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Monday - March 7, 2022

Vertically Integrated Manufacturing Supports a Stable Supply Chain

We are now entering year two of global goods shortages and unpredictable supply chains due to the pandemic. However, this phenomenon has been simmering beneath the surface for some time now with the increase in the total volume of goods shipped worldwide. In reality, it may take months or even years to get back to “normal” – even then, the process will have to adapt to meet an accelerated logistic schedule coupled with a shrinking labor market. So, what can companies do to mitigate problems in the future? There are a few potential solutions to protect your business from supply chain volatility.

Closer Factories and Warehouses

According to Reonomy, Amazon spent over $164 million in 2021 to expand warehouse space. Having more warehouses in close proximity to customers helps reduce shipping time and costs. Manufacturers can explore this strategy as well by investing in new factory locations around the world. For example, Intel plans to invest $20 billion to build a factory in Arizona in order to expand semiconductor manufacturing. Bringing factories closer to customers can help companies become less reliant on overseas manufacturing with long shipping times.

Flexible Supply Chain

Lean manufacturing has been the standard for many years with companies closely monitoring and controlling tight inventory levels. This method helps manufacturers reduce the costs incurred by storing large amounts of goods. However, in the current climate, it has been difficult to keep stock due to manufacturers lack of flexibility. Having a single supplier or material can lead to halts in production when there are problems with the sole source. Diversifying a supply chain makes companies more adaptable in unpredictable situations.

Vertically Integrated Manufacturing

Vertical integration is the process of manufacturing individual parts of a component or product in-house. This is challenging because it requires significant investment in resources and equipment. In the past, it was easier and cheaper for companies to outsource the production of these unique parts. However, with the growing logistic uncertainty, manufacturers are waiting on multiple parts coming from various locations that all have the potential to negatively impact production schedules. By producing more parts in-house, manufacturers can have greater control over their production schedules and lead times.

How Can NMB Help?

The NMB brand is synonymous with high quality and good value. This is a result of our commitment to vertically integrated manufacturing processes. For example, the majority of components for NMB fans are made in-house, such as motor windings, molded plastic impellers and casings, stamped metal impellers and precision NMB miniature ball bearings. By making these parts in-house, we can better control quality and production schedules, and therefore offer shorter lead times to our customers. We also partner with distributors in the U.S. to stock a wide range of fans, bearings, motors, connectors, switches and Li-Ion battery ICs that are available for immediate purchase.

Alvaro Espinoza
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