In the world of politics, sometimes politics see the world as black and white, but in the reality, it is grey, and one of the ways it is grey is supply chains for companies that manufacture. Over the years, some companies emerge as the dominant in their field and they are very hard to dislodge from that position. This means a company which competes in the field needs to specialize. This specialization is good because the product tends to the go to product, the bad side is because of the specialization the main source of material tends to be one plant.

In an article by Allison Lampert and Tim Hepher of Reuters, there was a fire in a Philadelphia area parts factory owned by SPS located in Jenkintown. SPS is owned by Berkshire Hathaway – Precision Castparts Corp. The factory specializes in high-strength nuts and bolts for engines, wings, fuselages and landing gears or according to the SPS website – it is hard to find a plane that does not have some of its parts.

The fire lasted a few days, which means the aircraft supply system will be pressured because companies such as Boeing and Airbus have backlogs to build airplanes. The nuts and bolts are made with titanium fasteners, and it is hard to find other companies doing the same thing. The nuts and bolts are needed to assemble the carbon-fiber jets. All the major aerospace companies have sent people to the Philadelphia area. Companies include: Boeing, Airbus, Safran, and GE Aerospace.

Linking to dividend paying stocks, in the world of supply chain systems, they are complex for many good reasons. Quality, specializations, quantity, ownership and the list goes on. It is the reason why managing the supply system is a very important element to any manufacturer and understanding the complexity is needed for the health of the organization. If you invest in a manufacturing company, it is important to try to understand how the supply system works and options when something bad happens.

There are more questions than answers, till the next time – to raising questions.