Category: Future-Proofing Manufacturing & Supply Chain

JIT Might Not Be What it is Cracked Up to Be?!

April 2nd, 2020

Just-in-time might not be what it is cracked up to be! Certainly, the coronavirus impacts should give us reason to question this rule at face value. Are you running so tight that you only have one bin, pallet or small supermarket to keep your facility running? If so, the question extends to your end-to-end supply chain.

Let’s assume you are a critical manufacturer struggling to produce key items during this coronavirus pandemic. Your suppliers should not be on lockdown since they support a critical infrastructure business; however, that doesn’t mean you’ll be fine. There are many considerations to review:

  1. Source of supply: Are your suppliers located in Asia and unable to staff during the peak of the coronavirus? Do you know what type of delays you’ll experience? Do your suppliers have contingency plans?
  2. Your suppliers’ suppliers: Even if you have a good handle on your suppliers, do you know the status of your suppliers’ suppliers? In an interconnected supply chain, we are only as strong as our weakest link. Who is your weakest link?
  3. Your transportation infrastructure: Even if your suppliers have product, can it get to you? Within what timeframe?
  4. Backups: No matter how well you’ve planned, the question is whether you have backups for critical materials/ ingredients that will ramp up rapidly as needed. Hopefully your supply chain is diversified geographically.
  5. Your customers: Are you in lockstep with your customers so that you are proactively managing demand or are peaks and valleys a surprise? Of course, the coronavirus was unexpected but the degree you fully understand your customers will determine your reaction time to changes in demand.
  6. Positioning of inventory: Do you have critical inventory positioned throughout your end-to-end supply chain?
  7. Your digital supply chain: Are you able to see into your extended supply chain? It could provide quite a benefit at this point.
  8. Additive manufacturing & robotics: Are you able to keep running with less people, socially distanced people and/or print on demand?

Using JIT (or any concept for that matter) without taking a 360 degree view is a bad idea! The cousin of JIT is lean manufacturing. I gained the attention of Wiley by writing that lean is just uncommon common sense (which of course simplifies it in order to make a point), but perhaps it is something to think more about. Have you put all these trendy concepts through a common sense filter? How about a risk filter? Let’s hope so! Otherwise you can be in a critical business and still not producing and running customers out of stock.

What is the answer? It depends! If you have put thought into your supply chain strategy upfront, considered risks, diversified your supplier base, invested in quality checks and top talent, and treated your employees well, it is likely your version of JIT will prove successful. On the other hand, if you saw JIT as a way to reduce inventory and were short-sighted in looking at your end-to-end supply chain and treating your employees and partners as trusted colleagues, you will likely suffer.

Getting ahead of the curve might be the only avenue to success. Consider creating a resilient supply chain and future-proofing your supply chain. Stay tuned and read more about it, and If you are interested in discussing a supply chain assessment, please contact us.

Did you like this article?  Continue reading on this topic:

Future-Proofing Your Supply Chain

The Strongest Link in Your Supply Chain



Supply chain strategy: Modernization tips from Lisa Anderson

March 27th, 2020

As Published in:  Ratelinx

For business leaders looking to modernize their supply chain, the technology investment is the easy part: Evaluate solutions, calculate the ROI, make your business case, and take delivery. Sure, it can be tricky to get sign off on these tech investments, but it’s a business problem with a logical solution.

The more challenging part is preparing your organization to take full advantage of that investment. That means getting people on board, ready for the change, and developing new processes that take full advantage of the new tech.

“High tech must be accompanied with high touch,” says Lisa Anderson, supply chain consultant and President of LMA Consulting Group, Inc. “The most successful supply chain leaders will remember that people are their number one asset.”

We asked Lisa for her perspective on the current state of supply chain, the key trends that are driving change, and how you can prepare your team for what comes next. Read on to learn what she had to say.

Modernizing Your Supply Chain Strategy

The right supply chain strategy includes technological investments, process refinements, and a change management plan for your team. It should be detailed enough to act upon, but flexible enough to account for changing trends. Here’s how to get started.

Key Trends Driving Supply Chain Modernization

For most businesses, there are two factors that make modernization essential. First, there’s sustainability: Consumers are looking to buy from sustainable companies. That means companies are under pressure to not only work with sustainable suppliers, but to prove they’re doing so.

The second factor is perhaps an even bigger driver for change: The demand for near-instantaneous, free shipping for ecommerce. “In the next five years, customers will be expecting Amazon-like service levels at affordable rates, regardless of the high levels of disruption,” Lisa says. “Reshoring, near-sourcing, and sourcing reevaluation will be major concerns.”

Lisa predicts high levels of adoption for new technologies to meet these demands. “The use of technology such as artificial intelligence, IoT, predictive analytics and other technologies will enable meeting these customer needs while maximizing profit and cash flow,” she says.

