Archives

The Amazon Effect is Driving Dramatic Disruption

February 26th, 2018

Supply Chain Briefing

On February 15th, I participated on a panel discussion with Dan Vest, co-owner of Midpoint Bearing, BJ Patterson, CEO of Pacific Mountain Logistics and Jon Burgess, panel facilitator and VP of RedFusion Media at the Manufacturers Council of the Inland Empire’s Manufacturers Summit.  We had a great discussion about the disruption Amazon has caused in manufacturing and logistics circles.  

 

In looking at the Amazon Effect as a metaphor, manufacturers and distributors must respond to elevated customer expectations, rapid delivery requests, 24/7 service, and much more.  It is certainly driving massive changes throughout.  

For example, smaller e-commerce type orders are considered the norm which drives the need for quick and flexible changeovers, shipping flow changes (instead of pallets, there is a need for eaches), dramatic transportation and logistics disruption (consider how to ship eaches to multiple ship points vs. traditional truckloads to one ship point) and more.  Dan and BJ gave examples of how significantly Amazon is disrupting their businesses on a daily basis.  

Have you thought about how to raise the bar to stay competitive with the significant disruption flowing through the industry?

What Should We Consider and/or What Impacts Could Arise?
As I responded when Jon asked whether there are any other disruptors to think about in addition to Amazon: Definitely!  Sears was the Amazon disruptor several years back and lately all the news relates to whether they’ll make it at all.  No one was thinking about Amazon as a serious player 20 years ago.  It is wise to always be thinking about the next disruptor and how to successfully navigate your business.

This seems like a tall order – how to identify disruptors and figure out how to respond.  Instead of spending time to figure out the next disruptor, stay on top of the latest trends, companies, and economies impacting your business.  You’ll see them coming!  

Stay agile, hire and develop the best talent and keep an eye to the future.

 



Case in Point – Should You Speed Up Your M&A Plans?

February 25th, 2018

I lead a group of top notch trusted advisors (ProVisors) in the Inland Empire, and so I am immersed in what CPAs, attorneys, commercial real estate experts and other advisors see in the marketplace.  Last month, we had a fascinating and insightful presentation by Mark O’Keefe , Managing Director of Ambrose Advisors (a leading Independent Investment Bank) on the state of the M&A markets.

This presentation got me thinking about you. I see my job as providing trending topics, fresh ideas and contrarian advice as it makes sense.  And this is one of those times.  Typically speaking, every trusted advisor is singing from the same song sheet when it comes to preparing for the sale of a business: Don’t rush to sell because you miss out on a huge opportunity to increase the value of your business and sell at a much higher multiple.  

For example, one of my group members runs CEO groups, and his CEOs have a dramatically higher multiple than the average.  Thus, it is “excellent advice” typically.  However, we might be in a unique time frame where accelerating the sale could drive a higher exit value.     

As Mark said, interest rates are low, flexible terms and structures are available, and there is high competition among lenders; thus, it is a strong market for borrowers.  Additionally, U.S. stocks keep posting record highs, notching milestones not seen in more than 20 years.  And middle-market business owners are reporting strong growth and a favorable business outlook.  How long do you think this highly favorable situation might last?  And, last but not least, M&A activity has slowed down due to the political, economic and tax uncertainty.  

Might it be the opportune time to take the contrarian view and sell quickly to maximize value?  The strong market is pushing values UP which might outweigh a few percentage points of improvement in operating performance.  

If you are thinking about it anyway, perhaps it is worth-while taking a look….

 



Harvey Mudd Student Projects & Innovations Related to Cancer

February 22nd, 2018

Earlier this week, I attended some clinic presentations at Harvey Mudd (student projects with companies / partners), and the value of innovation hit home!  

For example, there are students working on innovations to improve on the success rate of breast cancer surgeries – talk about relevant!  There are many tangible and impactful projects the students work on throughout the year in a wide variety of industries.  Marrying up practical experience with book knowledge can go far in preparing students to be successful in careers after college.  Do you provide well-rounded education and experiences?

One tip to implement this week:
What type of education and experiences do you provide for your employees and team members?  I see a distinctive difference between training and education whereas education is a much broader concept so that your employees will be able to interpret and carry forward.  Do you explain the whys?  Do you provide practical examples?  Do you allow your team members to try new things?  Even if they fail?

