When is it the ‘Right’ Time for a Supply Chain Network Assessment?

September 4th, 2018

Supply Chain networks that are not set up to support scalable, profitable growth have a high likelihood of negatively impacting your customers, impeding your growth and consuming far more resources than they were ever imagined to sustain.  What is ideally mapped out one year is likely to change the next in today’s Amazonian marketplace. Thus, assessing your supply chain network from your suppliers’ suppliers through your manufacturing and logistics networks to your customers’ customers with an eye to customers, cost and cash will undoubtedly yield results.  

What are some hints to know when it’s the ‘right’ time?

  1.  Renew your lease, buy or move? – As your lease comes due, it is a natural time to re-evaluate your supply chain network to make sure you are positioned ideally to support your customer base at maximum value for your customers and your organization.
  2.  Cost considerations – As you think about how to reduce your cost base, re-evaluating your supply chain network is a ‘must’.  Most likely, you can save a few pennies here or there.  But, for substantial savings, you may need to review your infrastructure.
  3.  Customer demands – In today’s Amazonian environment, customer demands are ever-increasing.  Is your supply chain network positioned to support your customers’ needs, delivery points and sales growth expectations?
  4.  Space constraints – As you start to think about space, it might be an opportune time to re-evaluate your supply chain network.  First, do you know how much space is needed to support your growth plans (and where)? Do you have the opportunity to maximize space?  Or should you re-position?
  5.  Insourcing/ outsourcing– As you think about whether you should insource, outsource (ex. 3PL) or utilize a combination of both, it is definitely an opportune time to evaluate your supply chain network and logistics infrastructure.
  6.  Supply chain partners – If you are re-evaluating key supply chain partners, it is likely a good time to do a quick assessment of your supply chain network.   

We have found that a supply chain network assessment can be valuable even if you decide not to change a thing.  Performing a quick review of customers, suppliers, operations and logistics infrastructure from a customer, cost and cash flow viewpoint can provide substantial benefit every so often.  Contact us if you’d like to talk further.



Keeping an Eye on Global Markets

September 1st, 2018

If there ever was a strategic topic of critical importance no matter your position in the supply chain, it is keeping an eye on global markets.  We’ve worked with clients who ONLY source materials, components and products from U.S.-based suppliers.  Yet, even they must pay attention to global markets to thrive.  Are you making this a priority?

There are countless reasons to stay informed of global markets.  First and foremost, we live in a global society. It isn’t practical to go through a day without coming into contact with products, services, people, currencies and more from around the world.

A few additional reasons to keep an eye on global markets:

  • Interconnected world – We live in an interconnected world.  A political risk in Asia can impact the price of your materials.  Or, a shortage of oil or gas (as an example) in one country can impact the price and availability elsewhere.
  • Economy & currencies – Currency exchange rates will have an impact somewhere in your supply chain whether or not it touches your product or service.
  • Tariffs & trade – Tariffs certainly can have an impact.  The impact can be far reaching and can be from areas that don’t directly touch your organization. In this case, you might have short-term pricing impacts or long-term strategic impacts of where to locate manufacturing or which countries and markets to pursue.  Hopefully, you are considering both.
  • Global customers – There might be unique opportunities in one part of the world to utilize your product or service with a greater benefit realized than in another part of the world.  Are you considering your options and expanding your mind to the possibilities?
  • Risk – There’s no doubt that mitigating risk alone is reason to keep track of global markets.  For example, earlier in my career when there were issues getting materials out of Brazil, we wouldn’t have been able to service customers if we hadn’t planned for a backup supply elsewhere in the world.  Similarly, we would have gone out of business if we relied on only local suppliers when a major hurricane hit our manufacturing plant.  Every local business was under water except us and even with a plan we were affected – were shut down for a short period of time because our employees could not get in or out of our facility.

Keeping an eye on global markets can become a full-time job. Clearly, few, if any, clients can afford that.  Thus, pursue ways to collaborate with customers, suppliers, trade associations and more to leverage insights. Minimally, put aside some time on a daily basis to watch for key trends.

 



What Tours Have You Gone on Lately?

August 27th, 2018

In the last month, I have attended quite a few tours of manufacturing and distribution operations.  The pictures below were taken at an APICS Inland Empire and ProVisors tour of Southwest Traders Foodservice Distribution and Do It American Manufacturing.  Both were excellent.  And I walked away with great tips!

Tours are a great way to see different ways of doing business and gain insights and ideas to apply in your company.  I find that what I see and learn will provide value to clients somewhere down the line.  As often as I hear clients request a consultant with knowledge in their specific industry, I have found that we often-times provide even greater value when we can apply a concept that we’ve seen in a completely different industry that looks like it could be an ideal solution.

What Should We Consider and/or What Impacts Could Arise?
How recently have you gone on a tour?  You might want to start by going on a tour of your company.  As strange as it sounds, it can be eye opening if you take the view of an external tour and see what you observe.  Better yet, take others with you and see what they observe.

Beyond your facility, there are many options for tours of manufacturing and distribution operations.  You can go to customers and suppliers to better understand their operations. Not only will you gain ideas, but you’ll learn about companies that tie directly to yours and collaborate with supply chain partners.

You can also tour by joining a trade association like APICS (trade association for supply chain and operations management), the DMA (distribution management), ISM (supply management), CSCMP (transportation) and more.  Last but not least, why not ask friends and colleagues for a tour.

While you are touring, observe and ask questions.  You are likely to see new techniques, learn about new technologies, see different equipment (such as narrow aisle forklifts which we saw at Southwest Traders), observe robots in action (which we did at Do It American), discuss metrics and dashboards and much more.

Step out.  Take a Tour.  Learn from Others.



Are Your Ready for a Systems Transformation?