 

“In these early stages, it’s important to focus in on the
most relevant data to drive decision-making. ” 

Getting Started with a Modernization Strategy

The actual nuts-and-bolts process of building a strategy is the same as solving any problem in your organization. “Start with the outcomes you’d like to achieve,” Lisa says, “then perform an assessment and gap analysis of your people, processes and technology. Assess your change management capabilities to achieve your outcomes. Finally, design the solution and build an implementation team.”

The process may be familiar, but knowing where to start can be a challenge. The first step should be getting a clear picture of your current supply chain. “Start simply and create a dashboard or availability screen that shows your supply chain status; however, remember that if you don’t pay attention to process disciplines, garbage in will result in garbage out,” says Lisa.

In these early stages, it’s important to focus in on the most relevant data to drive decision-making. But don’t try to boil the ocean: “Data plays a vital role; however, do not get sidetracked and overwhelmed with data. Start with your No. 1 priority, find directionally correct data and enable visibility,” Lisa says. “Once your team and supply chain partners understand this data, move to the second largest priority.”

Once you have your supply chain mapped out, you can start to implement solutions that will pay off in the short term and in the long run. A.I. and IoT initiatives have the potential for a quick win. Lisa says in her consulting work, she’s seeing “Artificial Intelligence and IoT used in predictive analytics and forecasting as top priorities. Getting ahead of customer demand drives significant supply chain value.”

Train and Hire the Right Skill Set

For Lisa, the human element is an often-overlooked, but crucial, part of supply chain modernization. “I’ve found that a more dramatic ROI can occur by aligning the people, even more than the data and the process,” she says.

When bringing in new talent, Lisa recommends looking for data science fundamentals. “Data analytics, the ability to leverage ERP systems and think through down-the-line impacts as well as tying business process to systems design are all part of the equation,” she says. “But we should also look at soft skill requirements, such as the ability to collaborate.” Collaboration, big-picture strategizing, and lateral thinking are all essential characteristics of a modern supply chain expert.

The ROI Potential of Supply Chain Modernization

Remodeling your supply chain is not without risks, and it’s a process that takes time and resources to ensure success. But the rewards are worth the effort. “It depends on the situation, of course,” says Lisa, “but it isn’t uncommon to see a five or 10:1 return on investment from supply chain transformation improvements.”



Supply Chain Heroes: How CFOs Can Help Save the World

March 25th, 2020

As Published in: Oracle/Modern Finance

Early this year, the largest asset-management company in the world made a bold announcement: It would start redirecting investments away from fossil fuels because of climate change. In his annual letter to CEOs, BlackRock CEO Larry Fink stated that “climate risk is investment risk,” and that risk is driving a fundamental reshaping of finance.

“Because capital markets pull future risk forward, we will see changes in capital allocation more quickly than we see changes to the climate itself,” he wrote. “In the near future—and sooner than most anticipate—there will be a significant reallocation of capital.”

For manufacturers, retailers, and others that move business or consumer goods, a reallocation of capital will require tighter alignment between the CFO and supply chain leaders. This is already happening among the leading-edge CFOs I meet because they recognize the end-to-end supply chain is driving customer experience, profit performance, and working-capital improvements.

As more companies start reshaping strategy in response to climate change risk, this CFO/supply chain alignment will become more critical to achieving business and environmental goals. In fact, CFOs could find themselves being the heroes of the next decade’s climate-change success stories.

Assessing the payoff for climate change initiatives

CFOs will need to be front-and-center to assess climate change initiatives related to packaging, material handling, transportation, and logistics because changes in these areas tend to have widespread impact.

For example, consumer packaged goods (CPG) companies are feeling the most pressure from climate change activism right now. Packaging is a big target for waste reduction but switching container sizes or materials can have direct and indirect cost implications. There’s a change in direct costs for replacement packaging, but material handling and transportation costs also could shift because of weight, storage, handling requirements, and other relevant factors.

Another example is investment in technology systems. For instance, buying products that are sustainably sourced and handled is important to a lot of consumers, and trust is essential for companies that want to differentiate themselves on this point. New blockchain applications are enabling this verification down to a granular level. While an ideal investment from a marketing point of view, what will the impact be on logistics? Will shipments slow down or speed up? How will the change affect fulfillment and customer satisfaction?

Cloud applications and other advanced technologies have made it easier to conduct real-time analysis and identify upstream and downstream impacts from business decisions like these. Such decisions will require collaboration and ongoing discussions between finance and supply chain leaders to meet all business requirements successfully.

Supply chain health and environmental health are linked

Even if a company isn’t a leader in climate change-reduction efforts, improving supply chain performance will naturally make operations more environmentally sustainable. I’ve seen this over and over again in my decades of working in supply chain management.

Supply chain services and assets are expensive and don’t usually generate cash, so they’re a frequent target of cost reduction. The outcomes of these cost-reduction efforts reduce environmental impact because fewer miles are traveled, inventory replenishes more often and doesn’t become obsolete, and there’s less material waste in damaged goods and over-packaging.

