I was talking with a Los Angeles Times reporter about the coronavirus a few days ago, and it spurred several thoughts about down-the-line impacts beyond the obvious. According to the Epoch Times, the coronavirus impacts will hit within the next few months. This makes perfect sense since lead times are typically between 2-3 months for our clients. So, expect current shutdowns to have impact in a few months. While you should obviously spring to action if impacted, you should be thinking about future-proofing your supply chain regardless!
Tag Archive: manufacturer
While recently at the Association for Supply Chain Management International Conference, I attended a session related to reverse logistics that contained several ideas for how to achieve significant savings and customer value through reverse logistics.
What I thought was even more compelling were examples of innovative ideas that a friend of a colleague discussed that will provide superior customer service AND a significant margin improvement with a common sense idea gained by collaborating with her team. It again proves that results go to those who take the time to listen, observe and collaborate to test new ideas.
One example related to shipping boxes: This aerospace manufacturer received complaints from their customer that they didn’t want hefty shipping boxes as they had to dispose of them. However, there are legal and security requirements that had to be addressed. So, a creative solution was required.
A team brainstormed ideas and developed a way for the customs officials to look inside the crate without breaking into the crate and created a way to return and reuse the crates also saving the customer disposal costs. Collaboration was a key theme as the supplier, customer and internal team were involved. As this top notch manager commented, there are countless numbers of these types of opportunities out there if we just listen, observe and collaborate.
When is the last time you have visited your shipping operation to ask for common sense ideas that can achieve a dramatic return on investment? Even more importantly, the team feels a part of an important success.
Turning to the e-commerce world, according to a presentation by the Reverse Logistics Association, returns are 25-35% for on-line sales vs. 8-9% in stores. What a dramatic difference! And, of course, handling these returns is inefficient. Traditional labeling is the limiting factor in achieving higher throughputs. Have you thought about your labeling recently? Who knew it could become a differentiator!
When looking at reverse logistics related to food, collaboration was again a key theme. Costa Farms resolved cart and rack issues with both the customer and supplier by moving to consolidated rack return. The idea of collaborating across supply chains is just gaining momentum. For example, as a part of the consortium for logistics success in the Inland Southern California, we are collaborating with Georgia Tech. They are bringing collaboration of strange bedfellows across Southern CA to the table as a way to create a win-win-win for each company involved as well as the environment and more. Stay tuned for the latest trends and ideas emerging from this supply chain consortium over the next few years.
Perhaps the common theme is to pay attention to collaboration opportunities and reverse logistics. There can be a significant hidden opportunity in this topic.
Why not focus attention and see what can be achieved with some common sense and collaboration?
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Do you think of yourself as a salesperson? For most of us, the answer is probably ‘no’; however, every successful executive, manager, professional and person is a salesperson.
Last week, I participated in a consulting conference, and our Society for the Advancement of Consulting ambassadors (pictured here) filled the role of salesperson to spread the word on the value of SAC. We had a great time and many value-added discussions. I find the key to ‘selling’ is actually providing value; not selling people products and services they do not need!
When I think back, I have always been in sales even though I thought I had no idea whatsoever about sales at the time. The way I got my first job was talking about the value of a senior project and how it was applicable to performing a planning role. I had NO idea that this was actually selling but it is how I successfully landed a great job out of college. Early in my career, I found system settings that would make our Coca-Cola facility’s process better, and I had to sell IT and others on why they should support this change. Later at a plastic injection molder, I had to sell management on why we should focus on certain inventory initiatives.
Lastly, as a VP of Operations of an absorbent products manufacturer, I absolutely spent 90% of my time selling my team on how they were valuable to the vision, suppliers on how they could have a part on creating a win-win, customers on how we could create collaborative vendor management inventory initiatives that would increase their service and profit (which would also improve our revenue growth, inventory and efficiencies), the Board of Directors on why we should focus efforts on material projects to drive profitable growth (even though they wanted me to focus on reducing labor costs instead) and the list goes on. In consulting, 80% of project success (partnering with the client to make sure results occur) relates to selling and positioning. After all, doesn’t it all stem from successfully navigating change?
Think about your career and daily job responsibilities. I bet you are selling every day as well!
