THE RESILIENCY CHALLENGE:
CONSTRUCTING THE AGILE SUPPLY CHAIN FOR HEAVY INDUSTRY
June 2014
By Lisa Harrington, President, lharrington group LLC and
Associate Director, Supply Chain Management Center,
Robert H. Smith School of Business, University of Maryland

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The resiliency challenge

The engineering and manufacturing sector (E&M) is the definition of diversity. The companies that make up the sector manufacture everything from jet engines and drilling rigs to simple fasteners and filters. Broadly speaking, though, E&M firms fall into a number of sub-sectors including
Aerospace and Aviation and Industrial and
Construction Equipment. The overall sector, like all industries, faces a myriad of issues around volatility, including dealing with natural disasters and supplier disruptions.

But these issues aren’t the only ones that keep sector executives up at night. E&M CEOs also worry about how to transform their frequently large and conservative companies into agile enterprises capable of meeting new competition and opportunity head on with faster, leaner and more resilient operations.

Global market dynamics are driving the need for transformation. As emerging markets grow and new markets emerge, demand is dispersing geographically.
Demand is also fragmenting as a result of increasingly complex requirements from customers both for new product customization and post-sale support and service. Customers want – and expect – more choice on configuration options, faster cycle times, more frequent upgrades and robust aftersales service.
All of this occurs in the face of mounting competition from new entrants, and intensifying cost pressures.
Where in the past E&M companies earned healthy profits on selling equipment, growing competition is squeezing those margins. At the same time, customer demand is driving a paradigm shift away