Tag Archive: ERP system

What do UPS, Shamrock Foods, Amazon & a 3PL Have in Common?

March 14th, 2019

In touring multiple facilities, ranging from package shipments to cold storage food service delivery to the e-commerce behemoth to 3PL organizations, it despite the conversations that take place about labor costs and other daily concerns, the #1 concern across the board is transportation costs. The numbers support this sentiment. According to CSCMP, transportation costs are 65% of total logistics spend.

Logically, it also makes good sense. No matter your business, materials, parts sub-assemblies and/or products need to arrive at your facility. Often, especially in industries such as aerospace, the parts make multiple trips around the area (unless you are unlucky enough to require sourcing outside of your local area) for outside processing services such as anodizing and painting. Lastly, every work-in-process part or finished good must go to the next stop along the way to the customer such as a final assembly customer, your distribution center, your customer’s distribution center or the end customer. That makes for quite a lot of transportation, often involving multiple modes of transport from air freight to ocean freight to rail to trucking.

Given these alarming statistics about transportation costs, the question becomes: What can we do to proactively manage these costs as well as reduce the impact on the environment? After listening to several experts on these tours and experts from Georgia Tech, APICS (learn more about the critical importance of logistics in our APICS-IE CLTD, certified in logistics, transportation and distribution certificate program) and CSCMP SoCal (at the state of the industry event), a few ideas emerged.

  1. Collaborate with strange bedfellows:As recently published in an I’ve Been Thinking article, collaborating with strange bedfellows can achieve 1+1+1 = 25 minimally. In terms of transportation, there is no doubt maximizing the space used in your truck, container or plane is vital. Why not collaborate with another business to increase your utilization?
  2. Take the holistic or systems view: It is quite challenging to see the forest for the trees as the old slogan goes. We have all been there! I have worked with clients for extended periods of time and found myself with this same issue.  So, I have to deliberately shake it up to maintain the systems or bird’s-eye view. For example, don’t worry about saving a few pennies on a non-essential element of your transportation infrastructure when you are missing the key point that your mix of modes of operation or something like that is costing you millions.
  1. Utilize technology that focuses on the critical transportation factors: In every case (at every tour, event and in every conversation), leveraging technology where it makes sense came up. Certainly, artificial intelligence is the new craze since it has the potential to transform entire industries including logistics. However, robotics are being considered even in industries such as 3PL where they never were previously due to the nature of managing different customers and products. Of course, IoT is prevalent in the world of logistics and transportation as well as topics such as alternative fuels and automation. And what about the basics of a solid ERP system and TMS (transportation management system)? Don’t panic over the horror stories. Contact us if you want to overcome them.
  1. Be customer friendly:Interesting how often being customer friendly arises, no matter the industry or size company (small family owned to private equity backed to large complex organizations).  With rising truck rates and a shortage of drivers, if you aren’t a preferred shipper, you might just be out of luck no matter how much you spend. What does it take to be a preferred shipper? It depends on your business, carriers, locations and more. However, it starts by thinking about what is important to your carrier (not you). Are they looking for flexibility? A quick turnaround time? Fast payment? Good treatment for their drivers?

Since transportation costs are, at minimum, 65% of your total logistics spend, it requires further thought. With the vast amount of technology options available, the best approach is to start with your foundation (your ERP system) and ensure it is stable. Once you have a scalable base, find the ‘right’ technology for your situation to maximize the value of your logistics infrastructure. However, remember the 80/20 goes back to people. What are you doing to develop strategic partnerships and to ensure you are customer friendly and a preferred shipper? Given the impact, don’t leave this to chance or make assumptions. We all like to think we are preferred but what can we do to take it an extra step further?

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

Systems Pragmatist

 The Sheer Relevance & Impact of Transportation (a Billion Here, a Billion There)The Resilient Supply Chain: Should We Invest in Technology?

