Tag Archive: customer experience

Supply Resiliency: Video Interview on Disruption in Logistics

December 4th, 2018

Next in our supply chain resiliency value series, we are excited to share an interview with BJ Patterson, President of Pacific Mountain Logistics.  Thanks to B.J. for sharing his expertise on the Manufacturing Summit’s panel “Amazon Effect: Pass or Play – the New Sales & Distribution Game and How it Affects Manufacturing”.   

B.J. is responding to a question related to supply chain resiliency on disruptions in logistics.  In essence, the key question is: How to maintain margins throughout the supply chain when:

1) We ship a single item vs. a pallet of items in terms of warehousing/material handling inefficiencies

2) Customers’ orders require many more truck trips than ever before

3) Truck space is at a premium and we are shipping a lot of air since Amazon-like shipments often have 1 item in a large box on a truck.  

Certainly, there are no easy answers.  However, we must be thinking about how we’ll create supply chain resiliency so we can thrive with these changing market conditions.

 


With an increasing frequency, supply chain partners are pulling together to find solutions to these types of challenges.  Moreover, the strategic use of data is at a premium. If you can better coordinate all of these ever-changing market conditions to gain visibility and efficiencies within your extended supply chain, you just might take the lead in your industry.  

Our most successful clients don’t wait for these disruptors to crush them.  Instead, they are always looking for potential disruptors and searching for solutions.  They take proactive approaches to take the lead position instead of disappointing customers in an era where the customer experience is of paramount importance.  

What are you doing to navigate these logistics disruptors? We are always interested in feedback and ideas to share.

 



The Resilient Supply Chain: Does Supplier Negotiation Work?

October 29th, 2018

In today’s Amazonian environment, it is quite clear that the customer’s experience is #1.  It doesn’t matter what issues you have.  If you cannot make sure that your product or service is delivered on-time with a value-add at a reasonable price, you will lose the business.  

The Squeeze
In talking with a group of aerospace CEOs who are being squeezed between the Tier 1/2 suppliers (those who supply Boeing and Airbus with plane ready parts) and their suppliers who are metals suppliers (mills/metals service centers) and outside processors, it is a tough position to hold!  However, just as Mirna Elnar, CEO of Acrua Spas said in our supply chain resiliency video series, there is always a solution when you think innovation.

The Win-Win
In this example, many of the suggested solutions from executives and procurement resources alike were to find opportunities to redesign/improve the product and process to achieve a “win” for the Tier 1/2 suppliers (improved manufacturability with better efficiencies and/or less scrap, less materials while maintaining specs/ performance, having the “right” inventory in the “right” place at the “right” time etc.) while also achieving a “win” for the CEO (better margins/ better cash flow) and ideally a “win” for their suppliers (more predictable demand, etc.).  A win-win-win is achievable if you look hard enough.

A Dose of Reality
This relates to a situation I found myself in while VP of Operations & Supply Chain for a mid-market manufacturer.  We found private-equity backers and were able to make cash flow by the “skin of our teeth”. We even were able to convince suppliers to take a haircut.  So far, so good. Then, oil and gas prices rose which impacted 70% of our material cost which impacted 70% of overall cost. NOT good. Also, we found that our product lines were all mixed up (which ones cost less to produce vs. the sales price for various customer segments) because we had recently merged three companies into one.  Also NOT good.

Our customers were a bit angry about service issues that arose when we cut over to a new system and merged the three businesses into one.  Also NOT good. And the largest segment of the business hadn’t updated products in years because they planned to sell and were desperate need of an upgrade to grow sales.  A fact but also NOT good. Lastly, our product is light but fluffy (which makes it larger in size) which carries a high transportation cost. NOT good either. But we had good suppliers and an innovative and committed team.  GOOD! So, how did we turn this into a “win-win-win”?

We decided to kick off a redesign project to find a way to straighten out the product tiers, improve performance of the product, reduce the cost of the product and reduce the freight cost associated with the product to boot.  A bit of a tall order? Yes, but a challenge as well!

We were successful in achieving ALL of these objectives by turning supplier negotiation on its head.  Instead of demanding price concessions, we partnered, provided upfront information on our objectives (including cost reduction objectives), collaborated on the design of new/improved materials, redesigned products and packaging, collaborated with customers to make sure we aligned with their needs and priorities, collaborated with equipment suppliers to put it all together and turned supplier negotiation into customer collaboration. 

The Result? We achieved a win for our customers, our business (and therefore our private-equity backers) as well as our suppliers.  There are too many people to thank but a quick shout out to Bill Weber, Keith White and Rick Finlayson seems appropriate.

Are you stuck in thinking about cost concessions or are you looking for the “win-win-win”?



Technologies: Paying Attention to What is Important

September 6th, 2018

There are so many new technologies and combinations of technologies, it is extremely hard to keep up.  How do you know which to pay attention to and which to ignore? Unfortunately, some clients have told us they get overwhelmed by it all and just go back to what they are expert in (running the business) and postpone the technology decision.

