AI, Robots, IoT, Blockchain, Hike!

July 16th, 2018

AI (artificial intelligence), Robots, IoT (internet of things), Blockchain, hike! Doesn’t it sound like a foreign language?  It certainly does to my mother! Yet it is the language of the future.

business intelligence

Which of these technologies should we pay attention to?  Let’s look at some of the more popular ones:

  1.  AIDepending on your industry, AI will most certainly impact it.  Service industries such as accounting are definitely impacted. After all, if a program like Alexa can learn how to put together your taxes, it is bound to disrupt.  Machine learning and artificial intelligence can be powerful – preventative maintenance can be completely redefined in a proactive, predictive way.
  2. Robots – Isn’t everyone talking about robots?  Of course, this is partially because they are fun to talk about.  Is a robot good in all situations? NO! We’ve seen many manufacturers and distributors try robots and end up slowing the process down because they didn’t think about the full impacts.
  3.  IoT  We don’t even think about all the devices that are connected in our everyday lives.  Smoke alarms, security systems, phones, refrigerators, Amazon Alexa, our car, traffic signals, manufacturing machines, RFID tags and much more.  Connecting devices because we can yet for no valuable use just adds to the mountain of data to analyze. Instead, we should think about the strategic use of IoT for our business.
  4.  Blockchain Talk about another buzzword!  Isn’t a phone call, an email, EDI, lot traceability in ERP or a customer portal sufficient?  Many times – yes. Again, the value of blockchain should be evaluated before jumping on board with the latest and greatest trend; however, there will be uses.  When instantly visible, irrefutable and non-changeable (think avoidance of high potential fraud), traceable transactions are required, it might be just the medicine.
  5.  Autonomous vehiclesForklifts, cars, trucks, and more.  Again, let’s think ‘fit’ to our business.  In trucking, it is likely to make all sorts of sense.  Rates continue to rise. There is a shortage of drivers. Baby boomers are retiring. Environmental rules continue to increase. It does seem to fill a potential gap.

The underlying bottom line when it comes to technology remains – let’s not use technology for technology’s sake!
Instead, think smart. How does it fit with your business requirements? Will it provide a superior customer experience?  Purse those with a strong return on investment, ignore the rest and success will follow while your competition chases ‘shiny objects’.



Warehousing Strategies for Success

July 12th, 2018

The Amazon Effect is creating elevated levels of stress in the warehousing and distribution world. The key question is how to provide immediate deliveries, customized service, easy returns, and more for a reduced cost – a very good question indeed!

A few considerations to ponder:

  •  Storage capacity -What is your storage capacity?  How does that compare with your requirements?  And how can you maximize what you can store in your warehouse?
  • Flow – Are you running in circles around your warehouse to support your customers?  Similar to a manufacturing environment, flow can be an essential ingredient to warehousing success – or not.
  • Productivity – Have you automated what makes sense and will increase your speed/ throughput? If it doesn’t improve speed (and accuracy) to your customers, is it really more productive?  Similarly, is outsourcing truly more productive?
  • Equipment – What equipment is built into your warehousing strategy?  Would an upgrade provide a return on investment?
  • Data – Are you using predictive analytics and data analysis to make informed decisions to stay ahead of your competition?
  • WMS tools – Whether “poor man’s” or sophisticated, do you have a way to pick, put away and sort efficiently?
  • Inventory – Don’t ever forget inventory.  Without having the right product in the right place at the right time at the lowest system-wide inventory (and potentially end-to-end supply chain network inventory), what else will matter?

We have yet to come across a warehousing or distribution client that didn’t have at least a 20% improvement opportunity.  Have you looked into your opportunities lately?  Most likely your competition is!

If you need help thinking through your warehousing and distribution strategy, contact us.

 



Should I Move?

July 9th, 2018

Our clients frequently call with questions such as:

  1.  Should we renew our lease?
  2.  Should we move to a lower cost area?
  3.  Should we move to a lower cost state?
  4.  What considerations should we think about when evaluating our manufacturing and logistics network?
  5.  Should we outsource?

Thus, we thought it would be prudent to address some questions and themes that should be evaluated from a strategic point-of-view when discussing supply chain network assessments.  

Let’s start by saying that our top clients begin THINKING about these topics several years in advance. Similar to selling a business, it isn’t the best plan to evaluate whether to renew a lease at the last minute or to be forced into a particular partner or location because you started preparing “too late”.   

Instead, why not think ahead….

