ISJ Exclusive: Supply chains – challenging the new normal


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Mark Junge, Global General Manager for security manufacturer, Gallagher, explains how examining the production model can support integrators and customers to reduce risk and support business continuity.

There are many important factors organisations must consider when selecting a security solution. An often overlooked – but crucially important – factor to consider is a manufacturer’s production and supply model. As the Gallagher’s Global General Manager, Mark Junge is repeatedly being asked what Gallagher is doing differently that enables them to continue to supply security hardware at a time when others cannot. Here, Mark explains how examining a manufacturer’s production model can support integrators and customers to reduce risk and support business continuity.

Production model impacts

Understanding the production model of a security manufacturer can reveal a lot about the company. For example, what controls do they have in place to guarantee the quality of their solutions? Do they manufacture in-house, or do they outsource their production? How do they manage their supply chain to minimise disruptions?

For integrators and customers alike, asking these questions of security manufacturers has never been more crucial.

It’s no secret that the past few years have caused their fair share of challenges to businesses across the world, particularly as regards to global supply and distribution.

Raw material and critical component shortages have led to significant delays and surges in demand, which has impacted supply chain, component and freight costs.

Reports of staffing shortages, too, have impacted production. All this has seen major disruptions to projects, with companies either unable to source products entirely, or facing long wait times of many months.

So, what do integrators and customers need to consider when choosing a security manufacturer in order to ensure they can deliver?

Outsourcing vs vertically integrated manufacturing

Outsourced manufacturing can have a number of benefits – including streamlined operations and potential cost savings which are passed on to integrators and customers – but it has its downfalls. Through outsourcing, manufacturers lose direct control of their production and open themselves up to risks, including supply chain disruptions and business continuity challenges. This risk is amplified if the companies being outsourced to are themselves reliant on outside companies for manufactured components.

Vertically integrated manufacturers hold control of their manufacturing processes through designing, engineering, producing and distributing their hardware from one source. Junge explains how recent supply challenges and global events have highlighted the benefits of a vertically integrated manufacturing model.

He adds: “With less dependency on third parties, vertically integrated manufacturers are automatically less at risk of the effects of global events on supply and distribution. With everything produced under one roof, it allows them to be more agile and flexible and able to quickly adapt as needed to meet ever-evolving industry demands.”

With control over the full supply chain, vertically integrated manufacturers can respond rapidly to emerging challenges. Full oversight of production results in shorter lead times and the ability to deliver on demand. Furthermore, vertically integrated manufacturers are better able to guarantee quality of their solutions, with full visibility and the ability to ensure built-in quality processes.

With numerous business disruptions causing challenges to supply, production and distribution around the world, considering vertically integrated security manufacturers helps integrators manage risks.

Risk management through supply chain resilience

A resilient supply chain ensures a company can continue to supply, even during turbulent global events. When choosing a security manufacturer, it’s crucial that integrators and customers consider manufacturers who have proven they can continue to deliver.

Over the course of a decade, supply chain disruptions can cost the average organisation up to 45 per cent of one year’s profits. Time is money and delays on projects caused by significant product wait times can be costly. For integrators, delays can put them at risk of legal liabilities through not meeting project deadlines, with end customers suffering the consequences of incomplete projects or significant cost increases.

Richard Huison, Gallagher’s Regional Manager for the UK and Europe, says: “We are hearing some scary stories around excessive lead times – some exceeding 60 weeks.

“We know many manufacturers are struggling to provide stable and timely supply of product. For our partners, knowing Gallagher can continue to supply hardware that is critical to their growth and operational resilience is vital.”

These thoughts are echoed around the globe, with one study reporting 73% of Americans had recently experienced a product shortage and 74% believing product shortages are the new normal.

Scott Elliott, Gallagher’s Vice President for the Americas, responded to this, saying: “We’re committed to providing the highest levels of assured protection for some of the world’s most critical infrastructure. When it comes to high security, there can be no compromise.

“Gallagher’s unique end-to-end supply chain ownership has allowed us to deliver solutions that meet federal compliance standards in the Americas for over 15 years. It’s essential we continue to supply hardware without delay to ensure the protection of critical sites.”

A recent report by IPVM indicated that product shortages are a problem for more than three quarters of security integrators, with 95% of integrators feeling product shortages were very or moderately significant. Access control hardware, in general, was more likely to have delays reported by integrators.

These delays have led to frustrated customers, cash-flow issues for integrators, loss in productivity and ad-hoc project redesigns to utilise alternative products that may not be fit for purpose.

For security integrators, working with manufacturers who can guarantee supply supports them to foster stronger relationships with their customers through an improved experience, leading to longer customer retention.

Planning projects from the outset with manufacturers who can guarantee supply ensures integrators are able to better meet the security needs of their customers, removing the cost and inconvenience of carrying out last-minute redesigns due to product unavailability.

Customers, in turn, benefit from having projects completed on time, ensuring efficiency through avoiding long delays and associated rising product costs.

A strong supply chain creates a lower risk environment, alleviating a source of stress during unpredictable times.

The Gallagher Delivery Model

Gallagher is proud to be doing things differently in ensuring continued availability and supply of their solutions. Junge credits this market-leading position to Gallagher’s dedicated global manufacturing and supply chain team, located on site at their head office in New Zealand.

“Gallagher solutions have been designed, engineered, manufactured and distributed from our head office site in Hamilton, New Zealand for over 80 years,” says Junge. “This offers us complete oversight of our manufacturing and distribution, ensuring we maintain quality and enabling us to quickly and easily make changes, invest in raw materials and implement strategies to ensure continued availability.”

Gallagher implemented a number of initiatives early on in the COVID-19 pandemic to ensure they maintain a strong supply position.

This included empowering a dedicated, proactive supply team to meet regularly to monitor Gallagher’s current position, while a team of data scientists create scenario models to predict usage and certainty of supply.

To combat component availability challenges, Gallagher has significantly increased their raw material inventories, while their engineers have dynamically redesigned products as required.

“With full control of our on-site manufacturing, our agile, expert teams can rapidly innovate and bring new technologies to our customers, fast,” says Junge.

“This has provided certainty of security for our end customers and financial security for our Channel Partners during very uncertain times. We are continuing to receive additional demand to fill in where other manufacturers have chosen not to invest and support their customers and channel.”

Gallagher’s dedicated teams work hard to maintain the strong relationships they hold with raw material and electronic component suppliers.

“One of Gallagher’s core values is around building lasting relationships and we pride ourselves on the long term, highly trusted relationships we hold with our supply chain,” Mark continues.

When it comes to continued supply, Mark believes Gallagher’s superpower is their private ownership.

“As a privately-owned New Zealand company, we have the freedom and ability to invest in our manufacturing and distribution facilities as needed to ensure we can continue to meet market demand. This sets us apart from publicly owned companies, which are frequently driven by the need to deliver shorter term returns to their shareholders.”

Gallagher’s Research Centre of Excellence Lead, Trish Thompson, has been the driving force behind several of Gallagher’s product innovations over nearly 20 years.

Thompson recently commented on the Gallagher Delivery Model, saying: “The thing that I loved from the day I started was that we make everything, hardware and software and ship it globally from this one small city in New Zealand.

“From reaching out to our global markets, to crystalising ideas, then design, implementation, manufacture, testing and release – it all happens here on this site. That’s pretty incredible and requires an incredible mix of skills, talent, infrastructure and coordination.”

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This article was originally published in the special September show edition of International Security Journal. To read your FREE digital edition, click here.

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