Category: Supply Chain Management

Let’s Spur Innovation

September 24th, 2018

Last month, I led a manufacturing roundtable on the topic of innovation.  Undoubtedly, if we want to be successful over the long-term, we must innovate. Problem solving only gets us back to our standard level of performance.  Although necessary, it will not be enough!  Instead, to exceed our customers’ expectations while enabling profitable growth in today’s Amazonian marketplace, innovation is a requirement.

Innovation is raising the bar to an entirely new level of performance.  It doesn’t require you to develop the next iPhone or 3M’s famous sticky pad.  In fact, the best innovators might not even think they are creative.  The great news is that everyone can innovate.  It doesn’t have to require significant investments.   What it does require is a culture that enables innovation.

An Innovation Culture
Here are a few “musts” when creating an innovation culture:

  1. Engage your people -You aren’t going to be successful innovating in isolation – at least not for long!  Involve your employees – view each employee as a valuable asset.  You never know what ideas can be unleashed if you have a culture of innovation that values each employee’s input and ideas.  Start here. Until your people are engaged, there is no point in going further.  How long do you think you’ll have happy, innovative customers with unhappy, not engaged employees?  NOT long.
  1. Engage your customers – One of our clients is creating an innovative culture.  They recently purchased a clay manufacturing company and are working to raise the bar.  The owners and executives value the input of their people and extend that to their trusted advisors, customers and suppliers.  I happened to be in Hawaii last month and my best friend wanted to see a pottery shop of an artist she really liked.  So I went along for the ride. When we arrived, I brought up my client because I thought the owner know of them. They were so excited.  They said they were a customer for life of Laguna Clay  (my customer) because they provided exceptional service.  They proceeded to provide input, ideas and much more. I took pictures and texted them back to my client. My client had engaged their customer in the innovative process.

 

 

 

 

 

 

  1. Provide opportunities– Next, provide opportunities for innovation.  Do you provide a “safe zone” for your employees, partners and others to collaborate and innovate?  Most importantly, you’ll have to set aside time for them to focus on this priority.  Beyond time, provide your vision and get the process started by spurring idea generation and give them a few guidelines.
  1. Stick by your commitment –  Innovation will create failures which is why guidelines are helpful so the failures can be isolated within a reasonable tolerance.  There is something wrong if failures don’t occur. Thus, be prepared for them and celebrate the progress. Don’t be disappointed, or worse, beat up your people. That will mark the end of their innovation.

Creating an innovation culture is “the” key to innovation. Start there. End there.  We’ll talk through more of the details in the middle in future editions (or feel free to contact us to help you accelerate progress); however, this is the 80/20 of success.  It’s well worth raising the bar of performance.



Are You Achieving Scalable, Profitable Growth?

May 9th, 2018

When we look back over the last 13 years of consulting with closely-held building products manufacturers to medium, private-equity backed food and beverage firms to large aerospace corporations, every single client has one goal in common – achieving scalable, profitable growth.  It sounds somewhat easy but is far from simple in reality.

PROJECTS THAT ADDRESS SCALABLE, PROFITABLE GROWTH

in the last few years, these types of projects have been of particular interest – all of which spur this result.

  • MANAGING GROWTH – How to make sure the back end keeps up with growth – seamless execution of rapid growth is far more challenging (and exciting) than it appears.
  • OPERATIONS – How to scale operational processes to support elevated customer expectations on-time and on-margin targets.
  • SYSTEMS INFRASTRUCTURE – How to scale your systems infrastructure to support your customer experience without adding people and costs every step of the way.
  • TECHNOLOGY INFRASTRUCTURE – How to scale your technology infrastructure without going overboard and getting caught up in fads while losing your objective.
  • TALENT AND TRAINING – How to scale your people (skills and talent) to support growth – there are a myriad of topics ranging from training and education to cross-training and capacity planning to scale in the appropriate skill areas that will provide the largest impact.
  • SCALING MANUFACTURING CAPACITY – How to scale your manufacturing capacity to support growth – gaining a view in advance can go a LONG way to alleviating a world of service and cost issues down-the-line.
  • SCALING WAREHOUSE CAPACITY – How to scale your warehouse capacity to support growth without expanding into new buildings unless absolutely necessary – after all, warehouse space is at a BIG premium, if you can find it at all.
  • SCALING SUPPLY CHAIN – How to scale your supply chain to support growth – no matter how prepared and perfect your company, if your suppliers, trusted partners and other supply chain partners are left in the dust, you’ll falter quickly.  For example, lately, we’ve heard a lot of buzz about issues causing delays from China, ranging from unexpected pollution controls to government mandates to Chinese New Year.
  • SCALING YOUR CULTURE – How to scale your culture as you transition from a small to medium-size company, medium to large and so on.  It is easy to get stuck in “no man’s land” – NOT where anyone wants to be!
  • And more….

Our best clients are thinking about each of these topics on a frequent basis.  In today’s Amazon-impacted marketplace, you don’t have a second chance. Instead, you’ll see your competition speeding by….