  1.  Where are your customers?  – As much as we all want to reduce costs especially in today’s Amazonian environment, we also need to remember that customers expect rapid deliveries, change their mind frequently (and expect agility) and desire easy returns.  Thus, where are you located in comparison to your customers?
  2. What are your customers’ expectations?  – Lead times. Personalized service.  Return policies. Vendor managed inventory.  Future forecasts. What will they expect a year from now?  Are you already planning for these needs?
  3.  Where are your suppliers?  – Similar to your customers, it is important to consider where your suppliers are located as well.  Do you receive product from the ports? If so, what volume is related to the ports?
  4.  What access do you have to people? – We evaluated Nevada for one of our clients. However, when we talked with local contacts to estimate building / lease costs, we also discovered that as low as the overhead might be, freight aside, there were no people.  Tesla had absorbed them all and there were requests to supply people from Southern CA to support current workloads. People can certainly be relevant!
  5.  What type of freight partners/ rates are in place? –  No matter how close you might be to your customer, freight can add up – and, more importantly, delays to your customer are VERY costly (lost business, charge backs from customers such as Walmart, ill will and more).  Just because you have carriers with your current situation, it does NOT mean that will be true with your new situation. Freight is tight and rates are going up! And, remember last mile considerations are complex. Last mile. Last minute!
  6. What type of transportation network is required to support your business?  – In addition to freight considerations, will you need to think about parcel, rail, ocean freight, and other modes of transportation?  Or should you be considering these options?
  7.  What inventory levels are built into your network?  – Inventory = cash tied up.  

There is quite a bit more to think about than solely a cost cutting exercise.  Most clients call due to concerns about cost – as important as cost is, taking the strategic / high-level view can ensure your service, total cost (including hidden costs) and cash flow are maximized.  

Have you started thinking ahead?  If you are interested in our newly upgraded service offering in response to the Amazon Effect of warehousing/ supply chain network assessments, contact us.



People Rule

July 4th, 2018

Why does Southwest Airlines outperform the competition by a long shot in employee turnover (7% vs. 25% industry average)?  People!

As our long-term readers know, we believe that people rule!  There is just no doubt about it – our most successful clients are similar to Southwest and JetBlue as it relates to people – executives view them as assets; not costs.  Instead of stifling creativity and success, they encourage it!

We have to imagine that no one sets out to stifle creativity when they leave for work in the morning (it sounds like a miserable existence) . Yet that is what we find in the vast majority of companies.  Sometimes, it is due to the rules and regulations that are supposed to protect threats.

For example, recently we received dismal service from a major bank.  Certainly, the employee helping us with the transactions meant no harm and wanted to help. However, her overriding need was to remain employed which meant following rules to the T….and beyond.  Taking zero risks while servicing customers is clearly celebrated and we felt the pain. Our account kept going on hold for no reason. Checks bounced. Silly requirements were communicated (we ‘the bank’ missed a space on this form and so you must jump through 10 hoops so we can get our paperwork in order). The list wents on. We went up the chain to no avail. We must follow the 10 hoops, avoid cracks on the sidewalk (reminded me of Jack Nicholson in As Good as it Gets), swim the English channel and more…

On the other hand, a business bank focused on service was able to navigate the same federal and state requirements remotely and immediately.  What was blamed on rules and regulations were clearly bank policies. Are you making your customers avoid the cracks in the sidewalk to work with you?  Or are you rolling out the red carpet? It didn’t cost more at one bank vs. the other, although we would have paid more by the time we went through the first few hoops.  

Do you care about what your customers care about or do you care about rules for the sake of rules? Or, put another way – do you care about the customer result or the process used along the way? (assuming no bad motivations)

Related statistics
According to Gallup, 85% of employees are not engaged at work.  Yet, companies with highly engaged workers outperform their peers by 147%.  

We have no doubt the employee at the large bank fell into the 85% category whereas the business bank is more likely in the 15%. We know the banker at the business bank will go over and beyond.  

Which employee would you rather have service you and your firm?

 



Southwest, JetBlue and How People are the Brand

July 2nd, 2018

I heard Ann Rhoades, former VP of People for Southwest and JetBlue speak at an Executive Forums meeting.  When JetBlue surveyed their customers to find out what influences loyalty, the results were a bit surprising in that products/ services, operational performance (on-time arrival) and pricing weren’t critical (even though they are known as a low cost airline). Instead, people were the key!   

People are the brand and create customer loyalty.

According to Fortune, the companies that perform best on inclusivity, trust, pride and camaraderie outperform the rest.  Companies that placed in the top 25% by this measure saw higher revenue growth than the ones in the bottom 25%. In essence, people create the brand – and results.  It is logical but do we behave as though this is true? Are you creating a place people want to work?

One tip to implement this week:
In today’s Amazon impacted marketplace, customer expectations are high, pressure on costs is immense and it is quite difficult to find top talent.  Perhaps it is just the time to figure out how to create an attractive work environment to outperform your competition – and enjoy your day-to-day work life.

As Ann said, creating this culture starts with values.  What values do you stand for? Do your employees know your values?  Are they apparent in how people behave or are they just on a piece of paper?  Are you willing to let your top performer go because he/she doesn’t live up to the values?  

 When I was a VP of Operations, we re-set values after barely escaping bankruptcy to set our path forward. It was pivotal to the profitable growth that followed.

Perhaps take a step back and think about your values, talk with your executive team and think about how to “make them come alive”.