This might be an obvious example, but when you think about on-the-horizon innovations, such as biofuels made from landfill waste and autonomous vehicle and aircraft deliveries, you can see how supply chains could become proactive enablers of reducing climate impact.

Another reason for CFOs to focus on supply chain when developing an impact-reduction strategy is it could help recruit supply chain talent. We’re experiencing a shortage of supply chain professionals across manufacturing, retail, logistics, and a range of other companies. Having a solid stake in climate change-reduction efforts could help attract limited talent, especially Millennials. A recent survey found that 75 percent of Millennials said they would be willing to take a pay cut to work for a company that is environmentally responsible. And nearly 40 percent said they have chosen one company over another in the past because their choice had a better environmental record.

Millennials will comprise three-quarters of the workforce within six years—so statistically, companies with stellar environmental practices will be a top position to recruit talent.

Finance and supply chain: Teaming up for sustainable operations

First and foremost, CFOs want to be good stewards of business assets. For many companies, the supply chain is central to value creation. So, it’s not surprising that CFOs at these companies are paying closer attention to their supply chains from a cost point of view.

Now, climate change is raising risk in ways that require a rethinking of how to grow and protect those assets. As markets begin to respond and shift, supply chain leaders and CFOs will find themselves facing the challenge together.



Coronavirus Spurs Supply Chain into Prominence

March 13th, 2020

The House of Representatives has launched a new Congressional Supply Chain Caucus. The coronavirus is spurring supply chain into the limelight. Because China is impacted, the effects to the supply chain will be felt throughout the world in 2-3 months (and sooner for countries closer to the source). We are already starting to see these effects. In addition, it is creating a panic resulting in virus-related supplies already being scarce. If nothing else, it is definitely highlighting the impact of the supply chain.

On a related note, listen to my video about the coronavirus where I talk about, establishing backup plans and future-proofing your supply chain. I’d love to hear about your situations, your ideas and plans so we can exchange ideas. Please email me.

What Should We Consider and/or What Impacts Could Arise?
The supply chain was already starting to gain prominence in the C suite. Since the supply chain is responsible for the vast majority of cost, it has always been relevant.  Now, it has gained in relevance as its impact on the customer experience has come to light. And, with disruptions like the coronavirus spread, the critical nature of the supply chain has been highlighted. We cannot leave our end-to-end supply chain to chance or we will be left in the dust at the first sign of disruption.

Instead, we should not only proactively look at backups but we should also diversify across countries/geographies, size companies, industries and more. We should build solid relationships to proactively and successfully navigate disruptions. In fact, we will be publishing the 10 ways to Keep Your Supply Chain Moving shortly. Stay tuned…

In the interim, keep focused. Don’t panic. Look for solutions.  Don’t be deterred by roadblocks. In essence, create a resilient supply chain. There are several ideas in our new LMA-i, LMA-Intelligence series including the Resilient Supply Chain and Future-Proofing.

Contact us if you’d like an assessment of how well you have future-proofed your manufacturing operations and extended supply chain.



Special Report: 2020 Predictions

March 12th, 2020

We received such a positive response to last year’s predictions report that we wanted to add to that value in 2020. It was an exciting process to see what CEOs, executives and thought leaders of manufacturing and logistics organizations think about the current trends, what’s coming, and most importantly, what to do to get ahead of the curve.

A special THANKS goes to our contributors. We’ll be discussing these topics much more in our March newsletter to build upon their predictions and ways we can THRIVE amidst the ambiguity.

For our Profit through People subscribers, we are pleased to provide a direct link. Feel free to forward to your colleagues and friends by sending them our download link.

A Few Highlights
Please pay special attention to my introduction (page 2). I believe we are at a critical juncture in our field. To succeed in 2020, manufacturing and logistics organizations need to become agile, proactive and even disruptive, to merely survive. The most successful organizations are going to do a deep dive into human capital, technologies and strategies that will achieve the trifecta – a superior customer experience, profitable growth and improved working capital, simultaneously.

With the promise of additive manufacturing, artificial intelligence, IoT, robotics and blockchain, technology can play a pivotal role.  However, technology alone is NEVER the answer. Instead, it is the smart application of the appropriate technologies by top talent, aligned internally and across the extended supply chain and following a well-thought out strategy that wins the race.

I thought the insights, predictions and recommendations from our experts are worth noting – and taking action! We were careful to gain perspectives from manufacturing and logistics executives and thought leaders, spanning industries (from food and beverage to building products and logistics), specialties (trade, sourcing, technology, human capital, economic development and more), and size and complexity (from family-owned to private equity to large, complex organizations). I’d love to hear your feedback and areas you’d like to deep dive further.

We will continue our webinar series with future-proofing topics and thought leaders, as well as our video series of timely topics such as the coronavirus. We will continue to explore these topics in our blogs and newsletters, as well.

Please contact us if you’d like to discuss your situation and how you can future-proof your manufacturing operations and create a resilient supply chain.