to prevent unplanned downtime.
A newer approach, known as predictive maintenance, is a strategy that aims to anticipate equipment failures before they happen. Predictive maintenance leverages devices with sensors and data processing capabilities, known collectively as the Industrial Internet of Things (IIoT). Predictive maintenance devices measure things like vibration, heat, and energy consumption, and analyze the data to keep technicians informed of system performance, or make predictions on when equipment failure might occur. By some estimates, predictive maintenance can cut unplanned downtime by as much as 30-50%, and may even extend equipment life by 20-40%.
To be sure, predictive maintenance tech has some room to grow, with the key caveat being that it can take time and technical expertise to collect data and tune predictive algorithms to produce accurate analyses at a given facility. But those types of limitations are expected to fade with ongoing development and expanded data sharing. Properly used, predictive maintenance gives manufacturers a valuable head start in making repairs before a breakdown happens—even when spare parts and supplies are delayed by days or weeks. Indeed, as predictive maintenance sees greater adoption, manufacturers are beginning to imagine unplanned downtime as a thing of the past.
Can SAMCO help?
SAMCO has over 40 years of experience in sourcing parts for industrial machinery. Our knowledgeable team will help you identify which of your system components are most vulnerable to failure, and create a plan to ensure that you have replacement parts on hand when you need them—so you can keep your systems up and running.
Whether you’re looking to plan months or years down the road, SAMCO will work with you to source spare parts on the right timeline and in the quantities needed to suit your facility’s preventative maintenance plan. With over 120,000 square feet of Freeport warehouse space at our location in Buffalo, New York, SAMCO can help you to overcome challenges like long lead times for spare parts shipping, as well as constraints on storage space at your own site. Through our sister company, CS Kimeric, we also offer remote system monitoring and routine maintenance services to help ensure peak performance of your equipment.
Contact us here to set up a consultation with an engineer or request a quote for our spare parts services. We can assist you in developing a cost-effective maintenance plan to maximize uptime, and extend the life of your equipment.