Although education can be quite valuable, it might not be enough.  Do you find a way to provide an experience?  A kaizen might do the trick …or at least get the process started.  Or, have you put together a cross-training program?  Shouldn’t a planner or logistics resource understand the trials and tribulations of talking with customers on a daily basis?  Dealing with an angry customer can do wonders for opening your eyes.  And how about vice-versa?  Are your customer service resources committing to whatever the customer requests regardless of whether you can deliver it?  Why not give a more comprehensive experience approach a go?

Regardless, continuous education is critical today as everything seems to change in a nanosecond!

 



Manufacturing is HOT!

February 19th, 2018

Supply Chain Briefing

In the last week, not only have there been several articles about the positive strides manufacturing is making but it also has come up in several presentations we’ve attended such as the Inland Empire Economic Forecast.  

Here is a compilation of just a few of the HOT topics and trends:

  • There are plenty of customers and consumers are in the U.S. – with the Amazon Effect (customers expecting rapid deliveries, customized product and 24/7 accessibility), locating closer to the customer is advantageous.
  • Automation and technology are gaining rapidly – the more technology that makes sense in our factories, the less lower-skilled people required.  That makes U.S. factories more competitive!
  • High-tech resources are in the U.S. – the more technology and automation, the higher skill level required.  Those folks are close by.
  • According to Industry Week, the NAM Manufacturers’ Outlook Survey, 95% of manufacturers are are optimistic at their company’s prospects.
  • According to an economic forecast I attended by a professor at Claremont McKenna, manufacturing is vital to the economy and  jobs since it pays well, similarly to construction.  Clients are hiring.
  • Deregulation and tax reform are definitely positive for manufacturers and improve manufacturers’ competitiveness vs. other countries.
  • Harvey Mudd (the #1 engineering school in the U.S.) has seen a significant increase in the popularity of manufacturing careers.

    Manufacturing is attractive once again….

Are you ready to grow your manufacturing presence?

What Should We Consider and/or What Impacts Could Arise?
Let’s sum this up with the following question:  Are you ready to achieve scalable, profitable growth?  

There are many aspects to consider in answering this question:  

1) Are your people prepared?  Do they have the appropriate skills, education and experiences?  Are they cross-trained?  Are they prepared for growth?  Do you have enough people?
 2) Will your processes support 25% growth before hitting the wall?  50%?  100%?  How agile are you?  Would you have to throw people at it (typically because you haven’t prepared in advance) or can you address with a combination of people, processes and technology?
3) Will your systems and technology infrastructure support your growth?  This is one of the most challenging as it can appear overwhelming in terms of the cost to upgrade your system; however, it can also become pennies in the scheme of things if you cannot keep up and service suffers, let alone margins suffer.  Also, are you considering new technologies and automation to keep your costs in line?
4) Are you thinking through in-sourcing, outsourcing, near-sourcing and keeping all of your options open?  It is rare that I run across a client considering both in-sourcing and out-sourcing simultaneously but it just might make sense….
5) Are your finances in order to support growth?
6) Are your supply chain partners and trusted advisors ready for growth?

Gather your team and start discussing these topics because it is coming!

 



A Systems Checkup

February 16th, 2018

Early in the year is an appropriate time to perform a systems audit.  In fact, most clients could benefit from this at any time of the year as we often discover some significant gaps.  

As we look further, we consider this subset of the questions:

  1. Do you have clarity of your current processes? It certainly seems apparent to start here but there are many clients who would check a box less than a “B” rating.  How about you?
  2. Do your people and/or facilities perform processes in a standard way? Do you want them to do this?  Or do you encourage differentiation?  There is no right answer across-the-board here!
  3. Do you know how to utilize your ERP system to support your core processes? Do you hunt and poke around until you figure it out or is there clarity for the basic elements of the process?  Perhaps take a step back – does anyone know how to use the system to perform these processes?
  4. Do you look for opportunities to further leverage your ERP system by joining user groups, going to conferences, brainstorming with your team etc.? The vast majority of companies use 20% of an ERP system’s functionality.  Moving the needle to 30% of the best functionality for supporting your business objectives can accelerate results.
  5. How do your processes and systems interface with your customers, suppliers and other supply chain partners? If you don’t know, find out!  You might be missing a HUGE opportunity.

A regular audit of your system can uncover  types of opportunities.  When was your last checkup?