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Imports & Exports: Which Companies Dominate and What are the Related Impacts?

June 28th, 2018

 

According to the Journal of Commerce, the U.S. imported double the amount of its exports (measured in TEU). In 2017, imports increased 6% whereas exports increased 1%.  This is quite an accomplishment since China (the top market for U.S. exports) announced an importation ban last year that cut across the various types of the top U.S. export, waste.

 

  

So, who do you think was at the top of the import list?  
Walmart!

The Details
The largest segment of import is retail at 3.5 million TEU.  The next largest segment is foodstuffs at 700,000 TEU.  This is quickly followed by household goods around 645,000 TEU, conglomerate at 606,000 and auto parts and automobiles at 453,000.

On the other hand, the top exporter is America Chung Nam (largest exporter of recycled paper).  Thus, the largest segment in export is recyclables at 1.1 million TEU, followed by agricultural goods at 630,000 TEU, paper and forest products at 521,000 TEU and chemicals at 310,000.  

What is projected this year?  It appears to be shaping up to be the strongest international and domestic demand conditions in at least a half-decade.  It isn’t all rosy though.  There are plenty of concerns about tariffs and a tight trucking market. According to Wolfe Research, shippers expect a 5.2% increase in truckload rates and a 3.4% bump in less-than-truckload rates.  These are the highest expectations in the history of Wolfe’s survey.

What Should We Consider and/or What Impacts Could Arise?
Well, clearly growth and volume are robust (just like in manufacturing).  However, there is plenty of concern about potential disruptors (such as Amazon) and volatility.  Thus, we must stay on top of trends and likely impacts – and focus on agility. Are you able to respond rapidly to changing market conditions or will you be left in the dust?

We can expect freight challenges.  How significant is freight to your bottom line?  For example, when I was a VP of Operations for an absorbent healthcare products manufacturer (adult diapers, hospital underpads), freight was a BIG concern.  Although our product wasn’t heavy, it was definitely bulky. Thus, we focused a lot of attention on how to collaborate with customers and transportation partners on innovative programs. We invested efforts into product and packaging redesign that would reduce the size of the boxes while meeting/ exceeding customer expectations and more.  Aside from cost, tight transportation capacity might translate into late deliveries.

Do you have transportation partners or vendors? Perhaps you better take a more strategic view….

 



Memphis, Sun Studio & Following Your Heart

June 25th, 2018

 

I made a quick stop in Memphis since I was nearby and had never experienced the birthplace of rock’n’roll – and, from all appearances, some amazing fried foods.  Of course, I had to do the typical tours of Graceland (including seeing Elvis’ vast automobile collection and private plane) and Gibson guitars; however, I was most impressed by the tour of Sun Studio.  See a few shots of the memorabilia below.

 

 

 

 

 

Sun Studio is the place many greats were discovered including Elvis, Johnny Cash, Jerry Lee Lewis, Roy Orbison and more.  The owner, Sam Phillips discovered these amazing talents by stopping them from playing for him – and what they thought he would want to hear.  Instead, he asked them to play what they love and follow their heart. Are you performing for your boss, your Board or you?

One tip to implement this week: Passion
Think about the question – are you following your passion/enjoy what you do?  Or, can you incorporate some elements of your passion into what you do? I have no doubt you can!  Just think a bit longer about how you can incorporate some aspects of your passion – the imagery, in metaphors, etc.  There is always a way to add some aspect into your daily routine.

And how about the question Sam asked – are you performing specifically for your boss?  Can you include some aspect of what you enjoy in your communications? Similarly to Elvis and Johnny, undoubtedly, you’ll improve your chances of that next promotion, innovation or BIG discovery by being yourself.

Wouldn’t that be more pleasant – and potentially more successful?



E-Commerce Drives Industrial Space to New Heights

June 21st, 2018

Supply Chain Briefing

According to the Journal of Commerce, e-commerce is driving industrial space rents to new heights.  Our clients are definitely experiencing the same dilemma! There has been a 12.1% increase in rental rates since 2017, and the L.A. / Long Beach area has the lowest vacancy rate in the U.S. of 1.2%.  Ridiculously, the average price in L.A. was 60%+ higher than the U.S. average in the first quarter! And, stranger yet, e-commerce is driving class B space (not as desirable) to be snatched up. It is becoming the new class A!  Even Class C (even less desirable) is starting to sell like hotcakes.

Are you prepared for these Amazonian type disruptions?

 

What Should We Consider and/or What Impacts Could Arise?
First, are you thinking about the disruptors most likely to impact you?  For example, almost every manufacturer and distributor is certainly impacted by Amazon’s rapid delivery expectation.  Have you thought about what your customers expect from you? How about what is required to satisfy – or delight – them?  Undoubtedly, the bar has been raised.

