Category: Eagle Eye Strategic Focus.

The Resilient Supply Chain: Cross-Organizational Collaboration

January 4th, 2019

I’ve been coordinating a process involving several disparate players, ranging from multiple educational institutions who are not aligned with one another, government players (with many differing goals) and business partners (with a completely different set of needs).  Although there are others, these 3 core groups are more than enough!

Success will only come to those who find common ground with collaboration.  If collaboration was as easy as simple communication, everyone would do it. We would probably have a lot more happy customers and more profits to share with investors, employees and for reinvestment and giving back.

What should we think about if this is the outcome we wish to create?

  1.  Look for the win-win-win –  If someone wins and someone else loses, it isn’t a successful collaboration.  If you think hard enough, there is usually a way to turn a situation into more of a win-win-win with some shared give-and-take.
  2.  Think about positioning –  If your idea is presented in isolation, it has a much greater chance at failing than if it is presented in light of the bigger picture. Why is it important?  How can each person play a role? Does each person know how he/she fits in and provides value?
  3.  Value diversity – Each time I think “I don’t want to be on this person’s team because he/she is annoying or won’t add value”, I find that I am completely wrong (luckily these are just thoughts, not actions).  The best ideas come from the most unlikely places.  And, interesting suggestions that can lead to “big” ideas typically come from someone who is quite opposite and thinking about the situation from a different perspective.
  4.  Recognize progress of the team –  Who doesn’t want to be recognized with a pat on the back as progress is made?  The key to collaboration is not to say positive things about collaboration and then reward individual performance.  Instead, reward team progress, even if that progress is simply gaining an understanding of how much they do not agree with each other yet are willing to listen.  
  5.  Consensus isn’t needed – As much as collaboration can achieve dramatically better results than each superhero individual thinking on his/her own, consensus is overrated.  Set the expectations upfront of how collaboration works. Feedback and input is expected. Discussion and debate participation is mandatory. But consensus isn’t required for every decision.  Otherwise, you might get there eventually but your competition will be LONG gone. More importantly, determine how to collaborate and make decisions upfront.decisions

The importance of collaboration comes up more frequently than almost any other topic.  Since executives are collaborating with customers, suppliers, trusted advisors, other supply chain partners and even competitors, there is just no room for poor collaborators.  

If you’ll notice, many disruptors collaborate with strange partners. Perhaps this core skill is a key ingredient to success…. Or, think of it another way, how will anything get done without it?

 



The Resilient Supply Chain: Do You Have Vendors or Partners?

December 1st, 2018

Since we did research on “The Squeeze” for a speech on the the squeeze in aerosapce (meaning:  how does the supplier in the middle between the Tier 1 suppliers who supply final assembly parts for an airplane and the powerhouse mills survive, or preferably thrive), we have been thinking a lot about the supplier relationship.  Coincidently, we also heard a lot on this topic at the Association for Supply Chain Management (ASCM/APICS) international conference as it is a hot topic across all industries. There was an almost identical discussion occurring with retail and the consumer goods industry. Last but not least, all of our clients are seeing the relevance of this topic.

What is the “right” answer?  Of course, it depends!
To manage “the squeeze”, one of the keys is to create partnerships with your key suppliers.  The rest can be vendors since they are not core or significant to your success. However, your key suppliers must be partners and collaborators.  For example, one of the best ways to handle the middle position in the aerospace world is to bring your customers and their demand together with your suppliers and their capabilities.  

Here are a few ideas that all depend on being a partner:

  • Collaborate with suppliers on new ideas/design concepts to reduce materials and waste for you AND up your supply chain.
  • Become a partner of your customer and gain access to demand information as it becomes available and help translate that into a benefit for your customer, you and your supplier.
  • Leverage pricing and volume across the supply chain for a win-win-win.

Although these ideas relate to aerospace, the same concept applies with every client.  When I was VP of Operations and Supply Chain for an absorbent products manufacturer, we used these same concepts to find win-win-win solutions in your supply chain.  We partnered with key vendors to redesign materials (that performed better at a lower cost), redesign packaging, reduce waste in our manufacturing process which required teaks and collaboration with both material and equipment suppliers and more.  By following a partnership route instead of the “vendor” negotiation/beat up on price route, we turned our situation around from bad to good.

We found private equity backers who wanted profitable growth.  However, soon after, the market changed and oil and gas prices were continually rising which significantly impacted our material costs (and were unavoidable) while our private equity investors still expected the same profit improvements as before.  Our business was also heavy in transportation cost since the product was bulky which was also an issue with rising oil and gas prices. Thus, we collaborated with customers, material suppliers and freight suppliers for win-win-win solutions. It “worked” and we were able to offset the price increases while growing the business in a profitable and scalable way.

These types of situations are common in today’s business environment.  

Do you view your suppliers as vendors or partners? And who are you hiring to manage these relationships?  Transaction-oriented purchasing folks or strategic relationship procurement resources?

 



The Resilient Supply Chain: Video Interview on Global Competitiveness

October 26th, 2018

To kick off our supply chain resiliency value series, we are excited to share an interview with Mirna Elnar, CEO Acura Spa Systems Inc.  Thanks to Mirna for sharing her expertise at the  APICS Inland Empire Executive Panel & Networking Symposium panel is Spring!   

Mirna is responding to a question related to supply chain resiliency.  In essence, the key question for manufacturers is how to be competitive with overseas manufacturers in low cost countries.  Clearly, we are NOT likely to be competitive on cost (especially labor cost) alone.  However, all is not lost!

In her comments, Mirna provides several ideas and strategies for how to navigate these rough waters successfully.  

