Category: Future-Proofing Manufacturing & Supply Chain

Future-Proofing Your Customers

February 13th, 2020

Have you thought about future-proofing your customers? In thinking about future-proofing your people, it makes sense to start with your customers.

The statistics are staggering. According to Outbound Engine, acquiring a new customer can cost five times more than retaining an existing customer. We wouldn’t be surprised if the actual cost is far greater if direct and indirect costs are combined. It certainly should give us pause. How do we future-proof our customers?

One way is to focus on the Amazon Effect and providing lighting speed delivery and tirelessly differentiated service. There is no doubt customers expect more. The bar gets higher with each passing day. Thus, we must be ahead of our customers to take a proactive approach to providing a superior customer experience while being cognizant of profitability and working capital.

How will you know what your customers see as differentiated service? Start by listening. Observe your customers and see what might provide value. Ask questions and tailor your solutions to be special for key customers. Find ways to provide these differentiated services while proactively managing the process efficiently and effectively from the internal point-of-view.

To accomplish this feat, it is wise to keep in mind that you are only as good as your #1 asset, your people. We have yet to meet a client with unhappy employees and happy customers. Start by getting your house in order. What do your employees need to be successful? It is more than a training course or occasional pat on the back. Do they know they are making a difference? Are they empowered within reasonable guidelines? Do they know leaders value performance and are willing to address the tough topics?

Investing in employees is the best way to future-proof your manufacturing and supply chain. Expand your thinking on people to your trusted advisors, customers, suppliers and other business partners.

Are you taking the time to ensure a prepared yet agile end-to-end supply chain? Remember, the people within the end-to-end supply chain count in providing an exceptional customer experience!

If you’d like an assessment of where you should invest (time, resources, money) to deliver lightning speed delivery and tirelessly differentiated service, contact us. There are also plenty of free articles and resources on our website. Let us know your thoughts and questions.

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

The Amazon Effect Won’t Die
People & Robots Can Co-Exist Successfully


Are You Waiting Too Long to Future-Proof?

February 10th, 2020

Although most economists do not see an immediate recession, there are plenty of concerning signs along with global volatility. Unfortunately, concern alone can create a recession unrelated to underlying factors. Meaning, we could have terrific fundamentals and results yet still go into a recession if fear takes over! I wouldn’t want to be dependent on avoiding fear in the marketplace. Would you?  This is why it’s important to future-proof manufacturing operations and the extended supply chain!

The worst thing you can do is wait for a recession to act. It is similar to a natural disaster. For example, when my house burned down in a fire, I was fortunate that it was an isolated incident. I was able to find alternate housing nearby while the house was rebuilt. I was also able to gain priority with a builder, etc. Instead, if I was caught in one of the devastating California fires, I would be one of many people struggling with the aftermath. Of course, I would be a pebble in a sand quarry in that case. The same is true would be true with a recession, global unrest or a natural disaster. Have you thought through how you will continue operations to satisfy customer demand?

One Tip to Implement This Week:
We’ll make this quite simple: Stop and determine if you have backup plans at a minimum.

Think through the following:

  1. Sources of supply
  2. Resources, skills and trusted advisors who support the business
  3. Operations
  4. Logistics infrastructure
  5. IT and ERP system infrastructure

What are you going to do about it? Are you willing to invest in future-proofing? I’d be willing to bet that any executive willing to make prudent investments in future-proofing might have to take a temporary ‘hit’ with the initial investment but will surpass the competition by a minimum of 10 fold in the future.

For example, one of our clients thought about what they should do to get ahead – not just survive. When the competition was increasing capacity in China, our client was moving out of China and into Vietnam. They were ahead of the curve and had far less roadblocks and bottlenecks along the way to overcome. There is definitely something to be said about being early to the party and leading the way.

Think about taking a calculated risk to lead instead of follow. In today’s Amazon-impacted world, you cannot afford to be a follower!

 



Interview with Fender Guitar Executive

February 7th, 2020

Can people and robots work side-by-side? It seems to be the hot topic lately.  Fender Guitar’s Senior VP of Operations, Ed Magee and I talked about talent, technology and transition after the Manufacturing Summit. At Fender, skilled craftsmen and craftswomen are critically important.  Yet, Fender also automates where it makes sense. Technology working hand-in-hand with your #1 asset, your people, can assist in improving the craftsmanship, as well as safety. Ed considers training and development to be a key to success.

We also talked about potential recessions and disruption. Certainly, in today’s Amazon-impacted environment with global volatility, there will be continued ebbs and tides to navigate. Ed mentioned the importance of creating community and flexibility. Invest in your employees during times of boom AND bust. Don’t be afraid of the cycle and keep the lessons in mind as you think through your business cycle, and you’ll future-proof your manufacturing operation. Maintain focus, don’t cut back on training and development when everyone else does and you’ll be likely to speed by the rest.

