Category: Supply Chain Management

What’s Going On with Asia Supply Chains

June 25th, 2020

 

Supply chains are quite tenuous, and China drives the most volume:

  1. Coronavirus: Beijing is under a soft lockdown with a surge of virus cases. Although Beijing doesn’t impact trade, it is another sign that China vastly under reported previously and it is likely to have a new surge of coronavirus and plant closures.
  2. Manufacturers in China: Small and medium size manufacturers are not doing well. They are struggling to keep up since they had to continue paying people even when they weren’t producing. Are you watching your quality and cash?
  3. Vietnam: so far, they are faring pretty well and companies that moved prior to coronavirus and quite happy with service; if they hadn’t yet moved prior to coronavirus, it is likely on hold due to the disruption.
  4. Global transportation: Volume has picked up at all 3 ports in China (although they are dealing with a short-lived vessel shortage) and we aren’t seeing goods movement issues.

International rates are rising: they are up a hefty 12% from Asia to Northern Europe & 32% on the Transpacific route. They have taken capacity out and are slow to add it back. We’ll have to stay tuned to see what will happen.

 

 

Are you taking the continued disruption into account in your supply chain plans?

 

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

Undoubtedly, you should be thinking about how to proactively manage your global footprint:

  1. Re-evaluate your sourcing strategy: as many are already doing, the least you should do is re-evaluate your sourcing strategy. Generally speaking, the total landed cost for non-commodity products is less expensive in the U.S. than in China. Check your total cost and review multiple sourcing alternatives.
  2. Review your customers’ needs: Undoubtedly, consumer and business buying behaviors are changing during these unprecedented times. What is happening with your customer base? What can you do to get in front of the changes and see opportunities for expansion?
  3. Review your customers’ requirements: Understanding where your customers are located is a good start. It can have a profound impact on your supply chain, where you should produce and how you should set up your supply chain infrastructure. In addition, what expectations do they have? Are they expecting immediate delivery? Are their preferences changing to deliver at home? These questions will have a profound impact on your supply chain setup.
  4. Understand your transportation options: Clearly, understanding the speed, cost and effectiveness of your transportation options will be integral to your supply chain infrastructure.
  5. Understand likely disruption: Do a risk assessment to understand the likely disruption and risk associated with your options. You certainly have a different situation in China vs. Europe vs. Brazil.

Read more about this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19 . If you are interested in a rapid assessment, please contact us.



e-Commerce & the Rise of Online

June 9th, 2020

According to the statistics as well as client commentary, e-Commerce sales and online everything is on fire:

  1. According to data from Adobe Analytics, the second half of March saw a 25% increase in e-commerce sales.
  2. Even more impressive, Adobe said that April saw a 49% increase in U.S. e-commerce sales!
  3. Of ALL our clients, the only unanimous area of growth during COVID-19 was in e-commerce sales.
  4. According to a Gartner CFO survey, 74% intend to shift some employees to remote work permanently.

 

Thus, the key question is whether you are proactively thinking about online opportunities. If not, get ready to see your competitors rush by.

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

Undoubtedly, you should be thinking about online from all angles:

  1. E-commerce (B2C): If you haven’t started offering e-commerce capabilities, you better evaluate rapidly and get on board. There are several options for how to pursue this opportunity. You can offer direct e-commerce with your website. You can go through a partner with key customers and folks such as Amazon. The bottom line is that your customer doesn’t care how you provide the capability but they expect to be able to order easily.
  2. B2B: If you serve other businesses, you cannot ignore these trends because you don’t sell to consumers. Your customers expect a B2B customer portal with the same type of e-commerce capabilities that Amazon provides. We have been helping a client with a systems roadmap, and it is quite clear that the “80/20” from the customer and sales viewpoint is Amaon-like capabilities (with an almost exclusive focus on B2B currently). Nothing else is sufficient.
  3. Supply chain partners: What are your customers, suppliers and other supply chain partners offering?
  4. Employees: Remember, your employees expect you to have Amazon-like capabilities and online capabilities as well. This perception spills over into all aspects of the business.
  5. Online is more than B2B/B2C: Have you thought about how COVID-19 has forever changed the way we do business? After all, if Gartner thinks 74% will change to remote work in some fashion, that is a HUGE change. How will that change your industry, your supply chain and your employees’ needs?

E-commerce was already on the rise, and COVID-19 gave it a strong boost. As with everything, there are advantages (such as the consumer gaining quick delivery of essential items) and disadvantages or challenges (managing freight costs, reconfiguring warehousing operations and space requirements, implementing technology rapidly, figuring out how to be environmentally-friendly delivering to tons of consumers and many more issues). Those who are most successful in proactively thinking through these considerations and creating strategies will thrive whereas the rest are likely to struggle significantly. Which avenue will you pursue? Read more about this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19 . If you are interested in a rapid assessment, please contact us.



The Future of Manufacturing

May 30th, 2020

 

I was on a panel of a webinar, The Future of Manufacturing with Andrew Zanelli, president of VCC, Michael Knight, president TTI Semiconductor Group, and Seth Denson, co-founder of GDP Advisors. It was a lot of fun, and we talked about the coronavirus, reshoring, cost leadership, innovation, and other topics. Are you interested in what the future might look like and how you can position your company and career successfully?                                         

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

There is no doubt there is a renewed interest in reshoring and sourcing manufacturing closer to the customer. All panelists agreed that labor cost has reduced significantly in terms of relevant factors to consider in evaluating manufacturing and supply chain strategy.

