Tag Archive: distribution

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.

Did you like this article?  Continue reading on this topic:

Will Inventory Matter Again?

Warehousing Strategies for Success

 



Why Inventory Will Matter Again

June 8th, 2019

I was on a bit of a trip down memory lane over the holidays as I reconnected with former colleagues from when I was VP of Operations and Supply Chain at PaperPak, an absorbent products manufacturer for healthcare and food products.  I recently talked about healthcare manufacturing with a group of powerful women (and a few brave men) at the Professional Women in Healthcare event.  When inventory arose as a hot topic, I thought about paper rolls (pictured).

Actually, inventory was a hot topic as we partnered with key customers to develop collaborative forecasting models, implement vendor managed inventory programs to dramatically reduce inventory and free up cash while improving service levels and to maximize storage and efficiencies in our operations, distribution centers and, most importantly, throughout our transportation system (since absorbent products are bulky and freight intensive).

In our view, inventory is circling back in importance and will become a hot topic again as customers expect immediate, customized deliveries with the expectation of easy returns and last-minute changes to orders in production, in the warehouse or in transit. What are you doing to get ahead of this ‘new normal’ assumption?

To throw out a few ideas to get your juices flowing:

  • Get demand further into your supply chain – what are your customers’ customers selling or using of your product?
  • Be collaborative with strange bedfellows – I’ve written several articles recently on this topic as the most successful executives see the value in finding the ‘win-win-win’
  • What talent do you have focused on having the ‘right’ inventory at the ‘right’ place at the ‘right’ time? You could double your inventory and decrease service if you don’t know how to navigate these treacherous waters.
  • How sure are you that your demand and supply (labor, skills, machine capacity, buildings/ storage capacity, cash flow) are aligned and will remain aligned (review your SIOP plans)?

This topic reminds me of one of my early articles, the Million Dollar Planner. Although that sounds insane, it might be worth thinking about conceptually. If you maximize your customer experience, profitability and cash flow, the return is frequently in excess of a million dollars. Most importantly, what could you do with an extra million dollars? Invest in new products and services to spur growth? Build your infrastructure to enable scalable growth? Build your talent base to create sustainability? The possibilities are limitless.

Contact us if you’d like to discuss further.



People & Robots Can Co-Exist Successfully

May 23rd, 2019

We held an engaging executive panel discussion at our APICS Inland Empire spring symposium on the topic: “The Talent Transformation: People or Robots? There is quite a lot of hoopla in Inland Southern California as this geography is larger than all but 24 states (and soon will take over Lousiana) with a strong manufacturing and logistics base.  Yet, the threat and opportunity of automation is close at hand. According to a University of Redlands study, most large metropolitan areas are subject to losing 55% of their current jobs due to automation. In Inland Southern CA, that number expands to 62%. What will this mean? Disaster or opportunity?

According to a robotics expert with a background in industry, Carnegie Mellon and Harvey Mudd, the CEO of the Inland Empire Economic Partnership (IEEP), a Director at Honeywell and a recruiter and practice lead at Aerotek, we can rest assured that people and robots can co-exist successfully. Of course, this assumes we are proactive in thinking about automation, retraining and educating our workforce and providing the insights and collaboration opportunities such as the executive panel event.

We had some probing questions from the manufacturing and distribution professionals in the audience, but it was unanimous that a solution exists. We also talked about Middle Harbor which is a high-tech area of the ports. This has proven more challenging as negotiations have put some people out of a job yet still getting paid for it. With that said, there were many examples of success with business growing 3-fold while the company doubled the workforce and more. Hiding under a rock is definitely not the route to success. Instead, be a part of the collaborative effort.

As a Board member of IEEP and a supply chain expert, I am helping to lead a consortium for advanced manufacturing and logistics success to address just this topic (resulting from the Brookings study research). If you are interested in staying in the loop with updates, please email me. I’ve created a special interest list for this topic.