 



Top Importers & Exporters… E-Commerce Impacts

June 2nd, 2017

According to the Journal of Commerce, the top importers were impacted by e-commerce and that trend is expected to continue. Imports grew by 8% last year (2.2 million TEU) whereas exports grew by 3% (just under a million TEU). The rankings are showing signs of a shakeup with the surge in e-commerce and Amazon. In 2016, Walmart rated #1, Target #2 and then Home Depot and Lowe’s as #3 and 4.

e-commerce

For example, the retail industry woes are highlighted by Sears and Walmart. Sears sales slid by almost 10% whereas Macy’s slid almost 4% and Payless filed for Chapter 11 protection (all top 100 importers) while Amazon increased 27%. Last year, e-commerce accounted for 8.1% of retail sales and it’s expected to increase by 10% by 2022. Walmart fared a bit better but spent several billions to purchase JET.com. And, Target is also testing next day deliveries. Small orders delivered rapidly is the future!

Not to leave exporters out of the mix, as a matter of interest, the top exported product is wastepaper with beef products also high on the list. 5 of the top 6 relate to paper and packaging such as Koch Industries with the holdout being an animal feed/grain exporter.

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

Clearly, we must pay attention to what our customers are communicating — they want small orders more frequently — with rapid deliveries. How will we accomplish this goal? We can certainly outsource the capability or, if we see it as a strategic aspect of the business going forward, perhaps we should think about how to incorporate into our strategic capabilities.

From a sales and customer perspective, start looking at e-commerce capabilities. 24/7 access is a must with the ease of doing business built into the process. You’ll need to integrate into your ERP system or find a way to work collaboratively from a process and systems perspective one way or another to maintain high service levels at reasonable efficiency levels.

From a warehousing perspective, handling e-commerce is quite opposite of handling pallets and bulk shipments. Think about them as two separate warehousing functions. There is quite a bit of automated equipment and technology that can help you automate and increase efficiency. But don’t just jump in and sink. Start researching, ask experts and build a plan. There is no time to waste!

 



Case Study in the Power of Design

February 21st, 2017
power of design

Taking a big picture view while simultaneously eyeing execution when implementing an ERP system will help companies not only achieve desired results, but do it quickly.

Situation: Our client had implemented an ERP system several years ago. As is typical when a system is implemented, they implemented the basics and then took a break to run the business. Although you start out thinking of vast improvements and how you’ll automate all sorts of processes, getting the foundation working effectively with high levels of customer service and some level of efficiency typically takes quite a lot of effort. The team is tired and needs to smooth out the day-to-day business. Understandable.

The good news is that they were set up for the future with an improved base. The bad news is that they didn’t know how to get from this new base to utilizing the improvements that would start to yield a return on investment. Their ERP partner moved on to other customers. Although they would return to work on improvements, our client wasn’t sure how to best utilize the ERP supplier’s expertise to jump to a new level of improvement. Instead, they stressed as they watched dollars fly out the window as hours passed, discussing these improvements. What could they do?

Path Forward: The key challenge is in translation between business objectives, process improvements and utilizing advanced functionality to support them. Most clients want to jump to one particular software feature (specific functionality) as the path forward that will cure all ills. In 80% of the cases, the software alone will only automate a less-than-desirable process, providing substandard results faster. Thus, the key is to find those resources in your organization or outside of your organization who can take the big picture view simultaneously with an eye to execution to figure out the best path forward, given your ideal business outcomes, your current situation (technology, process and skills-wise), technology advancements etc. Clients that pursue this path not only achieve improved results but they also achieve them rapidly.

Did you like this article? Continue reading on how to become a Systems Pragmatist:

Why ERP Success Has Little to Do With Systems

5 ERP Selection Pitfalls

 



Why Blame Doesn’t Work

September 19th, 2016

supply chain

I’ve been spending the majority of my time this week with two clients: one is preparing to go live on a new ERP system and the other is working to improve service levels by implementing improved planning and order flow processes. Although these specific objectives are nothing alike, they have much in common. Both have countless numbers of small issues arise on a daily basis — and some quite large ones thrown into the mix. It is just the nature of the beast in manufacturing environments. And so we need to uncover the root cause of the preponderance of the issues instead of playing the blame game!

