Category: The Resilient Supply Chain

Drones are More Than a Pipe Dream

December 2nd, 2019

In reading an Cnet article on drones, it is clear drones are more than an Amazon pipe dream. In fact, NASA Administrator Jim Bridenstine said that he expects at least one U.S. city to have have the ability to control hundreds of unmanned aerial systems by 2028. NASA is using a “grand challenge” incentive program to improve the technology’s maturity, and there are many key companies working on drone technology. Of course, Amazon is one.  They are joined by folks like UPS and Uber Elevate. Drones soon will become a reality.

One of our clients makes drones for military use, and they have a “mini Cal Tech” feel. The future will be in the hands of those who can transform technology into practical applications, improving the customer experience and the bottom line simultaneously. Are you thinking about how drone technology and other technologies might impact your industry, your company and your employees?

What Should We Consider and/or What Impacts Could Arise?
Certainly, there are a vast number of challenges in flying commercial drones especially in dense population areas like Los Angeles. However, as NASA says, with the brightest minds thinking through how to bring this to a reality, it will occur. The only question is whether you will be surprised and left in the dust by the impacts or whether you will be positioned to thrive. We plan to ensure our clients are thinking ahead to be squarely in the “thrive” category!

Drones might seem unrelated to our immediate future and to our business. However, if we receive anything or ship anything, I imagine drones might be relevant. Perhaps we should re-think the impact. And, more importantly, it isn’t the drones themselves.  Instead, it is the technology and that translation of technology into practical applications. Whether it is autonomous vehicles, artificial intelligence, the internet of things, blockchain or another buzzword, the key question is whether we are thinking about our vision and objectives and how we can leverage technology to accelerate our progress towards these objectives. Now that is worth something!

Since we are unveiling another LMA-i, LMA Intelligence category of Future Proofing Manufacturing & Supply Chain, this is quite relevant to preparing to successfully navigate your future. No matter what happens in the volatile global marketplace, if you are set up to thrive no matter the conditions, you’ll come out ahead. Stay tuned for article archives related to future proofing, just as we have for the Amazon Effect, the Skills Gap and the Resilient Supply Chain.



Food & Beverage and Future Proofing Your Business

November 27th, 2019

As I have been thinking about the food and beverage industry (and process manufacturing) and future proofing your business, I see several examples of proactive clients and colleagues future proofing their business.

As this is my latest, hot-off-the-press LMA-i, LMA Intelligence topic, I thought we’d explore a few trends related to food and beverage.

First, the industry as a whole does provide some level of future proofing because it is more recession proof than other industries. After all, we all need to continue to eat!

Next, since I talked to several attendees of the PMA’s (Produce Marketing Association) Fresh Summit, I was intrigued with the level of technology and complexity. For example, one apple expert (spanning multiple tiers in the supply chain) was keeping up with an incredible amount of detail with crops in a database as it was integral to the view 9-12 months into the future and how he could navigate for success. In essence, he was using predictive analytics to position his company for success in his specialty area. He also mentioned keeping up with technology to evaluate trade-offs to handle the skills gap, costs and more. He was keenly focused on future proofing his extended supply chain. Are you?

Technology and sustainability continue to pop up when looking at future proofing. For example, according to PMA CEO Cathy Burns, the top 5 trends include conscious capitalism, a focus on emotional health and megatrends shaping the industry (which both link back to produce and floral), and how corporate sustainability and technology matter.  Also, certainly all of the largest food and beverage companies are exploring the ‘right’ technology and systems upgrades to improve performance. They know that in order to future proof their business, they have to lead the pack with technology that will return value to their customers, investors and employees. And NONE of these higher level concepts are unique to food and beverage!

What Should We Consider and/or What Impacts Could Arise?
First, how are you up-to-speed on what is happening in your industry, technology impacting your industry and what you need to do to successfully future proof your company? If you don’t have a plan that is part of your daily, weekly or monthly business cycle, you better re-think your plan!

Next, are you trying to navigate on your own? You certainly are less likely to succeed. I also talked with additional experts who had a clear strategy of partnership and collaboration to maximize impact and minimize risk. Of course, you must choose wisely. Similar to a ‘bad spouse’, a bad partner is definitely worse than no partner at all. Yet, I’m seeing more executives realize that as much as they require more control and even vertical integration to control the customer experience and associated costs, they also need to find ways to make 1+1 = 22.

In today’s Amazon-impacted marketplace, the fast prevail. How can you leverage your extended supply chain and network for exponential success?

And, of course, a big part of future proofing your business goes back to creating resilience. Check out our many articles with ideas to create a resilient supply chain on our blog. Why not pick 2 or 3 ideas and run by your trusted advisors and collaboration partners…

 



Inventory or Capacity?

