Category: The Amazon Effect

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.



Future-proofing Your Manufacturing Success

December 11th, 2019

One of our core roles is to pay close attention to trends, issues and opportunities that will impact our manufacturing and distribution clients so that we can give them a leg up on the competition.

Lately, we have noticed that the next “big thing” will be future-proofing. Although everyone seems concerned about potential recessions in one of the greatest periods of growth ever on record, that isn’t why we have chosen to focus on the topic of future-proofing. Instead, what we have noticed is that the future is simply unknown.

It has an equal or better chance to be ideal for growth. Yet clients will not be able to take advantage of the opportunity if they haven’t been future-proofing their business and customer base. Also technology is a big unknown. Certainly waiting on the sidelines for someone else to figure it out will not cut it! In today’s era of the Amazon Impact, the Skills Gap and the need for a Resilient Supply Chain, your future will still not be secure if you haven’t thought about future-proofing. So, we are excited to launch our next LMA-i, LMA Intelligence topic, “Future-proofing Manufacturing & Supply Chain

As we explore this new strategic topic, we always start with the fundamentals. It does not matter how much you spend on the latest and greatest, energy efficient windows for your house if your foundation is cracked, letting in air and sinking. People must be your foundation. No matter how high tech your company, it must be accompanied with high touch.

Have you taken a step back lately to evaluate your people?

  1. Do you have the right players on your team?
  2. Do they understand where they are going and why?
  3. Do they have a coach, mentor and/or adviser?
  4. Are there opportunities for career progression for key roles?
  5. Have you identified your stars and have a fast-track program in place?
  6. Are you recognizing your team?
  7. Do you have bench strength?
  8. Is your team prepared for where you are going currently or are they thinking about where they need to be in a year?
  9. How about your customers, suppliers and trusted advisors? Do they understand their value and how they can contribute?
  10. Are you willing to invest in people before investing in equipment and technology? Why or why not?

To future-proof your manufacturing business, you must know these answers. Of course knowing the answers is not sufficient. Is your team on board? How about your supply chain partners? Moreover, as unfortunate as it seems, being smart isn’t enough. You must apply this knowledge in a way that enables you to successful navigate the future while continually creating scalable, profitable growth.

Stay tuned for more articles on this topic and contact us if you’d like to assess your situation.

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Manufacturing Month & Interview with an Innovation Award Winner

Profit Through People



Top Trending Client Request: Reduce Inventory

October 7th, 2019

More than 50% of client requests in the last several months have related to inventory. In fact, it seems to be a trending hot topic! In today’s era of the Amazon Effect where customers expect more and have ZERO patience to wait, there are challenges like a volatile environment with tariffs and concerns about space, costs and more, more inventory is needed to grow the business yet businesses cannot afford it. Learning how to reduce lead times and improve service levels while reducing inventory and costs is of utmost importance.

In partnering with several clients on just this topic, we’ve found the same ingredients to success yet the mix and proportions can be quite different. Several of the top contributors behind inventory success include:

  1. Demand planning: It turns out there is a lot to be said for fine tuning your demand plan (sales forecast). How well do you understand your customer requirements? We’ve seen that even in the best of clients, there is a gap between perception and reality. In 80% of our clients, there is a path to significantly improve the forecast with a direct correlation to inventory reduction
  2. Production &/or material planning: Not surprisingly, there is no ‘magic process’ that works for every client.  However, there are general themes that are identical. In every case, there is some sort of logical combination of master scheduling/material requirements planning (MPS/MRP) and kanban processes. How we figure out the right mix, proportions and formulas is the trick. It depends on the manufacturing/distribution type, people, processes, systems, customers, suppliers and related capabilities and more.
  3. Distribution planning: Similar to production and material planning, we’ve seen a significant opportunity with several clients to leverage a more proactive yet simpler distribution planning approach. The process will involve concepts from DRP (distribution requirements planning) and kanban. Often, this simple process can provide the visibility required to better manage inventory levels.
  4. Lead Times: Certainly, none of these can be viewed in isolation. Customer lead times will dictate the requirements of your network, whereas supplier lead times must be built into your planning processes. Distribution lead times and options (mode of transportation) could also make the difference between OTD (on-time delivery) or OTIF (on-time-in-full) and late delivery as well as profit and loss.
  5. Capacity: Understanding your capacity (skills, labor, machinery, space, and more) and how it relates to your requirements is of paramount importance. This process of aligning demand with supply across your organization and supply chain is termed SIOP (sales, inventory and operations planning).

In our experience, clients can reduce inventory by 20-30% on average without negatively impacting customer service. In fact, we often find that a win-win-win can be created: improved service, inventory turns and cost/margins simultaneously.

