How to Achieve Supply Chain Success

What does supply chain success mean to you? For global electronics-distribution leader Smith, supply chain success comes from the ability to serve as a complete solutions partner to its customers, explains Megan Pedigo, Vice President of Global Supply Chain Assurance at Smith.

“Our customers face more challenges and struggles in supply chain than the typical just-in-time shortage situations,” Pedigo says. “Success is really knowing your customer, knowing their models, knowing their programs and being able to identify key benefits in areas that they may not even know that they need. Success is about being a comprehensive provider in all market conditions.”

Pedigo spoke with Supply Chain Connect and explained that in order to establish successful supply chain operations, one must foster valuable partnerships, obtain relevant market data, and strive toward continuous improvement.

Identifying Supply Chain Risk

In order to successfully serve as a complete solutions provider, Smith relies on its global reach, extensive market knowledge, and decades of industry experience. Through these foundational pillars, the company can identify potential supply chain risks and in turn navigate market disruption and fluctuation.

“It’s about reading the market and having our experienced, informed teams,” Pedigo says. “Being an independent distributor like Smith is a valuable perspective. Our network provides a broad view of conditions. We often see key indicators and trends of possible disruptions well before they’re announced.”

Smith recently celebrated 40 years of business in the industry. That experience lends to an earned understanding of the market, which establishes insight into potential supply chain risks and how to mitigate the impact of disruptions. It has also created enduring partnerships.

“We have a fantastic group of market intelligence specialists and commodity experts with decades in the business, as well as a network of longstanding partner relationships,” Pedigo attests. “We’ve been in the business for a long time. We know the market. We also know our customers and the customers in the market, and through that, we’ve built many partner relationships. We have a lot of information—we are hearing what’s going on and what may become pain points that are going to affect customers.”

Facing Supply Chain Disruption

Pedigo emphasizes that while looking at current supply chain issues faced by the industry, it is hard not to realize that similar situations have been faced before. “Patterns in history seem to repeat themselves,” she continues. “Just take the US port strikes, for example. It’s transportation issues, logistics issues…This is not new to anybody in the industry.”

How long a supply chain disruption is felt and exactly how it impacts those along the chain are always unique to the characteristics of the disruption itself. Each disruption should be analyzed individually through the context of past experiences.

“It’s about being able to look at each situation individually and having a proactive plan and being able to understand how that impacts us and how that will impact our customers farther down into the supply chain as well,” Pedigo says. “It happens in varying degrees and across different geographic locations. It’s not just in the US or Europe or EMEA or APAC. We see potential problems coming and going, and they will come about again.”

Disruptions to oceanic transit are very small for Smith in the sense that the majority of the company’s shipments are conducted by air freight. With the recent port strike as an example, Pedigo explains the company’s management of transportation disruption:

“[A port strike] may mean that there’s going to be congestion in the air,” she says. “There’s going to be higher costs…Are we factoring in heavier freight? Yes. Are we able to establish key indicators in-house so that we make sure that we are not surprised by a bill at the end of a deal? Yes. Those are internal factors that we can help mitigate. Also, because of our global footprint, we’re not stuck in one transportation lane because we are so diversified in our geographic locations.”

Natural disasters are another unfortunate supply chain disruption. Recently, Hurricane Helene devastated North Carolina, as well as a critical quartz mine.

“This has a huge impact on the semiconductor industry, in a sense that the quartz supply could significantly impact production depending on how long they are restricted,” Pedigo comments. “But we saw the same thing in varying degrees during COVID where you must look at impacts to resources not being able to get production back online in order to be at full capacity again.”

Smith is no stranger to dealing with natural disasters, being that the company headquarters are in Houston, Texas, which also faced a hurricane this year.

“But that’s where our strength comes from in the sense that we have prepared emergency-disaster plans, and we put them in place,” Pedigo says. “We have a countdown clock starting out at 72 hours to impact, 48 hours to impact, 24 hours to impact, and then post impact. We have these plans in place for all our facilities so that we can appropriately react, not only to our company and to our customers, but to our people.”

Import and export trade-compliance regulations are another inevitability when assessing supply chain restrictions. Trade controls and regulations are not challenges—they are requirements and obligations, Pedigo explains.

