- Artificial Intelligence – it certainly has the power to transform entire industries. If that alone doesn’t prompt you to pay attention, it seems like the attractiveness of predictable demand just might. There are vast implications for the supply chain. Our 2020 predictions document will discuss this further.
- Internet of Things – we have embraced the internet of things in our personal lives with step counters, Apple watches, self-adjusting cars, and more. There is definitely ample opportunity in manufacturing and supply chain as well. Think of tracking shipments with GPS, monitoring storage conditions of products to name a few.
- Blockchain – although all reports are that there is a long way to go and it will require a collaborative effort, the big firms are dumping money into blockchain, it came up in our 2020 predictions and seems to be hailed as transformative. Thus stay alert!
- Additive Manufacturing – Who cares about all these sourcing decisions with lengthy lead times (causing cash flow delays), risks of IP and trade secret theft, and hidden costs and burdens related to a BUNCH of factors out of our control if we can produce customized product on demand next to our customers?
- Physical Internet – As a part of my role with the consortium for advanced manufacturing and logistics success as a part of IEGO, I am reminded of the importance of the physical internet. GA Tech’s research is quite intriguing. It combines many of the concepts into a way to share infrastructure such as freight and warehouses.
Tag Archive: cash flow
Amazon is propelling this age-old topic into a new realm. Since the CEO of the Ontario Airport Authority used the phrase “last mile” has become “last minute” on a panel I facilitated last year, I have shamelessly reapplied his brillant quote.
If customers don’t even know what they want, how can we? Interestingly, we have found that many customers, even the seemingly most confused and volatile ones, have a pattern to their demand. If we take a holistic view of their demand and inventory planning processes from beginning to end and from high level to the minute detail, solutions emerge.
One strategy that has proven quite effective is to “remove the middleman”, the customer himself. Instead, with access to demand information direct from the customers’ customer or end user, you can not only manage the extended supply chain inventory better for a happier customer but you also can improve margins, efficiencies and cash flow to boot.
In consumer products circles, this strategy often termed, vendor managed inventory is usually dictated by the “big guys”. In aerospace, it is also expected but termed differently, customer based ordering, min max and other names. It is also common in healthcare as we won “supplier of the year” for two years in a row because of what we accomplished with VMI for Cardinal Healthcare when I was VP of Operations at PaperPak. We decided to make it a strategy for key customers at PaperPak, even though Cardinal is the only one who requested it. Should you consider a strategy like this to get ahead of your customers’ demand? It is just another aspect in creating a resilient supply chain. Check out our series on the topic.
In today’s Amazon-impacted world, we believe in instantaneous delivery. It has become an expectation. Even my mom who orders on Amazon by calling me believes a two-day delivery is a bit long. After all, she might not realize she needs something until the last minute. Thus, which is more important – time or money?
Here are a few questions to ponder when thinking about time vs. money:
1. Do you expect rapid deliveries across the board?
2. Are you willing to spend extra money for speed? Are your customers? Do you know this answer or are you guessing?
3. How important is cash flow to your business? How long is your supply chain? Regardless of how well inventory is managed, how much will be tied up by virtue of your supply chain design? How does that compare with delivery expectations?
4. Have you thought about investing in your demand plan instead of into inventory to be better prepared to deliver quickly without sinking cash into what is likely to become slow moving inventory?
5. Have you thought about investing money into strategically placed inventory? Having what your customer needs when they need it might be the difference between success and failure.
6. In your business, can you have time AND money?
7. What other types of time and money are you overlooking? Get the full picture before jumping in.
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As with everything in business success, SIOP (sales, inventory and operations planning) success is a straight line back to people. Thus, it is the reason I started my business with the “Profit through People” brand and continue with it as one of our service lines and for our newsletter. In the last 5 years, we have completed many SIOP projects and have found the keys to delivering rapid, bottom line results – exceptional customer service, significant growth, improved margins, accelerated cash flow and high morale. These keys to success are built into our proprietary process for SIOP, 4 EXCEL, which drives exponential results.
Even though SIOP is all about aligning demand with supply and has many technical components ranging from demand planning to master scheduling to inventory strategy and cash flow planning, we have gained the most significant results by aligning ALL areas of the organization on one page – the PEOPLE! There is no coincidence that the first of the 4 E’s of EXCEL is ENGAGE.
Some of the most challenging issues we’ve faced while implementing SIOP had nothing to do with the technical components. For example:
• How do we get sales and production on the same page?
• Can R&D and production work to one integrated plan?
• How can we align our customers and suppliers on the same page?
• How can we get finance, sales and operations on the same page?
• And so on…
We find that becoming expert in culture change and collaboration is important to success. Clearly, communication is at the crux of this equation as well. If you are thinking about how to get each of these parties to see how SIOP will benefit them to align on one page, give us a call to learn more about 4 EXCEL.
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