Read more in an upcoming article I’ve written for Distribution Trends.  Feel free contact us to discuss your situation in detail.

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Will Inventory Matter Again?
Warehousing Strategies for Success

 



The Amazon Effect Won’t Die!

October 4th, 2019

We have been writing countless articles about the Amazon Effect for many years as customers have the upper hand. In essence, if you cannot provide rapid, customized service with easy returns and ‘extra value’, you will be left in the dust. The needs aren’t going away. If anything, Amazon continues to raise the bar. Several companies such as FedEx, Walmart and others have announced same day and next day delivery. Target is redesigning stores and pick up areas so that customers can conveniently pick up purchases same day. Walmart is evaluating delivering groceries inside a customers’ home while they are at work. And, Costco has established a chicken farm to grow, slaughter and distribute chickens in an effort to eliminate the middle man for quicker, cost effective deliveries. However, this isn’t just about B2C and traditional e-commerce companies typically in industries such as consumer products and food and beverage. B2B companies expect Amazon-like service as well! Behind every B2B company is a person who expects B2C customer service.

Executives are still intrigued by the Amazon Effect. The reason executives still care is because it is getting harder and harder to remain competitive and profitable. For example, at the Manufacturing Summit, we recorded a series of videos from an Amazon Effect panel talking about these issues. Countless CEOs are expressing concerns about how to navigate these troubled waters. On the other hand, there are a few who are taking advantage of the situation to stand out from the crowd by becoming the disruptor instead of the disruptee. Which are you?

The Amazon Effect also teaches us that innovation is cornerstone to success. Not only does Amazon continually innovate and test new ideas, but some of these new concepts ‘stick’. As the founder of Netflix said, it isn’t that you set out to get the idea for Netflix and it is success all the way. The reason we are still talking about 3M and the famous sticky pad innovation is that it doesn’t happen that often, and 3M sets aside time and money for innovation as a part of their culture. Thus, we must get comfortable with trial and error. Of course, the error part is the problem. No one likes failure. Yet, it is just a part of the process. In fact, if you aren’t failing, you won’t succeed. Even Amazon fails. They test new markets, are willing to lose money and shut down programs. We just don’t hear about them as often as we hear about the latest and greatest new service or drone delivery! Are we really pushing the envelope far enough?

Have you thought about whether you have a culture that supports innovation? Check out our video series on innovation to gain some ideas. Gather your team to brainstorm out of the box ideas. Ask an expert to poke holes. Deliberately stimulate debate and organize trials. In essence, why not encourage maverick behavior within reasonable guide posts so that you set your team up for a “win”?

If you are interested in an Amazon Effect assessment with ideas to break from the mold, check out our free resources and/or contact us.

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The Amazon Effect is Still Going Strong
Eagle Eye Strategic Focus


Do You Have a Resilient Supply Chain?

August 11th, 2019

supply chain strategyThere is extreme volatility in today’s end-to-end supply chain.  Are you keeping up with all the changes?  For example, think about the following:

  • Tariffs & trade impacts
  • Data & security breaches
  • The Amazon Effect
  • New technologies such as 3D printing
  • Natural disasters, port strikes and more

The Resilient Supply Chain
Instead of allowing each of these incidents to impact you, we must create a resilient supply chain.  Are you proactively thinking about these topics?

  1. Agility– Instead of seeing agile as an IT or project management concept, we should be thinking about how to incorporate agility into every step / every piece of our end-to-end supply chain.  If a customer changes his mind, are we flexible enough to handle it?
  2. Speed – Is your supply chain set up for speed?  Customers are unwilling to wait.  I’ve found that I’m unwilling to wait anymore.  If I wait for a trusted advisor, service provider, subcontractor or even a client, it delays LMA Consulting. For us to be on the leading edge with clients, we must be ahead of the curve; not waiting for something that will be obsolete before we get it!  That is one thing we appreciate about our webmaster; he is speedy and understands priorities which is how we are able to announce a major content upgrade (thanks Scott).
  3. Predictive – In today’s complex world, we must also be predictive so that we are prepared from an 80/20 standpoint for the most likely unexpected events, trends and bumps in the road.  Thinking three steps ahead can go a long way in creating resilience.
  4. Collaborative – One of key components to creating a resilient supply chain with multiple partners is to collaborate.  There is no time to establish relationships and find ways to navigate volatility together if you haven’t already set a collaborative tone.
  5. Adaptive team – No doubt; the core to resilience is having an adaptive team where each members understands where he/she is headed and feels empowered to handle obstacles as they arise.

Have you thought about each interrelated partner, piece or parameter in your end-to-end supply chain?  How can you set it up to be resilient?