  1. China’s labor costs have continually risen, leading progressive companies to move to Vietnam and other Asian countries to chase lower labor costs if labor is a significant factor in total cost of their products. Mexico is gaining steam as well as the latest statistics show their fully burdened labor costs are often lower than China.
  2. Advances in technology have reduced the labor component in the total cost of products, sped up the turnaround time and enabled greater customization on demand. Robotics, additive manufacturing, automated equipment, autonomous vehicles are just a few of the advances.
  3. The time component is increasing in importance in today’s environment where Amazon-like customer service is the norm. Lengthy lead times will lead to a loss in customer demand.
  4. Although cash is always king, during the pandemic, it has risen in importance. Product tied up in the supply chain which is typically 3 months minimum for Asian supply to the U.S. equates to dollars tied up that cannot be invested elsewhere.
  5. There is a higher likelihood of disruption the further away production is from customer demand and the more steps to the supply chain (such as ports, trucks, sailing through unfriendly waters).

Whatever was true last quarter or last month is no longer true. Continually reevaluate your end-to-end supply chain requirements. I’ve addressed this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in a rapid assessment, please contact us.

 



Are You Developing Close Relationships with Your Customers?

May 17th, 2020

During turbulent times, relationships move faster than at any other time. Will they move in a positive direction or a negative one? That is the only question. In fact, customers will be reevaluating what they buy and when they buy it. Consumer behaviors are evolving and business buying behaviors are evolving. Are you in the loop with your customers as to what is top of mind? Listen to our conversation with an expert in creating customer loyalty on our Navigating Through Volatility webinar series on creating a Forever Transaction.

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

As a customer, I have less patience with slow response when I need it the most. Our customers are no different. On the other hand, a few suppliers stand out in my mind in making my life easier and being ahead of the curve. I will remember that as the pandemic winds down. Identify your top customers and make sure your relationships are moving rapidly in a positive direction. In fact, it is appropriate to drop low priority or unprofitable customers. Otherwise, your key customers might not gain the value they would otherwise.

Look for opportunities to provide value. Ask questions to understand your key customers’ current situation and what would help. Simply look for opportunities to help your customers be successful. If you can offer help and/or ideas, it can go a long way! Don’t worry about expanding business during your conversation. Provide value and your customers will be more successful. When your key customers are successful, you’ll be more successful as well. I’ve addressed this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19 

Please share your stories, challenges, ideas and successes. Contact us and please join in our free webinar series and listen to our archives.



Manufacturing Expert, Lisa Anderson, Releases eBook Future-Proofing Manufacturing and the Supply Chain Post COVID-19

April 29th, 2020

CLAREMONT, CALIFORNIA – April 29, 2020 –  Manufacturing and Supply Chain Expert,  Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc., has released, Future-Proofing Manufacturing & the Supply Chain Post COVID-19. This eBook provides insights, advice and experiential value for Manufacturers and their Supply Chains.

 

The importance of the supply chain came into focus as shelter-in-place orders and the COVID-19 epidemic shifted the demand and supply for newly deemed essential items. “Manufacturers have long understood the intricacies of the supply chain.  What has recently emerged is the key role that the supply chain plays in every aspect of a business.  From sourcing strategies and managing supplier and logistics partner relations to proactively forecasting demand and managing customer service and inventory expectations, the end-to-end supply chain is much than production or operations.  A wrinkle in the supply chain can throw a company off its axis,” commented Ms. Anderson.

“We have been talking about manufacturing and the supply chain being at a critical juncture and the need to become agile, proactive and exponentially innovative.  Little did we know that we would be in the spotlight to meet the challenge under these circumstances. We have seen manufacturers respond to critical needs, like ventilators.  We have seen the supply of toilet paper and other paper goods disappear, highlighting the importance of the supply chain.  We are already seeing manufacturers building a new framework to future-proof their supply chains for the future.  This experience, while sometimes painful, has provided trial by fire and a means to step ahead for a different future,” Ms. Anderson said.  LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth.

Future-Proofing Manufacturing & the Supply Chain Post COVID-19 provides practical go-forward business concepts than can be applied to any manufacturer, distribution or supply chain organization.

Ms. Anderson is an active member of the Inland Empire Economic Partnership, was recently appointed to the Department of Commerce, District Export Council of the Inland Empire and is sought out by organizations such as Oracle for her manufacturing and supply chain insights. Future-Proofing Manufacturing & the Supply Chain Post COVID-19 can be downloaded here.

 About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation.  She focuses on maximizing the customer experience and enabling profitable, scalable, dramatic business growth. Ms. Anderson is a recognized Supply Chain thought leader by SelectHub, named a Top 40 B2B Tech Influencer by arketi group, 50 ERP Influencer by Washington-Frank, a top 46 most influential in Supply Chain by SAP and named a top woman influencer by Solutions Review. She recently published, I’ve Been Thinking, 101 strategies for creating bold customer promises and profits. A regular content contributor on topics including a superior customer experience with SIOP, advancing innovation and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, tED magazine and the Wall Street Journal.  For information, to sign up for her Profit Through PeopleTM Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.
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Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com