Show notes
In this podcast we spoke with Derrick Alig, North American Western Regional Sales Manager for PSG Dover Biotech, Chris Couper, President and Founder of Liquidyne Process Technologies, and Phil Sanders Biotech Chief Innovation Officer at Agilitech about current supply chain challenges, possible solutions, what the future holds, and ways to navigate supply chain shortages to ensure manufacturers meet their timelines.
Supply Chain Shortages
I began the discussion by asking our panel members if they could discuss challenges that their customers are currently having with sourcing single use consumables and technologies.
Derek began by discussing the lack of raw materials to make these products, whether it is polymer-based components where lead times have been extended due to lack of raw materials, or other areas such as chips. As a result, customers are having to purchase larger quantities of product in advance, which ultimately leads to even longer lead times.
Chris added that from a distribution perspective and an integrator perspective, many of their primary suppliers have had issues. They have also seen that many manufacturers have been able to ramp up their production with plants that were put in place in 2019-2020. However, it takes one to three years depending upon the complexity and the scope work to create additional manufacturing facilities and production lines. In addition, many manufacturers are using alternate materials. While they may have qualified one product in the past, now they are qualifying additional supply chains, so they have a primary supply chain and also secondary and tertiary chains.
Phil discussed bringing an agnostic approach to managing supply chain shortages to alleviate some of the issues of having a single source. He also pointed out that sometimes the focus is on single use supply chain issues, but there are companies using reusable equipment that are having some of the same supply chain issues, especially when it comes to these things like chips and control systems.
Supply Chain Solutions
Next, I asked the panel how their individual companies are approaching these challenges, specifically how they are working with customers to provide solutions for these challenges.
Derek explained that at PSG Dover they are committed to providing quality products to customers in the biotech market. They focus on delivery times for customers by adding more shifts to keep up with demand and in late 2021, they added a second validated cleanroom to provide additional production capacities. They have also acquired companies to provide additional capacity.
Chris added that the situation could have been much worse if manufacturers had not stepped up and added capacity like PSG Dover and that they have seen improvements in lead times. He added that for Liquidyne they have a minimum of three supply chains for virtually every component that they offer. They let their customers know that they need to qualify the three components so they can be used interchangeably to meet timelines.
Phil added that maintaining flexibility is critical. For example, maybe the entire amount of inventory that is needed isn’t available now, but there is enough to get started while orders are placed for the rest of the material. Instead of trying to provide a customer with inventory for an entire year, provide three months' worth, then another three, and so on.
Supply Chain in the Future
I followed up by asking what they thought the future looks like for the supply chain over the next three to five years. Does this resolve itself or does it shift to another potential supply chain shortage?
Derek said that he thinks that customers will continue to require multiple supply chain solutions and suppliers will also need to continue to add multiple sources for their raw materials and electrical components.
Chris said that he thinks companies that are successful will take the time to study what has occurred, how they reacted, what could have been done differently, potentially better, and what missteps should be avoided. One thing that we've learned as an industry is that we must be able to react quickly to the market, science had the ability to react quickly to this pandemic and they moved vaccines and treatments to the market in an incredibly short timeline. They took things that historically take several years to accomplish and did it in a matter of months. Suppliers need to be able to respond quickly to increased demand as well. Ultimately, he thinks that customers will need to communicate about what they need in for one to two years in advance instead of in three to nine months.
Phil said that he thinks the biggest issues are what we don't know today, what geopolitical event is going to happen that could cause sanctions on a country where we're getting components from and then having to shift those things. What act of God, tsunami, or earthquake, etc. If we can start figuring out what issues that coming, maybe we can maintain a specific inventory on these components. Maybe Chris keeps some of them, Derek keeps some of them, and I keep some of them so that we're working together to provide solution. He thinks over the next three to five years, the things that we're talking about today are going to be a thing of the past and we're going to be talking about a new supply chain shortage.
Chris added that as three companies we look at risk and try and share that risk to create a better overall customer experience. We must work together in order to make that a reality, and we have to make sure that we communicate individually and together as a team with the client base that exists along with the client base that we don't even know about yet.
All the panelists agreed that there needs to be excellent communication and partnership with customers to fully understand what their needs are and to help them ask the right questions to ensure that they will have the supply they need to move forward.
Navigating the Supply Chain
Then the panel discussed the things that they recommend customer related to supply chain, not just for purchasing and production, but also for scientists.
Derek started by saying that what they really want to know from their customers is their timeline so they can match it up with what they can deliver. It allows PSG Dover to review all the different options available for the best solution possible and also to make them aware of what is realistic with the current supply chain.
Chris added that it is critical to know what the key components for a process are and what are the risk items or items that have volatile lead times. It is critical for customers to be able to rank these items in terms of risk. Because of volatility in the marketplace in terms of getting the product or volatility in terms of price, we're seeing price adjustments 30 days' notice and it's not only for future orders, but also for orders that haven't shipped. New price increases happen because the raw materials that were used to build the product have escalated in price, and this is what's being passed down the supply chain. It is very important to look at the high-risk items and make sure that the product is secure and that there isn’t an issue in a year or two.
Phil explained that customers need to understand that assemblies are different components. So, you can't look at an entire assembly and say that that whole thing is at risk. It's the different components and understanding that sensors or pump heads or connectors or any of these things can be a supply chain issue and having that discussion with the team is important. It is important for customers to think about if there is an issue with one of the components, what is plan B? Is there inventory on the shelf or are there other options that can be explored.
Phil then gave an example from one of their customers that had a specific design to be able to maintain their TMP control, but the issue was that the team wasn’t sure that the supply chain for that design could be maintained. Instead Agilitech built the unit with interchangeable parts, so if that a component wasn't available, there were others on the market that could be substituted. He reiterated that it is important to be adaptable and flexible and have those conversations, so you have a plan for managing supply chain issues in advance.
Chris added that it is very important to have the entire team present when in discovery meetings with the customers. In order to facilitate quick turnaround times, these meetings need to involve not only the scientists, but ideally project managers, people from automation, and people from quality and documentation so that all the expectations can be addressed and met.
This post is sponsored by Liquidyne Process Technologies, Inc..
This post is sponsored by Agilitech.