Tag Archive: infrastructure

Manufacturing is HOT!

February 19th, 2018

Supply Chain Briefing

In the last week, not only have there been several articles about the positive strides manufacturing is making but it also has come up in several presentations we’ve attended such as the Inland Empire Economic Forecast.  

Here is a compilation of just a few of the HOT topics and trends:

  • There are plenty of customers and consumers are in the U.S. – with the Amazon Effect (customers expecting rapid deliveries, customized product and 24/7 accessibility), locating closer to the customer is advantageous.
  • Automation and technology are gaining rapidly – the more technology that makes sense in our factories, the less lower-skilled people required.  That makes U.S. factories more competitive!
  • High-tech resources are in the U.S. – the more technology and automation, the higher skill level required.  Those folks are close by.
  • According to Industry Week, the NAM Manufacturers’ Outlook Survey, 95% of manufacturers are are optimistic at their company’s prospects.
  • According to an economic forecast I attended by a professor at Claremont McKenna, manufacturing is vital to the economy and  jobs since it pays well, similarly to construction.  Clients are hiring.
  • Deregulation and tax reform are definitely positive for manufacturers and improve manufacturers’ competitiveness vs. other countries.
  • Harvey Mudd (the #1 engineering school in the U.S.) has seen a significant increase in the popularity of manufacturing careers.

    Manufacturing is attractive once again….

Are you ready to grow your manufacturing presence?

What Should We Consider and/or What Impacts Could Arise?
Let’s sum this up with the following question:  Are you ready to achieve scalable, profitable growth?  

There are many aspects to consider in answering this question:  

1) Are your people prepared?  Do they have the appropriate skills, education and experiences?  Are they cross-trained?  Are they prepared for growth?  Do you have enough people?
 2) Will your processes support 25% growth before hitting the wall?  50%?  100%?  How agile are you?  Would you have to throw people at it (typically because you haven’t prepared in advance) or can you address with a combination of people, processes and technology?
3) Will your systems and technology infrastructure support your growth?  This is one of the most challenging as it can appear overwhelming in terms of the cost to upgrade your system; however, it can also become pennies in the scheme of things if you cannot keep up and service suffers, let alone margins suffer.  Also, are you considering new technologies and automation to keep your costs in line?
4) Are you thinking through in-sourcing, outsourcing, near-sourcing and keeping all of your options open?  It is rare that I run across a client considering both in-sourcing and out-sourcing simultaneously but it just might make sense….
5) Are your finances in order to support growth?
6) Are your supply chain partners and trusted advisors ready for growth?

Gather your team and start discussing these topics because it is coming!

 



Duke University & CFO Global Outlook Survey Suggests Optimism

March 23rd, 2017

According to CFO, Duke University and CFO Global Business Outlook Survey suggests strong optimism! In fact, the survey’s optimism index for the quarter jumped to 69 (on a 100-point scale) which is the highest level in 14 years. This is also significantly higher than the long-run average of 60. Businesses are optimistic.

61% plan to increase their payrolls this year and 4% wage hikes are expected. Even more noteworthy is that capital spending is expected to increase by 6% vs. a median of 3% and a flat/negative spend in 2016. Are you ready?

business optimism

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

Good news abounds. However, the tricky part is that the vast majority of our clients struggle to sustain successful growth (profitable, high service levels etc.). We don’t enjoy layoffs and recessions but they can be simpler to manage. Are you ready for growth?

Our most successful clients prepare for growth. They invest in infrastructure with enough lead time to implement successfully BEFORE they must have it. This could refer to systems, technology, people, training and development, process improvement techniques, culture and change initiatives and more — of course, it depends on your business. Undoubtedly, this is easier said than done! One of these initiatives that is geared especially well to growth is SIOP (sales, inventory, operations planning). SIOP programs are focused on forecasting demand, collaborating with customers and aligning with staffing, capacity, systems and process infrastructure, training and development and so on. If you’d like to talk about preparing for growth, contact me.

 



Manufacturing Gains

February 8th, 2017

As one of the panelists at the Manufacturers’ Summit last week said, “Have you ever seen manufacturing in the news more than it has been lately?” Quite an intriguing point….

The Summit had an expert panel on the future of manufacturing — and what the Trump era was likely to bring to manufacturing.  The panel was specifically non-partisan and included several heavy hitters including the president of the CMTA (California Manufacturers & Technology Assoc), the president of a local manufacturing company who also sat on the president’s export council for many years, the president of the Inland Empire Economic Partnership (IEEP), a manufacturing leader at a global company and the COO of the National Association of Manufacturers (NAM). I definitely took notes.

The bottom line is that manufacturing has much to gain. This ties in with the sentiment of the manufacturers in attendance. How might you gain?

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

Let’s start with a few highlights and a mixed bag: Exports won’t change. Trade isn’t dead although costs will likely rise on imports. The use of technology is on the rise. Industry 4.0 is becoming “the thing to watch”. California has some steep disadvantages to overcome. For example, our energy costs are 15% higher than the next most expensive state, according to one of the large local companies in the Inland Empire, and investment in manufacturing is weak at best!

Now on to some positive news:

  • Tax reform – it is likely to benefit manufacturers
  • Infrastructure – definitely likely to benefit manufacturers and specifically California (roads, bridges, ports, digital, energy); however, we need to make sure it happens!
  • Regulatory reform – permitting will definitely improve, and regulatory reform will benefit manufacturers overall.
  • Healthcare – somewhat unknown; however, if Pence does what he has said he’d like to do, the states will have a significant say in how money is allocated. Certainly, most manufacturers have struggled with healthcare the last several years and so the hope is for improvement.

There is plenty to think about in these expert predictions. What can you do to start the ball rolling so you are ahead of the curve?

 



Trump’s Transportation Nominee Kicks Up Infrastructure

January 17th, 2017

Trump’s pick for transportation secretary faces the least amount of scrutiny of any nominee; thus, it is very likely Elaine Chao will be approved. Her vision for transportation supports Trump’s vision — we need a heavy boost of infrastructure improvements because our current deteriorating roads, bridges, airports, grids, etc. will jeopardize the economy. The key is that she is seeking private investment to support these initiatives. Public-private partnerships are on the rise. Are you thinking creatively about financing the essential building blocks for your supply chain?

As one who drives the Los Angeles freeway system on a daily basis (nice aerial view of my driving complexities above), it is obvious we need improvements; however, we also do not have time to deal with anything but a quick delivery of these improvements. Can you imagine what happens when one of these connectors closes down during rush hour?

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

There are a few items to think about related to infrastructure. Let’s start with whether your business is dependent on infrastructure — and to what degree. I’d be hard pressed to think of a manufacturing or logistics industry business that isn’t somewhat dependent on infrastructure. In manufacturing (in its simplest form), we receive deliveries of materials and purchased parts (delivered over the road, via rail, to/from the airport, and possibly via the port), add value to them and deliver them to customers (again via several modes of transportation).

Next, think about whether your business supplies materials and services that could support these infrastructure projects? Perhaps you should expect a sudden jump in business — assuming you are prepared to successfully handle it. Or, do you also rely on these types of materials for your business? If so, could you suffer a shortage? What could you do to prevent suppliers from downgrading your importance if/when materials go on allocation?

And, given the significance of the private-public partnership, where else could this type of agreement take place? Or what other agreements will this likely spur on?