                                                   

Success Responds to Resilience and Repetition
Our most successful clients build innovation into their daily routine.  It is no accident that they are the most resilient as conditions change.  In today’s Amazonian environment which is full of volatility and changing conditions, resiliency has become a “must”!

Mirna also gave a compelling story about exporting to Brazil.  Instead of giving up when she found out the tariffs were unfair, she devised a way to collaborate with a company in Brazil and find a win-win opportunity.  We walked away thinking if she could turn an unfair advantage into an opportunity, why aren’t we looking further for these innovative ideas?

 



The Resilient Supply Chain: Global Trade Unrest

September 30th, 2018

In today’s Amazonian environment, the customer experience is of paramount importance.      Nothing else matters if the customer isn’t happy. Thus, all the conversations going on about trade really just come back to the customer.  What is the best way to service your customers?

 

 

In manufacturing circles, there are many elements converging to strengthen manufacturing in the United States:

  • There are lots and lots of customers in the U.S. and they all want products and services delivered rapidly (making it less conducive to producing half way around the world).
  • Customers change their minds frequently and last minute changes aren’t conducive to long transit times.
  • The new tax law has made the tax rates much more comparative to other nations.  
  • Deregulation has definitely made manufacturers more on par with other nations.
  • Technology improvements have made it more cost effective to produce in the U.S.

Globally Interconnected
Even though manufacturing is surging in the U.S., we live in a globally interconnected world.  Very few, if any, clients source 100% of all materials within the U.S. If you go to suppliers twice removed, you’ll definitely be in global territory.  Thus, global trade remains a key issue.

Tariffs
In logistics circles, there is a lot of concern about the impacts of tariffs on global trade.  Will customers still bring in the same level of imports? If not, how will that impact the ports, distribution centers and transportation?  

Interesting that it hasn’t slowed down yet. The ports are having a record breaking year. We’ve seen price increases start to occur as they are passed on to the next person in the supply chain.  However, the question remains – is this good or bad? And will it substantially change the supply chain in any way?

Global Trade
Certainly there are a lot of heated discussions surrounding global trade.  We have clients who are positively impacted because it just makes them more competitive and on par with the rest of their industry.  And we have clients who are up in arms because their raw material prices are increasing and they are concerned about how to pass it on to their customers.  Will this put them at a disadvantage vs. a competitor who doesn’t source from overseas? Or does it just even the playing field?

Strategic Questions and Decisions
Strategic decisions are beginning to be impacted as well.  For example, Ford decided to not produce a new small car in China.  With the 25% import tariffs, it no longer made financial sense. A few clients are thinking about whether to expand into Mexico and the U.S.  There is uncertainty with NAFTA . However, the experts believe something will carry forward. Perhaps with a resilient supply chain, the key is to not guess and focus on your customer.  If your customers are in the U.S., Mexico is closer to the U.S. than China. That is a fact that won’t change. One thing is definite – things will continue to change and evolve.

Have you built resiliency into your supply chain so you can successfully navigate ever changing business conditions?



Gaining New Ideas to Increase Business Value

August 8th, 2018

Every executive we work with is interested in increasing the value of the business.  Whether a small closely-held business with an owner who might want to sell the business or exit with an ESOP, a private-equity backed company aiming to achieve the ideal exit strategy per the private equity agreement or a large, complex organization working to increase shareholder value, increasing the value of the business remains a unanimous top priority.

Understanding this objective is quite different from fulfilling it.  There is a reason the most successful businesses have teams of people rather than one person who has to come up with every idea – it is certainly more sustainable!  

So, how can we encourage these ideas? Here are several ways that we’ve seen success achieved consistently over 25+ years in both the corporate and the consulting world with manufacturers and distributors.

  1. Engage your employees – Definitely one of the “easier said than done” items; however, it is also one of the most consistently successful.  As the Gallop polls show, those companies with a higher percentage of engaged employees significantly outperform the rest.
  2. Involve your customers – Who can better than your customers to generate ideas that will ensure a superior customer experience while increasing the value of the company?  Don’t just go to your top 10 customers in volume. Think about your long-term customers. It can also be worth it to collaborate with customers on the brink of being an unprofitable and prompt ideas to turn it around or end the relationship on a “good note”.  You never know what might happen. We’ve seen dramatic turnarounds, just as often as we’ve seen the rest of the company improve when getting rid of the “rotten apple customer”.
  3. Collaborate with your suppliers – Aside from your customers, who else might have a substantial impact on your performance?  Your suppliers! If you can devise new win-win approaches together, imagine the possibilities.  For example, when I was a VP of Operations and Supply Chain for a mid-market manufacturer, we collaborated with suppliers to develop a new material so that we could reduce our usage (increasing our profit) and provide a benefit to our customers (better performance/ higher value for them).  We became a closer partner with our supplier and grew each of our businesses and profits while enhancing the value to our mutual customer. A win-win-win.
  4. Ask colleagues outside of your area of expertise – Just because your colleague is in a different function doesn’t mean he/she won’t have a great idea.  Take the time to explain an important project to related colleagues outside of the project or your area of expertise.   Ask for their thoughts, watch-outs and the like. You never know where the next great idea will come from.
  5. Consult with experts / advisors – Attend trade association meetings.  Dig into industry journals. Ask questions of LinkedIn groups. Pursue alumni colleagues.  Consult with an advisor, consultant or financial expert. Join a peer group.  

There is no doubt that the most successful executives utilize all of these techniques to make sure they generate a seemingly never-ending stream of ideas to increase the value of their business.  Set aside time on a daily, weekly and monthly basis to priorities these activities.  Do not expect an immediate payoff.  However, if you are consistent, you’ll find success one day down-the-road.  After all, it may only that one idea to make a significant impact!