Category: Supply Chain Management

The Value of Export

October 18th, 2019

My colleague, Kusum Kavia recommended me for CIEDEC which is the Califorina Inland Empire District Export Council.  So, I attended a meeting as a guest. Export is a vast opportunity. Just consider a few facts:

  • 95% of potential customers are outside of the U.S.
  • 97% of exporters are outside of the U.S.
  • California is the #1 state in exports
  • Less than 1% of American companies export – this is quite shocking. The good news is our clients are clearly outside of the norm.
  • Canada and Mexico are the top two export countries.

Given these facts, looking at USMCA, the U.S. – Mexico – Canada agreement should be of keen interest. The CIEDEC has written letters of support to pass this agreement citing that it will better serve the interests of American workers, farmers, ranchers and businesses; and, it supports mutually beneficial trade leading to freer markets, fairer trade and robust economic growth in N.A. There were $43.6 billion of exports from California to Canada and Mexico in 2017.  The top exports were computer and electronic products, transportation equipment agricultural products, machinery and chemicals.

There is also a heightened interest in export based on Brookings research and the consortium for Advanced Manufacturing Excellence in the Inland Empire. We are excited about the future Are you exporting?

What Should We Consider and/or What Impacts Could Arise?
There is vast opportunity for California manufacturers to export. There are tremendous resources available for exploring markets for your products and services, as well as help in getting started. We have several significant exporters in the Inland Empire.  They have grown their businesses faster and more significantly than the average.

This will be one of several topics we’ll address in our consortium for advanced manufacturing. If you are an executive interested in participating in an advisory capacity on the steering committee for this initiative, please contact me.

Additionally, our APICS Inland Empire Chapter will be addressing this topic as a part of our upcoming executive panel and networking symposium on “Collaborating for Advanced Manufacturing & Supply Chain Success“.

Think about taking one step forward in evaluating whether adding or expanding exports could increase your revenue, profitability and success. Of course, export also provides potential in distributing your dependence on domestic revenue and profitability.  So, it could be another leg in creating a resilient supply chain.



Hurricane Dorian & Your Supply Chain

October 13th, 2019

 

Hurricane Dorian certainly took over the news as it threatened devastation. I’ve included YouTube from USA Today of the storm. People were evacuating up and down the east coast. Although the impact on people’s lives is certainly more important, there is a dramatic impact on businesses, as well. As logical as it sounds for east coast manufacturers, distributors and other businesses to be impacted while preparations are underway and the storm passes, it also had a profound impact on customers, suppliers and their extended supply chains. Are you prepared to navigate these types of disruptions?

What Should We Consider and/or What Impacts Could Arise?When I was VP of Operations and Supply Chain for a mid-market manufacturer, a hurricane devastated Greenville, North Carolina, the location of our largest manufacturing facility. Luckily, since the facility used to be owned by P&G, they evaluated risks as a normal course of operations and the facility was on high ground and not affected.  Yet, the facility was closed and nothing could get in or out. That situation alone proved the importance of thinking ahead to key risks, managing proactively and creating a resilient supply chain.

An east coast issue is no longer an east coast issue. For example:

  • Do you use the same carriers that might be tied up on the east coast?
  • Are your servers on the east coast?
  • Do you have any suppliers or customers on the east coast?
  • Do you have suppliers who supply other customers on the east coast? Or do your customers have other suppliers or customers on the east coast? Most likely YES!

The bottom line is 80% of my clients are impacted directly (suppliers, customers, transportation partners) and 100% are impacted through their extended supply chain. At a minimum, don’t wait to think about disruptions until they are imminent. Build agility, flexibility and resilience in your business as well as within your extended supply chain. If there ever was a topic related to the resilient supply chain, this would be it! We have recently upgraded and added content to our resilient supply chain series.



Which State Has the Most Manufacturing? The Answer Might Surprise You…

September 25th, 2019

According to an Industry Week article on the US 500: Top Manufacturing States, which state is #1 in terms of having the most manufacturing headquarters? California! Certainly, CA is not a manufacturing-friendly state in most places (although there is an initiative to create an advanced manufacturing consortium of excellence in the Inland Empire which is gaining support across the board). Manufacturers account for 10.93% of total output in the state and employ 7.2% of the workforce. Neither of these figures is #1 but the total output of $300 billion with an average of 1.3 million manufacturing employees does! #2 is Texas, followed by Illinois, Ohio and New York.

One of the reasons manufacturing is bucking the trends so far is that there are a vast number of consumers and companies in California, and in today’s Amazonian environment, rapid, customized deliveries are the norm. Thus, proximity matters. California is larger than all but 6 countries! The powerhouse of manufacturing is Southern CA. Additionally, California and specifically the Inland Empire is #1 in logistics in the U.S. According to research by a University of Redlands professor, logistics is at the center of what’s called an onion structure. It is the lifeline of the economy. Manufacturing co-locates or locates next to the logistics lifeline. Supporting services form the next layer of the onion, followed by all others such as retail, construction, leisure and hospitality.

What Should We Consider and/or What Impacts Could Arise?
For one, all this talk about “manufacturing being dead and gone to Asia” is obviously an exaggeration. In fact, we are starting to see executives look at reshoring as rapid delivery is of paramount importance. After all, everyone is scrambling to provide one-day delivery to keep up with Amazon, and B2B customers are expecting B2C service as well!