One tip to implement this week:
The key to success in sales is to provide value. As I read in a book by my consulting mentor when I decided to start consulting, selling consulting services is simply finding ways to provide value to clients by helping them to increase the value of their businesses. Somehow, increasing the value of businesses sounded FAR simpler to me than selling people on hiring me as a consultant (after all, who budgets to hire a consultant?), and so I went for it (and am celebrating my 14th year anniversary in May).
Of course, it isn’t exactly that simple; however, it is absolutely true. The crux of all sales is in providing value. Think about when you purchase products and services. Why do you purchase? I used to think I was quite logical and not influenced by typical sales techniques; however, it is human nature that logic makes us think and emotions make us act. Although I am never tempted by clothes (except as I know I need to look decent to be successful), I realized I spent quite a bit of money on education to be successful in my consulting practice. Clearly, I saw the value and ‘went for it’. How can you show value more often in your job, your company, and of your products and services?
Recently, I attended Mobility 21, the Southern California transportation coalition, and it reminded me of the sheer relevance of transportation. No manufacturer can operate without transportation: distributors are out of business without trucks dropping off and picking up, healthcare would stop functioning and our frequent Amazon orders would be a thing of the past. In essence, everything would come to a grinding halt!
Certainly, trucks are what we typically think about when it comes to transportation. They account for $722 billion in freight flows with Canada and Mexico, for example. Whereas rail still accounts for $174 billion (not pocket change). The ports are our gateway to the rest of the world (and the Los Angeles ports alone bring in 40% of the U.S. volume). Air carries an impressive number of packages especially with the rise of e-commerce. UPS and FedEx are expanding at amazing rates, especially at Ontario airport, the hub of e-commerce activity. For example, during the 2017 peak season, this region of UPS alone processed 13.1 million packages!
At Mobility 21, there were some interesting statistics throw out:
- AAA has 60,000 service calls per day
- Transportation has a $700 billion dollar economic impact on Southern California and accounts for 1/3 of the jobs in Southern CA!
- 350 billion miles each year are driven in California
- The number of trucks is expected to go from 1.8 trillion to 3.9+ trillion by 2045
- And the list goes on….
What Should We Consider and/or What Impacts Could Arise?
At a minimum, why not take a step back to think about your transportation network? What does it look like? How do you receive materials and products? Do you use the ports? Air? Rail? Undoubtedly, you use trucks! How expansive is your network? Are there many players involved? Since it could cause your operations to cease, it makes sense to find out!
Next, think about what you’d like your transportation network to deliver. Do your customers expect rapid deliveries and “above and beyond” service? If so, who is your partner in ensuring this occurs?
Your transportation partners are your last face to your customer. And, in today’s marketplace, there is a significant demand and challenges your transportation partners must navigate. If you plan to be successful, you must stay on top of your transportation network and partners. Are you attractive to them? Perhaps we better think about that further….
My APICS Inland Empire Chapter hosted a program on “Changing Trade Policies and its Effect on Reshoring” with Michele Nash-Hoff, author of “Rebuild Manufacturing – the key to American Prosperity”. And, interestingly, the Institute of Management Accountants (IMA) Orange County chose “Onshoring Profits: Manufacturing is Not Dead Yet” from a long list of topics and asked that I speak on its impact. Thus, it seems only appropriate to discuss a few common themes:
- U.S. firms are leaving China as conditions worsen. Actually, 25% of U.S. companies active in China have moved some operations out of the country. 38% relocated to North America.
- In 2014/2015, parity was reached between offshoring & returning jobs.
- 7 industries have reached the tipping point of returning to the U.S. and these sectors account for 70% of U.S. imports. For example, computer electronics, electrical equipment, and furniture make the list.
- Using purchase price or landed cost do NOT capture total cost of ownership and can lead to incorrect sourcing decisions from a financial viewpoint.
- 70% of executives are thinking about reshoring.
Where are you sourcing from currently? Don’t just jump on the new bandwagon of reshoring – but you should give your total cost of ownership a second look as well as dig into your customers’ expectations and sourcing impacts. You might just be surprised as to what this new view tells you!
Did you like this article? Continue reading: Reshoring Gains