August 12th, 2018

The topic of Systems Transformation seems to be arising more frequently lately.  How do you know if it is time to consider a systems transformation?

Let’s start by defining a systems transformation.  In essence, a systems transformation is an upgrade to the way you perform business – inclusive of your people (allocation of resources, skillsets, etc.), processes, systems and information flows/ collaboration partners.  

Although there is never a bad time in terms of elevating your business performance, the investment and disruption might not be ‘worth it’.   In other words, does the return on investment make it the ‘right’ time?  

Here are questions to ponder in answering that question:

  1.  What are your growth plans? – If you are performing well and growth is slow, you are unlikely to require a systems transformation.  However, if you expect solid levels of growth, you’ll need one. There are two reasons: 1) Even if you are providing an exceptional customer experience currently, to maintain that with growth is a different ballgame.  2) As you grow, if you don’t want to add people to support each new level of growth, you’ll need to devise systems to grow in a scalable, profitable way.
  2. Will your margin levels sustain your business needs?  – Of course, no one would complain about increasing margin.  However, the key question is what has to be done to achieve the result?  Take a look at whether your profitability and margin levels are sufficient to satisfy stock price expectations, investor needs, reinvestment plans, business valuation goals etc.  We have run across “cash cow” businesses that yield enough profit for the owner’s lifestyle and objectives. There might not be a reason to invest in an upgrade. After all, there is risk and disruption with every activity of this magnitude.
  3.  What are your customers’ expectations? – No matter your growth and profitability, if your customers’ expectations are changing or increasing (as they often are in today’s Amazonian environment), the key question is whether you’ll be able to meet them with your current setup.  We see that it can go either way – depends on the industry, your customers, the marketplace etc.
  4. What are your employees expectations and capabilities?  – Will your employees stick with you if everything remains status quo.  This can completely depend on your employees. We have run across people who prefer “what works” and are quite happy not to upset the apple cart.  On the other hand, we have also seen many job seekers look for new opportunities because the executives weren’t interested in growth – the company’s or the employee’s.  It is important to think through what will happen. If you choose the status quo and your employees don’t align, it might force you into a different strategy, and you’ll be worse off for not thinking proactively.

On another note, if you don’t have employees capable of leading a systems transformation, you will need to shore up your team.  Certainly you can supplement with short-term resources to fill in gaps and consultants to advise on skills not required over the long-term but you might also need to fill in gaps within your team.  Don’t overlook this critical component but also don’t let it deter you from making the leap.

  1.  Do you have the funds?  This is the one that deters most executives.  It is quite tempting to hold off until later when it seems like it is a ‘better time’.  However, are you defining better time as one when you feel better or one as defined by the questions above?  As my consulting mentor says, there is always money. It is a matter of priority. Recently, we ran into a client that has never borrowed money.  It can be a smart and prudent strategy if it supports your business objectives. However, the CEO was questioning whether he should continue this strategy.  If it is the ‘right time’ for an upgrade and it will provide a return on investment over the long-term, he should absolutely borrow to fund the near-term investment to gain the value down-the-line.  

Of course, that doesn’t mean you should dig a hole the size of the Grand Canyon to fund your systems transformation.  We have seen many executives accidentally throw money out the window when it wasn’t the best timing or get carried away and spend ‘too much’.  In these cases, you might never recover from your upgrade! Gain advice from experts with an eye to return on investment. Keep in mind that taking prudent risk will be required!



Do You Have an Eye to the Future?

February 9th, 2018

Do you have an eye to the future?  Don’t just answer yes and move on.  Take a few moments to consider this question.

In today’s Amazon-impacted world, if you miss a few months buried in your isolated internal world no matter the reason, you might miss a noteworthy event, trend or comment that could put you behind the 8 ball with no hope of catching up.

A 3-5 year strategy session once a year NO longer cuts it.  We are all in a strategic sprint.  In most industries, even going beyond one year out is a wasted exercise.  Instead, we should keep an eye to the future and build agility into our strategy setting process.  So, what are some ways we can keep an eye to the future?

  1. Pick up the phone and call a customer – Those clients who talk frequently to their top customers are far more successful than those who don’t.  Of course everyone is busy.  Offer value and make it is your customer’s best interest to keep in touch.  You’ll know more about what’s going on in the marketplace than those buried in month-end numbers, Board meetings and strategy sessions.  
  2. Attend an industry conference – Why do all the work yourself?  Network with those who are uniquely positioned to keep track of the latest trends and what might impact your industry.
  3. Have lunch with an old alumni friend –  You might wonder how this would help if your friend isn’t in a related field or isn’t a business owner or executive.  Keeping an eye on what’s happening in the world around you and gaining insights from trusted colleagues in different industries can provide some unique perspectives you won’t gain anywhere else.
  4. Involve your team in keeping an eye to the future – Certainly, if you provide the vision to your team (no matter the level), explain how the company is performing and encourage them to keep an ear to future trends, people will be happy to contribute to success.  We find that the best trends can come from unlikely places – the secretary you didn’t even notice or the person shipping orders who talks with UPS drivers.
  5. Watch the latest trends globally, economically– We are often surprised by how seemingly unrelated events throughout the world will impact suppliers, transportation channels, exchange rates or something else that will have a direct impact on business.  Subscribe to newsletters that can keep you up-to-speed on highlights, read the Wall Street Journal, talk with colleagues etc.
  6. Go visit a supplier– Don’t assign this to your procurement professionals solely.  Suppliers and trusted advisors can provide a wealth of knowledge that can help you navigate your path forward successfully.
  7. Join a CEO or key executive group – The problem with being at the top is that there is no one to talk to.  Find a new group of peers to ask the hard questions and keep you on track.

When you have a good idea of the future, you will position your company, your people, your processes, your infrastructure, your supply chain and more for success!