Unfortunately, many of my clients are hard wired to worry about the blame game and related politics. Imagine how much quicker and better progress could be made if we focused on the root cause. Rarely if ever is that root cause due to a specific person. Instead, the likely categories include (in lean terms): method (process), machines, manpower (resource shortage, skills shortage, etc.), and material. If we think about our issues from this point-of-view, suddenly, we aren’t attacking each other; we are attacking the problem jointly.

And, I’d like to state boldly that it makes no difference if you are in a lean environment or whether you agree with lean principles. It is just common sense to just think of categories of causes unrelated to blaming specific people!

One tip to implement this week:

The good news is that there is VAST progress that can be made in a week. Simply stop blaming people. Instead, think about the root cause. Even if you think it comes back to a person, look for every other potential cause that could help that person be successful. If they had a new process and were trained on the new process, could they perform the job? If they were overloaded, would he/she have made the mistake?

Practice talking in these terms. Instead of complaining about Mary or Steve, how could you re-phrase your concern into a productive conversation? Hold off until you’ve thought about it. At a minimum, I bet you’ll waste less time.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”



Why Customer Service Trumps All

September 13th, 2016
customer service

Start with building a customer service culture with your employees to give your clients reason to come back and refer you to others.

Although we work on many topics impacting manufacturers and distributors, we have found that the most popular — and vital — is customer service. Prior to the recession, most companies called for our inventory management expertise and how to understand and manage costs (and therefore strategically price); however, since the recession, almost everyone that calls has some element of the customer in their conversation.

As our passion surrounds customer service which must start with your customers (your employees), we love this development. From a financial point-of-view, the customer has a profound impact on business performance. Clients call for every one of these reasons:

  • Business growth – certainly, you have no hope of growing your business unless you serve your customers well. Specifically, in today’s Amazon-impacted world, it must be an assumption.
  • Delivery performance – unfortunately, there are a vast number of ways companies can get into trouble with delivery performance. There has to be at least 20 different processes that impact whether product and services will be delivered in a timely basis. And, that is before you talk about people and culture…. If you cannot deliver on time, not only will you incur extra costs in expediting but you’ll lose orders (perhaps even ones you don’t know about).
  • Lead Times – every client talks about lead times. Customers are demanding a 50% reduction in lead times. Shortening the cycle translates to money and cash flow.
  • Value-added service – we must stand out from the crowd with exceptional service — forget about growing the business, this is essential to MAINTAIN the business (and to have a decent work life). How are you adding value for your customers? It is not all about price! Do you provide service options? Do you provide value add ideas and options? When my laptop crashed, I was very interested in those companies that would expedite, no matter the fee.
  • Margins & profit – do you look at service with a win-win eye? You better start! No one can afford win-lose propositions any longer. Find a way to increase your customers’ profits while increasing yours.
  • Cash flow – an area tied directly to service is inventory positioning and levels. If you can count on high levels of service, you won’t need to carry as much inventory. Every dollar not tied up in your warehouse is a dollar you can invest into the business, your people and your life.
  • Controlling overhead costs – This might sound strange but it frequently arises. If you need to upgrade your infrastructure as business grows and/or complexity increases, a compelling reason not to ignore this need is customer service. For example, if you have an ERP system that is highly customized and no longer will expand with your business, it will result in customer service challenges. Of course, most clients will attempt to address these issues without impacting customers. Since their business isn’t scalable, they will have to employ people to fill the gap. And, instead of automating these tasks, the manual workload increases errors — impacting service levels.

Clearly, customer service should rise to the top of your list in terms of priorities — assuming you want to maintain and grow your business and/or would like to enjoy your work life. What programs are you pursuing to take your service to an entirely new level? What ideas do you have to take a leap forward?

Did you like this article? Continue reading on how to be the Strongest Link in your organization:

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