As much as we find that technology is NOT #1 to success, achieving scalable, profitable growth without technology is an uphill battle to be sure!  We also find some technology enthusiasts who get so bogged down in technology as the “be all, end all” to success that they actually struggle. Instead of either of these extremes, use a bit of uncommon common sense and determine which technologies are important.  A few points to consider:

  1.  Your Industry:  There is no point being an early adopter if unnecessary in your industry unless it is your competitive advantage.  Where is your industry headed? What would provide a benefit?
  2.  Your Position:  If your competitive edge is being on the forefront of delivering an exceptional customer experience, you better figure out what you need to succeed in this differentiator.  If this is the case, we bet you would need to invest in technology that would enable a superior customer experience. But it is unlikely you’d need other technology advances.
  3.  Return on Investment: As exciting as new technology can be, it pays to ensure you’ll gain an ROI.  Go through the exercise to determine if technology will enable growth, profitability, cash flow or another bottom line benefit.
  4.  Your Current State: A few of our clients have been in a position where they were limited in growth prospects without enabling technology.  Of course, they could grow by brute force with a stellar sales and marketing team; however, to grow in a scalable way, they will need to leverage technology instead of hiring just to ‘keep up’ with growth.
  5.  Your Strengths:  As with most priorities, focus on your strengths.   It can be tempting to “keep up with the Joneses” and buy the latest and greatest technology you think your competition is using.  However, instead of throwing good money after bad, think about your company’s strengths, your teams’ strengths and what makes the most sense to align those strengths with customer requirements.

In today’s Amazon impacted environment, evaluating technology to best support your business objectives is a “must”.  As much as can be accomplished through people and process alone, you will not thrive without at least thinking about technology.  

You want to be aware of what’s coming down the pike in terms of technology before you head over the edge in complete denial with your typewriter in hand.  After all, who would have thought network TV would trend towards becoming obsolete?



Robots Taking on Pharmaceuticals & Food?

July 28th, 2018

 

According to the Wall Street Journal, robots are taking on pharmaceuticals and food preparation.  In pharmaceuticals, companies like Eli Lilly and GlaxoSmithKline are investing heavily in automation to radically change the process of drug discovery.   If robots can handle thousands of samples around the clock (although costs will decrease or be reallocated to more valuable tasks), these results pale in comparison with the vast opportunity to develop drugs quicker!

Are you radically re-thinking and innovating with speed in mind?

Meanwhile, a burger joint will open in San Francisco that makes $6 burgers entirely by robot.  Creator is betting that robots can create burgers more efficiently and better (with techniques borrowed from Michelin-star chefs) than humans.

Now the question will become – when the robot curious wears off, will people frequent a robot run burger shop?  Regardless, the question really becomes – are you considering whether robots or automation might benefit your customers and business value?

What Should We Consider and/or What Impacts Could Arise?
As much as we warn our clients not to get “too” carried away with robots and technology (as it is easy to chase these ideas down a rabbit hole leading nowhere), it is certainly worthwhile to think about the strategic use of technology as it relates to innovation, providing a superior customer experience and in improving performance.  If it fits with your strategy, doesn’t distract from your priorities (or preferably compliments and enhances them) and generates a return on investment, why wouldn’t you consider every option?

One client leveraged the use of robots (designed uniquely for them by internal expertise) so that they could run a critical operation around-the-clock.  They couldn’t find employees with the appropriate skills to run more than first shift and overtime.  And, they were constantly struggling to keep up with orders.  Once the robot was up and running, the bottleneck was virtually eliminated and customers received what they needed when they needed it.  The people on first shift took on the complex tasks, set the robots up to run at night and remained extremely valuable (even more so).

Have you thought about these type of unique innovations to propel your business?  We’ll be starting a new video and interview series, “Innovation: Fast-tracking growth and profits” shortly.  We’d love to hear about your suggestions and innovations.

 

 



There is More to Chicago than Good Pizza. Logistics Anyone?

July 23rd, 2018

 

My aunt worked at CSX rail outside Chicago for her entire career.  Growing up, it sounded like odd, middle of the night shifts was what rail was all about.  Now, rail – and specifically Chicago – have become strategic. As people moved west in the good old days, Chicago became a rail hub, and it remains so today.  

When having supply chain network strategy discussions with clients, Chicago often arises since it connects rail across the country. Now Chicago has expanded beyond rail to become a high-tech logistics hub.  And with transportation rates tight with no end in sight, we better pay attention to the impacts of Chicago logistics!

Chicago logistics is all about connectivity.  Connecting the east with the west, Chicago is a natural hub.  5 international airports, 7 Class I railroads carrying 50% of the nation’s freight (think of the enormity of that figure!), 3rd largest intermodal port in the world, 3rd largest interstate highway system in America, and more.  Chicago is the leader in transportation assets and connectivity. Have you considered what this means to you?

What Should We Consider and/or What Impacts Could Arise?
Perhaps we shouldn’t be too fast to dismiss Chicago’s relevance (even as tempting as this is when it is in the negative digits in the middle of winter).  Location, location, location. Chicago clearly has the location in the middle of the country which puts it in the top position related to connectivity. Connectivity brings power.

Chicago connects the east with the west, rail with rail, rail with trucks, rail with air, high-tech talent with logistics opportunities, products with consumers (as it is also a significant consumer base) and more.  Being at the center of this activity can have a significant impact. For example, in one client’s supply chain strategy project, we hesitated at expanding the volume through Chicago because it frequently “got stuck” and experienced delays which negatively impacted the customer experience.  

We had to account for this extra lead time (and therefore extra inventory and carrying costs) and find creative offsets to the lead time to support customers.  Whether you go through Chicago or not, do any of your suppliers? How about your suppliers’ suppliers? How about your partners?

We are all impacted. The question is by how much!  Contact us to tell us how it worked out for you.