“It’s our responsibility to make sure that we’re compliant,” she continues. “It’s our responsibility to our company, to our employees, and to our customers to be fully compliant with regulations and laws when we’re importing and exporting.”

Smith has a proprietary system which utilizes tools and enhancements in the review process to effectively maintain compliance as orders are going out across all the company’s geographic locations. Whether it’s the ECCN classification of parts, restrictions of usage, identifying denied entities or tariffs, there are tools and built-in systems Smith leverages to mitigate supply chain risk.

“It’s about reliability and stability,” Pedigo says, “to be able to provide our customers the assurance that we have the key tools and assets to be able to incorporate the unknown factors into our systems.”

Preparation for Supply Chain Success

So, how can you address supply chain disruptions and risks? It starts with an acceptance of the age-old adage that change is inevitable.

“The market is going to shift. It always has. It’s been the market, and it will continue to be—that is what the struggle is,” Pedigo affirms. “We will continue to have shortages, and that’s going to happen even in an excess surplus type of market. You’re still going to have shortages. Shortages are here to stay. The takeaway from coming off the biggest chip shortage is preparedness and partnerships and relationships, and having that transparency, and having those plans, and partnering with people that are reliable and sustainable in this market.”

Smith emphasizes risk mitigation and anti-counterfeiting measures as a foundation of all processes and procedures, Pedigo relays. This is established at the onset of operations and involves a multi-tiered approach.

One example is the company’s extensive vendor-evaluation process. A detailed onboarding and vendor-screening process evaluates and qualifies vendors, assuring that the company’s Purchasing team is only sourcing from approved and select sources of supply.

“We have built-in high-risk-application policies in place to protect those that are in an automotive, aerospace, medical, or military application,” Pedigo explains of the extensive vendor-screening process. “We have a tiered rating system where you can only select from certain vendors so that we can deliver a higher risk reduction. We have policies where certain applications go through additional screening and testing.

“We also have a unique way of capturing our customers’ certification or test requirements into their profile so that it’s built in on every order, and we ensure accurate and complete consistency on every order out of every geographic location that we have,” she continues. “It’s a global platform, so what you get from one location is what you’re going to get from another—and that’s part of Smith’s reputation of consistency.”

The Core Elements of Supply Chain Success

The core elements of Smith’s supply chain success are applicable across industries. Pedigo stresses that it is paramount to establish a solid source of supply.

“First and foremost, any company, all companies, should and need to have a strong and robust vendor base,” she claims. “You must have trust and commitment in your relationships and with who you’re partnering with. At Smith, we continuously develop our vetted vendor base through proven practices, partnerships, and management. A strong and managed vendor base is essential to make sure that it evolves and that it’s dynamic as the market changes.”

Another core element of supply chain success is knowledge, Pedigo continues.

“Knowledge is powerful,” she says. “In our proprietary platforms, we capture data in real time, which allows our purchasing teams to work on requirements in their respective regions. We have global coverage, so whether we are working in Asia or in the US, we have what we like to call the 24/7 clock. We’re looking at everything 24/7.

“We’re able to see that full view of the market,” Pedigo continues. “You must have systems in place that allow you to have full knowledge of the market. Smith identifies this and excels at this because we are in all channel lanes. It’s a unique position that we are in because we are seeing the manufacturer channel lanes, we’re seeing franchise channel lanes, and we’re seeing the open market. We’re looking at everything and seeing how the market is really playing out.”

Complacency has no place in supply chain operations, and a core element of supply chain success involves a work ethic striving toward continuous improvement.

“You may not be able to predict natural disasters, you’re not going to be able to predict the next COVID, you may not be able to predict market changes, but we all know that they’re going to happen. It’s not an if; it’s when,” Pedigo concludes. “Supply chain agility and being able to evolve within a market is essential. Effective, continuous improvement is key.”

No matter which supply chain challenges you may have to face, the realization of the changes that need to be made in order to establish successful operations is what is important. Taking the lessons learned through a mindset of continuous improvement, relying on trusted and managed partnerships, increasing your knowledge base and opening the door to transparent communication across your supply chain will win out and lead to supply chain success.