November 18th, 2019

Inventory has emerged as a hot topic lately. In today’s Amazon-impacted business environment, customers expect rapid, customized deliveries, the ability to change their mind anytime and easy interactions (placing orders, returns etc.). Since clients are growing, they are also concerned with keeping up with the increasing volume. Thus, they have responded  by stocking more inventory to support increased sales and to respond to these increasing expectations.

However, as clients are taking a step back, they see inventory tying up bunches of cash unnecessarily.  Just because they have more inventory doesn’t mean they have the ‘right’ inventory in the ‘right’ place at the ‘right’ time. Inventory not only ties up cash, but it also increases costs. We are hearing about concerns regarding space, efficiencies, transportation cost impacts and more. In essence, there is a double hit to cash and profit yet the appropriate level of inventory (varies by network and strategy) is required to meet customer expectations.

In addition to pursuing inventory improvement programs to maximize your service, cash and margins such as SIOP (sales, inventory and operations planning) and proactive vendor managed inventory/ collaborative inventory programs, you might want to consider your capacity.

We had a client a few years ago who called because service issues had started to arise and customers were angry. Leadership thought the the operations team was under-performing because there must be something wrong with them since sales revenues were not increasing over 5% a year.

As we dug into the issue, we found that the product mix changed significantly which drove a greater level of operations requirements for the same dollar volume. When this occurred in the past, it didn’t create a problem (lending support to the perception that the operations team was at fault).  Yet, it turns out that as people left, they stopped replacing them because they wanted to bring down costs.

In the past, since they had excess capacity (machinery) and a small excess level of trained, highly skilled direct labor resources, they could produce what was needed as conditions changed without a problem. They no longer could use this magic bullet!

Would it make sense to maintain excess capacity/skills in a key bottleneck area of your operation (whether manufacturing, technical or office)?

If you’d like to talk about your inventory and/or capacity situation further, please contact us.



Celebrating Manufacturing Day & Its Impact

October 30th, 2019

In our Manufacturing month Profit through People newsletter, we discussed the relevance of manufacturing on the economy, jobs and quality of life. For example, for every $1 spent in manufacturing, $1.82 is added to the economy which is the HIGHEST multiplier effect of any economic sector. Read our feature article to gain many other compelling statistics.

October is Manufacturing Month.  Specifically ,Oct 4th is Manufacturing Day. And, we are ready to celebrate our significant success. After all, for an industry the general public thought was dead and outsourced to China, it is far from dead. In fact, manufacturing in the U.S. would be the 8th largest economy in the world!

There are many manufacturing events occurring during October. Take a look at a few of the options and consider how you can participate:

What Should We Consider and/or What Impacts Could Arise?
What is the impact of Manufacturing Month?

We could make the difference in not only our economy and quality of life but also on future leaders!
How can you participate in Manufacturing Day? Read through any one of the opportunities listed above. Or, why not start an event of your own? APICS Inland Empire teamed up with the University of LaVerne to offer production and inventory management education to high school students recently. These small steps can transform lives!

We are interested in what you decide to do. Send us feedback, pictures and ideas for continuing to spread the word on manufacturing. Manufacturing is a critical aspect in creating a resilient supply chain and so we thought we’d share a myriad of articles about manufacturing and supply chain to increase your success on our blog.

 

 



Do You Know Your Demand?

October 23rd, 2019

This has been emerging as a hot topic. As clients are interested in meeting ever increasing and changing customer expectations while managing long supply chains, changing rules and regulations (including tariffs), and concerns over the cash flow implications of high inventory levels have resulted in discussion around the critical importance of demand. Do you have a handle on your demand plan over the next 12 months?

According to Gartner, every 1% improvement in forecast accuracy will result in 7% less finished goods inventory and 9% reduction in inventory obsolescence. A 1% improvement is imminently doable! Also, according to the experts, a 15% improvement in forecast accuracy will drive a 3%+ increase in pre-tax performance. Last but not least, in our experience, it is one of the best ways to drive a simultaneous improvement in customer service, cash flow and profit.

Every client we talk with says the same thing: Our sales are unpredictable. We have a custom business. We follow lean principles and produce in concert with customer demand. Or, our sales team is on top of it and are already doing everything they can to give us a heads up on demand. We don’t doubt that. However, we have also never come across a situation that couldn’t be improved. With the dramatic results that follow, it proves well-worth the effort.

Instead of brushing off the idea of focusing attention on demand, just think about what could be improved. It isn’t an exercise to beat up sales or planning. In the end, if that is what happens, there is no doubt that is part of the issue. The forecast must be collaborative with input from sales, marketing, customers, planning and anyone who interacts with customers or has input relevant to future demand. With that said, the best forecasts start with a simple statistical base. What do you do?

I’d be remiss if I didn’t point out that you should use your forecasts in your S&OP/SIOP process (sales, inventory, and operations planning) to align your demand with your supply so you can maximize your customer value and your bottom line. If you’d like to discuss your situation further, please contact us.

 

What bottlenecks exist in your organization?