Watch our interview to learn more and gain a few insights. What are you doing to future-proof your manufacturing operation and related supply chain? What should you be doing? Ed and I concur. If you aren’t starting with your people, nothing else will matter.

No matter how high tech key clients go, the most successful and sustainable clients accompany high tech with high touch. You’ll gain some strategies for people in our Profit through People archives as well as with our new LMA-i, LMA-Intelligence series, Future-Proofing Your Manufacturing & Supply Chain. Contact us to discuss further.

 

 



U.S., China Sign Historic Phase One Trade Deal

February 3rd, 2020

According to the National Association of Manufacturers press release, the U.S and China trade deal is an unprecedented phase one win for manufacturers.  Previously the NAM CEO lamented that “China has proven one of the most troubling markets in the world for manufacturers, due to its lack of commitment to free markets, fair competition and reform.” Thus, this statement was high praise for the deal, “It is a remarkable turning point for manufacturers, with the unprecedented and enforceable commitments on critical intellectual property protections to which China has agreed.

There are a myraid of issues in trade with China for manufacturing, and there is debate whether “phase one” went far enough or too far (as both extremes exist); however, according to my recent discussions with international business attorney and China expert John Tulac on future-proofing your manufacturing supply chain, there is quite a bit of risk in China to navigate.

What Should We Consider and/or What Impacts Could Arise?

Certainly this trade deal relates back to tariffs. Of course, the U.S. agreed to cut tariffs of $120 billion in Chinese goods by half. They also held off on tariffs in December with expectation of the trade deal. Not surprisingly, economists expect this to positively impact growth.

According to a Wall Street Journal article, China agreed to ramp up purchases of U.S. goods and services by $200 billion over the next 2 years. Agricultural products will go up by $32 billion over that period, and China agreed to steps that will provide market access for dairy products, poultry, beef and more.

Most importantly to many manufacturers, there is strong language preventing thefts of trade secrets. That is certainly a huge frustration to manufacturers! We definitely aren’t too comfortable relying upon this but it can be seen as progress and eases some concerns. There is also agreement to create a dispute resolution office as well as to not manipulate currency. The bottom line is there is a host of positive outcomes and progress which provides a base to build upon.

By no means should we jump on expanding manufacturing in China as there are plenty of issues of concern. With that said, this trade deal might provide time for you to evaluate what will make the most sense for your business objectives while reducing negative impacts of tariffs. As costs have gone up in China and working capital increases in importance, manufacturers are starting to look at moving operations closer to customers to support quick turnarounds and a superior customer experience. Technology might provide a strategic advantage with 3D printing, AI, IoT, robotics and more. Commodity products with minimal freight costs are moving to other low cost countries. For example, Vietnam loves manufacturing and is rapidly expanding. There are plenty of options to ponder.

At a minimum, continually re-evaluate your supply chain road map and think through related impacts. These topics certainly relate to our new LMA-i, LMA-Intelligence series including the Amazon Effect, the Resilient Supply Chain and Future-Proofing and contact us if you’d like an assessment path-forward plan to accelerate your bottom line and customer performance.

 

 

 



Will Amazon Pass UPS & FedEx?

January 26th, 2020

According to a CNBC article, Amazon is already delivering half of its packages. It appears that Amazon is on target to pass by FedEx and UPS. They have had distinctly different strategies. FedEx curtailed its contract with Amazon in early 2019, and Amazon just retaliated by not allowing 3rd party sellers to ship via FedEx. On the other hand, UPS is doubled down with Amazon. Which will turn out to be better in the long run? And, as we know, USPS has been delivering packages for Amazon behind-the-scenes. Could they come out on top?

Or will Amazon just crush everyone? In recently touring the Ontario airport (the powerhouse in package shipping), it is clear Amazon has a long way to go to catch up in air freight but they are also known to speed by competitors. Amazon is slowly making inroads to ocean shipping as well. No matter who you think might win this race, if you ship or receive anything, you should pay attention!

What Should We Consider and/or What Impacts Could Arise?
Simply think about Sears. They were Amazon prior to Amazon entering the scene. Unfortunately, they didn’t keep up with changes occurring, and they are largely out of business. That annoying but not worrisome competitor might just speed by you if you aren’t staying relevant!

Additionally, from a supply chain and logistics point-of-view, there are substantial impacts. With the sheer relevance of the last mile, transportation infrastructure, customer perceptions, technology advancements and much more are becoming relevant. Undoubtedly, no matter your industry, it will be impacted since everyone relates to logistics. Not only logistics, but many industries relate to oil and gas prices or would be impacted by delays in materials etc. The impacts are widespread and substantial. Have you thought through your strategy and positioning based on these factors?

At a minimum, continually re-evaluate your supply chain road map and think through related impacts. These topics certainly relate to our new LMA-i, LMA-Intelligence series including the Amazon Effect, the Resilient Supply Chain and Future-Proofing and contact us if you’d like an assessment path-forward plan to accelerate your bottom line and customer performance.