Can Technology Predict Future Supply Chain Disruptions?

Brooklyn Kiosow Nov 30, 2022

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“We’ve seen the logistics problems we have by sea and by air, and that means there will be a shift in where your product is produced and how you get to it,” said Jens Gamperl, CEO of Sourceability and Sourcengine, the largest e-commerce marketplace for electronic components.

With around 70% of U.S.-based manufacturing companies planning to invest in reshoring or nearshoring capacity in the near future, Gamperl explained that having access to intelligent data and predictive analytics is essential in making smart business decisions. Sourceability, the predecessor of Sourcengine, is leading the effort to digitalize the supply chain and the purchasing process for electronic components.

In the latest episode of the Thomas Industry Podcast, Thomas’ Vice President of Platform Growth and Engagement Cathy Ma spoke with Gamperl about Sourceability’s mission, reshoring initiatives, and the technology helping manufacturers predict future supply chain strains.

What Makes Sourceability Competitive

Gamperl began his journey in the distribution industry in 1983, working for major distributors like Tech Data. When he left his job in 2014, he realized on his quest for a new position that no existing company matched his mission. He took the opportunity to start his own business.

Since 2015, Sourceability has helped digitize electronic components purchasing and procurement. When sales doubled in 2017, Gamperl saw an opportunity to optimize quoting and created Sourcengine.

“Our customers expect a lot of quotes in a short time period. And five, six, seven years ago, you would get a requirement with 2,000 to 3,000 electronic components for quoting. In the past, you take the spreadsheet, you break it down into multiple spreadsheets, and you send it to suppliers.

“You get the quotes back, you consolidate it, and then you quote the customer. And ultimately, when we quoted a customer back then, the quote was obsolete because there was always a change in inventory and pricing.

“Sourcengine is a result of this. It’s the first and only real marketplace in the electronic components industry where you can submit a request for a quote, and you get an immediate quote from more than 4,000 suppliers who are present at Sourcengine right now,” Gamperl explained.

The Benefits of Localized and Diversified Manufacturing Locations

In the United States, manufacturing accounts for more than $2 trillion in gross domestic product (GDP) and employs 12 million people. However, in recent years, the country has felt the pressure to maintain its spot as a world-leading manufacturing economy, according to McKinsey & Company. While the number of manufacturing plants has fallen 25% since 1997, the United States is poised for a resurgence.

A big motive? Recognizing the benefits of localized manufacturing.

With a lot of production now happening in Asia and the felt impacts of ongoing disruptions, Gamperl said manufacturing self-sufficiency is more important than ever. “It shows dependency on transport, on the availability of shipping containers, on boats, and on air freight,” he said. “That makes us really vulnerable if we have to carry products tens of thousands of miles across the oceans. [Localized and diversified locations] gives us more independence.”

Gamperl added that the benefits of reshored or nearshored manufacturing extend beyond functioning independently. “Besides the advantage for the labor market, we still have the best engineers here in the U.S., and that engineering, from my perspective, always works best when it’s close to manufacturing.”

One of the biggest challenges of reshoring manufacturing operations is production costs, with Bank of America predicting that it would cost domestic manufacturers around $1 trillion to reshore some or all operations. While the initial price tag is steep, Gamperl explained that reshoring plans might just involve statewide factories that bolster overseas production.

“The question really is, do we move back, or do we build new factories? I don’t really see the move back. I think what happens is there is additional production, and that additional production will now be onshored. It’s not like that I have to move a factory from Asia, disassemble it, and then build it in the U.S. I think it’s going to be a mix,” he said. “I think it’s simply a good option to have a portion of your production portfolio back home here in the United States.”

How AI, Machine Learning Are Improving Predictive Analytics

Some experts estimate that the pandemic accelerated the shift to Industry 4.0 by as much as ten years. As technology continues to advance, artificial intelligence (AI) and machine learning are transforming the way companies interact with and process data to become more efficient organizations.

As well, manufacturers are utilizing this technology to gain greater visibility into their supply chains to minimize or predict disruptions. According to Gamperl, while most companies have access to this data, it’s only useful if it’s used correctly.

“If you look at most companies, they have most of this information,” he said. “The question really is in what kind of format? Do they still have it in files, in spreadsheets, in Word files, in PDFs? Or are they able to collect the data digitally, and process it digitally?”

That’s where predictive analytics comes in. Using historical data, machine learning algorithms build a mathematical model to capture important trends to predict future events. From there, it offers actions for better outcomes.

Gamperl explained how companies are using predictive analytics: “If I look to some of our customers, some of the largest manufacturers of electronic components on the whole planet have all this information, and they are working with their ERP systems, with their PLM systems, to collect this data and use this data, then, to make these predictions.”

Gamperl said, “I’m very optimistic that in three to five years from now, we will be much closer to predicting what happens [compared] to what really happens.”