Speed is a more apparent Amazon-related outcome.  Don’t stop there. In order to support rapid deliveries, what will be needed now?  Six months from now? A year from now? Currently, it has made proximity to the ports and customers of utmost importance.  What other impacts have arisen? In this case, e-commerce has changed our shipping and transportation expectations dramatically and permanently – we expect to receive only exactly what we need (whether 1 box or 1 piece) when we need it.  

This has created the need for e-commerce fulfillment operations.  Where would you prefer to locate your operation? Most likely as close to customers and your supply base as possible.  In this case, it means rates are going through the roof – if you can even get them. What can you do to proactively set up your supply chain to support these likely impacts?  And, are you building these estimates into your projections? How will you make effective decisions – can you bring your suppply chain into the process further?

Don’t delay any further….

 



Women in Manufacturing & the Showing Up

June 18th, 2018

Last week, I attended the inaugural Inland Empire Women in Manufacturing event.  It was fun seeing old colleagues from throughout the years, as well as meeting new ones.  I especially enjoyed the key note speaker, Mrs. Anna Kan Chao who spoke about taking over her family company, Golden Island Jerky Company, because no one else wanted the job.  She never gave up and it went from barely getting by and bootstrapping the company (going without a paycheck with round-the-clock work) to successfully selling to one of the largest food companies in the world.  It didn’t stop there; when they wanted to close the Inland Empire California facility, she convinced them of the value, and instead they invested multi-millions in a facility upgrade.

She boiled her key to success as “show up”.

One tip to implement this week: Show Up
“Show up”.  It can be that easy!  Throughout my career, I’ve overcome some seemingly insurmountable obstacles simply by continuing to “show up”.  Have you thought about the value of showing up?

Think a bit further about this key to success.  When you are really tired and don’t feel like it, do you “show up”?  When you have employees in conflict and know it will be a rough day, do you “show up”?  When customers are calling (whether to yell at you over an issue or to explore further partnership opportunities), will you “show up”?  How about when Board members want to understand your strategy, are you willing to “pick up the phone” to talk?

It is easy to show up when celebrations surround you.  The key is whether you are willing to show up when you have to deal with unpleasant facts upfront or you have to deliver bad news or you have to “take one for the team”.  As my mentor used to say, “As a leader, you share successes and hoard the blame“. Great advice but to follow it, you must “show up”.

 



APICS-IE Symposium & Key Take-Aways on GROWTH

June 14th, 2018

Supply Chain Briefing

Our APICS Inland Empire chapter hosted the 12th executive panel and networking symposium (over 7 years) on the theme of “Managing Rapid Growth when Manufacturing and Distribution are HOT”.  We had a fabulous panel (clearly enjoying the conversation – see below) of manufacturing and supply chain CEOs and experts.  Thanks to the APICS BOD and Kash Gokli and the Harvey Mudd team for putting on such a value-packed day!

Overall, we discussed the power of manufacturing and supply chain in today’s environment.  In the era of the customer, it is all about the customer experience, rapid deliveries, e-commerce and responsiveness.  From that point-of-view, Southern CA has enormous opportunity since it is larger than all but 5 or 6 states in terms of population – and customers/ consumers! We also have access to technology, high-tech skills and more.  The tax law gives us additional great advantages. The only downer is the lack of support from the state California.

In addition, the panel talked about ways to thrive regardless of your circumstances.  For example, Mirna Elnar (CEO of Regal Spas) wanted to sell into Brazil but ran into horrible tariffs.  So, she collaborated with a local Brazilian company to achieve success.  Several of the themes boil down to the following: Innovation. Culture. People. Technology. Metrics.

What Should We Consider and/or What Impacts Could Arise?
First and foremost, we are in the “right” fields – manufacturing and supply chain (along with related disciplines such as IT/technology and Organizational development) are HOT and there is vast opportunity.   However, we must take advantage of the opportunity and have a voice! Would we prefer to leave our future up to the California lawmakers (for example) or take a proactive approach? Certainly our panel encouraged us to be proactive.

Think about your supply chain: How are you positioned in comparison to your customers’ locations, your end users (consumers, patients, or the base player in your industry such as Boeing) and how well positioned are you to create value-added customer experiences?  What do you expect to happen in the future? Are you still positioned effectively? Are you prepared for growth?

One of the most common issues our clients call about is unexpected demand: Are your products and services going to be in the right place at the right time, in relevant ‘packaging’ (meaningful to your customers’ current needs) at the right margins and cash flow?

Many of these questions go back to aligning your demand with your capacity, starting with your people.   It takes a minute to lose a customer – and a LONG TIME to win them back.

Keep innovation and future disruptors top of mind.  The last thing any of us wants is to come up with the best strategies and plans that are outdated by the time they are implemented!  If you’d like to talk about performing an audit of your supply chain positioning, contact us.