The students from Harvey Mudd presented some exciting robotics research they are conducting with industry on how to successfully navigate cluttered workspaces (as most manufacturing and distribution clients require). Much progress is being made.  And, robots aren’t going away. There are many positives in terms of consistency of quality, replacing competitive motion tasks, reducing workers compensation and labor risks in addition to cost savings. With that said, there are also some challenges to overcome such as what happens when technology goes wrong (like with the Boeing 737 Max). There is always risks to mitigate and people who are overlooked. The panel discussed the Challenger disaster and the employee who warned ahead of time to the technical glitch.

What are you doing to evaluate technology from a strategic standpoint? Will you be left in the dust? Grocery stores might have been a bit complacent before Amazon bought Whole Foods. Are you complacent? On the other hand, please don’t follow fads. When everyone thought outsourcing was great and Boards insisted on following the trend no matter the total impact, several companies outsourced and were sorry later when service went down and costs weren’t saved. If you’d like an assessment, contact us.

Did you like this article? Continue reading on this topic:

Profit Through People

The Talent Transformation: People or Robots?

The Resilient Supply Chain: Do You Have Resilient Employees?



What Tours Have You Gone on Lately?

August 27th, 2018

In the last month, I have attended quite a few tours of manufacturing and distribution operations.  The pictures below were taken at an APICS Inland Empire and ProVisors tour of Southwest Traders Foodservice Distribution and Do It American Manufacturing.  Both were excellent.  And I walked away with great tips!

Tours are a great way to see different ways of doing business and gain insights and ideas to apply in your company.  I find that what I see and learn will provide value to clients somewhere down the line.  As often as I hear clients request a consultant with knowledge in their specific industry, I have found that we often-times provide even greater value when we can apply a concept that we’ve seen in a completely different industry that looks like it could be an ideal solution.

What Should We Consider and/or What Impacts Could Arise?
How recently have you gone on a tour?  You might want to start by going on a tour of your company.  As strange as it sounds, it can be eye opening if you take the view of an external tour and see what you observe.  Better yet, take others with you and see what they observe.

Beyond your facility, there are many options for tours of manufacturing and distribution operations.  You can go to customers and suppliers to better understand their operations. Not only will you gain ideas, but you’ll learn about companies that tie directly to yours and collaborate with supply chain partners.

You can also tour by joining a trade association like APICS (trade association for supply chain and operations management), the DMA (distribution management), ISM (supply management), CSCMP (transportation) and more.  Last but not least, why not ask friends and colleagues for a tour.

While you are touring, observe and ask questions.  You are likely to see new techniques, learn about new technologies, see different equipment (such as narrow aisle forklifts which we saw at Southwest Traders), observe robots in action (which we did at Do It American), discuss metrics and dashboards and much more.

Step out.  Take a Tour.  Learn from Others.



Motocross, the 100% Brand and How Global Distribution Scales

August 20th, 2018

I recently attended the San Diego Distributors and Manufacturers (DAM) group of ProVisors. We had an engaging discussion with Francis Costello, COO and CFO of 100%, a well-respected brand in motocross and mountain biking.  He made a very interesting point about how the value of distribution scales and supports “getting big quickly”.

 

Francis generously provided insightful lessons learned in scaling distribution:

  1. Don’t trust your gut. (In essence, it isn’t enough to run the business) 
  2. Understand the rules and regulations.  
  3. Contracts vs. trust (neither is sufficient alone) 
  4. Choose wisely. 
  5. The only constant in change (after all, Amazon, Alibaba and more continue to change the scene).

Interesting to note that these are good rules regardless of your business!

One tip to implement this week:
Have you thought about scaling your business?  With the tremendous growth in manufacturing and distribution businesses in today’s marketplace, it is certainly worth considering.   In Francis’ case, he is thinking about how to scale quickly and globally. There was no better option than distribution in his case at this point in time (although it can change down-the-line).

Have you thought through your options to scale? There are more than one! Start there.  

While evaluating these options, keep his lessons learned in mind.  Although they pertain to scaling through distribution, I see them as uncommon common sense guidelines to use regardless of which option you choose.  They are certainly worth thinking through as you might find your default option isn’t the best.