What is your plan to achieve scalable, profitable growth?

 



Manufacturing Expands at the Fastest Rate in 14 Years

March 21st, 2018

Supply Chain Briefing

According to ISM (Institute of Supply Management), manufacturing expanded more than it has in 14 years in February – it is on fire!  Improving global economies and firm business investment are fueling this expansion. The factory index climbed to 60.8 from 59.1. Export orders are also up from 62.8 from 59.8 which is the fourth consecutive improvement and the longest stretch in six years.  Are you taking advantage of this manufacturing boom? How can you? Coincidentally a recent article was on exports – perhaps that is one area of opportunity? It appears to be for the vast majority of U.S. companies.

 

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

Let’s start by taking a look at your latest trends.  Has your volume increased? If not, why not? Are you in an industry that has been negatively impacted?  How do you perform vs. your competition? Most likely, you are growing. Do you know how your growth compares with the industry’s growth?  Could you be growing more quickly? Perhaps it would just take a small tweak….

If you are set up to be agile and are positioned to grow, you are likely to grow faster than your competitors.  In today’s Amazon-impacted marketplace, no matter your industry, if you cannot deliver on-time and within the expected time frame (which is quicker and quicker with each passing month), you will lose the order to your competition.  Even in contract-oriented industries, you have to be alert. Not only might you lose the order, you could lose the next contract.

Are your manufacturing facility and supply chain ready for growth?  Have you provided your suppliers with updated forecasts? Are they able to keep up?  Do you and your extended supply chain have the staffing, training programs, equipment, cash, and more in place?  If you aren’t sure, find out!



Case in Point – Should You Speed Up Your M&A Plans?

February 25th, 2018

I lead a group of top notch trusted advisors (ProVisors) in the Inland Empire, and so I am immersed in what CPAs, attorneys, commercial real estate experts and other advisors see in the marketplace.  Last month, we had a fascinating and insightful presentation by Mark O’Keefe , Managing Director of Ambrose Advisors (a leading Independent Investment Bank) on the state of the M&A markets.

This presentation got me thinking about you. I see my job as providing trending topics, fresh ideas and contrarian advice as it makes sense.  And this is one of those times.  Typically speaking, every trusted advisor is singing from the same song sheet when it comes to preparing for the sale of a business: Don’t rush to sell because you miss out on a huge opportunity to increase the value of your business and sell at a much higher multiple.  

For example, one of my group members runs CEO groups, and his CEOs have a dramatically higher multiple than the average.  Thus, it is “excellent advice” typically.  However, we might be in a unique time frame where accelerating the sale could drive a higher exit value.     

As Mark said, interest rates are low, flexible terms and structures are available, and there is high competition among lenders; thus, it is a strong market for borrowers.  Additionally, U.S. stocks keep posting record highs, notching milestones not seen in more than 20 years.  And middle-market business owners are reporting strong growth and a favorable business outlook.  How long do you think this highly favorable situation might last?  And, last but not least, M&A activity has slowed down due to the political, economic and tax uncertainty.  

Might it be the opportune time to take the contrarian view and sell quickly to maximize value?  The strong market is pushing values UP which might outweigh a few percentage points of improvement in operating performance.  

If you are thinking about it anyway, perhaps it is worth-while taking a look….

 



Steel Imports at the Lowest Two-Year Level Since 2002-2003

November 30th, 2017

Steel Imports at the Lowest Two Year Level Since 2002-2003

According to Industry Week, steel imports from 2016-17 are on track to be the lowest in almost 15 years!  What is more remarkable is that Obama and Trump both proactively limited steel imports.   Obama’s administration passed import tariffs which started the decline, and Trump ordered an investigation into whether steel imports threatened national security which might have spurred China’s recent decision to eliminate dirty capacity in an environmental crackdown.  China’s crackdown has already impacted a few of my clients.  Their manufacturing facilities shut down without notice, creating inventory shortages and service issues.  Are you thinking ahead as to what is likely to happen in your industry?  Or impact your industry or business?

What Should We Consider and/or What Impacts Could Arise?
How many business owners and executives impacted by the environmental crackdown in China were prepared?   I bet not nearly as many as those who wished they were!  In today’s Amazon-impacted world, service issues are unacceptable – not only will customers complain (if you are lucky), but they will also find another source (whether immediate or down-the-line, it has a high likelihood to occur).  How costly is it to lose a customer?  Unimaginably high for my clients!

Certainly the environmental crackdown isn’t the only impact of this situation.  The steel suppliers most likely had a bump in sales.  Were they ready to take on the new business or distracted with saving their pennies in a cutback mentality with declining sales and missed the opportunity?   As my consulting colleague said recently, the millennial generation wants to quickly share information especially if it promotes a higher purpose.  I see the same theme here….SPEED is paramount!  Are you planning for success or your worse case?  It seems obvious yet I run across many executives with the first thought to plan for worst case, thus realizing their “worst case” instead of success.  What are you planning to achieve?