Further, we are seeing a SHARP increase in concern over high inventory levels to support these service levels. Some clients are concerned about the cost impact of tariffs and inventory levels and others are just becoming more focused on managing cash so they can better utilize existing resources to launch new products and services, invest in the business and more.

Since manufacturing is directly correlated to logistics, trusted advisors and other industries, it is worth paying attention. Start thinking about potential impacts such as the following:

  • Will your supply base change or move with the changing times?
  • Will capacity be available? Suppliers, transportation partners, manufacturing operations, equipment, skilled resources etc.
  • Are you agile so that you can meet changing conditions rapidly and without a significant hit to your customer experience or bottom line?
  • Do you have a skills gap? Please take our brief survey.

If there ever was a topic related to the resilient supply chain, this would be it! We have recently upgraded and added content to our resilient supply chain series.



Survey says Automation Beats IoT

September 19th, 2019

According to Industry Week’s Tech survey, robots are hot! On the other hand, there is a bit of skepticism with IoT and wearables. In talking with mainly small and medium size manufacturers in answering the question of which technology is most important to your company’s success, AI/ automation came in at #1 by a long shot.  It was followed by data analytics software/ERP/MES and then additive/digital manufacturing.

The article discussed the fact that IoT has been quite successful at driving results but the larger companies are the ones pursuing it. Certainly, with our clients, the small and medium size clients have less resources and need to prioritize.  We are seeing the same set of priorities. With that said, there is a lot of interest in IoT as it relates to connecting equipment, vehicles and more.  However, it is a more complex topic with multiple vendors involved. It just hasn’t been rolled out in any significant way because manufacturers and distributors see more potential for customer and bottom line improvement with automation/AI, ERP systems and additive/digital manufacturing. Are you considering any of these options?

What Should We Consider and/or What Impacts Could Arise?
Since we work with clients that are small and medium closely-held organizations to private equity backed to multi-billion dollar enterprises, it is interesting to note what is in common across the board. Certainly, there is no doubt that almost every executive is at least thinking about automation and robots!

Are you keeping up on the latest thinking on the benefits of technology? We NEVER support technology for technology’s sake. In fact, it is a common mistake for clients to get carried away with the latest and greatest concepts and lose sight of the return to the customer experience and the bottom line. With that said, you have to be aware of what’s out there and be continually evaluating what might make sense for your business.

I just talked with a commercial banker about collaborating on a robotics education session. Why not seek out information and figure out which technology will align with your business strategy and objectives? Then, put together a trial to test the concept without a significant financial commitment. There are also resources to collaborate with to share in these learning opportunities.

For example, we are creating a consortium for advanced manufacturing and logistics excellence in the Inland Empire focused on just this topic. Also, our non-profit APICS Inland Empire group, which is a chapter of the Association for Supply Chain Management, provides symposiums, webinars and tours related to these types of topics. You’ll find more information on these types of topics on our resilient supply chain series.

 

 



Talent Transformation: People or Robots?

August 23rd, 2019
As much as I’m seeing last month’s feature article on the bedrock topic of inventory continuing to ring true (clients are gaining more interest in reducing inventory levels to free up cash), the promise of technology (automation and robots) is enticing many clients to at least assess what they should be doing when it comes to the topic of the talent transformation. I cannot think of a client that doesn’t have some sort of a talent gap.
It appears as though this trend is only going to gain steam as more and more clients assess automation, AI, IoT and more to keep up with customer expectations, to try to address the squeeze on costs while also dealing with the lack of employees. As baby boomers retire (which I’m seeing at an increasing pace with some TOP talent), the gap is bigger than most executives realize. It turns out not all of the key information, decision-making capabilities and leadership abilities are easily absorbed by the next generation managers without a significant effort. What is worse is that if he/she gets fed up, you might not have a lengthy transition provided by the more dedicated baby boomers.
Our APICS Inland Empire Chapter had an executive panel discussion on just this topic at our spring symposium last April. I’m especially excited the vast experience of our diverse and experienced panel:
  • Navin Shetti – Director of Engineering, Honeywell Aerospace
  • Cindy Elliott – Global Go-to-Market Strategy, Manufacturing & Logistics, ESRI
  • Paul Granillo – CEO, Inland Empire Economic Partnership
  • Jerry Hsiung – Robotics expert, Carnegie Mellon & Harvey Mudd
  • Jermaine Waltemeyer – Recruiter/ Practice lead, Aerotek
To throw out a few ideas this month, which will definitely be supplemented and expanded upon in future months…..
  • Do NOT wait too long to consider which type of technology will add value to your ability to achieve your business strategy and objectives. Although there is something to be said about an organization that can perform manually, it will not achieve scalable, profitable growth in this Amazon-impacted business environment.
  • With that said, do NOT be a blind follower of your Board’s or Executive Team’s ideas. I have heard from countless clients that they outsourced when it was popular. Some have turned out great whereas others made no sense, didn’t make money and didn’t improve service. Can you afford to make preventable mistakes in this fast-paced world? Most likely NO!
  • Appreciate your hidden talent. 80% of the time, I find hidden talent at a client. They are typically underappreciated and utilized to 20% of their potential. If you’d like help in identifying them, contact us.
  • Find your internal best practice processes. Again, I find clients under appreciate best practices of certain departments, individuals or sites and instead focus a bunch of attention on bench marking to the industry. Do you really want to be average in your industry?
Put some thought into your talent pool, where it will be in 5 or 10 years and whether you are proactively addressing your situation to create sustainable and scalable growth.