Tag Archive: re-shoring

Manufacturing and Distribution Expert, Lisa Anderson, Confirms Inventory, Cost and Logistics Pressures in Supply Chain

July 12th, 2019

CLAREMONT, CA,  July 9, 2019 –  Manufacturing and Supply Chain Expert Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc. confirms that supply chain resiliency requires acute attention to inventory and cost pressures for manufacturers and distributors.  As predicted in her 2019 forecast, “Manufacturing & Supply Chain in the New Normal”, ever-changing customer needs, increased expectations, tight labor and transportation challenges are the ‘new normal’ and key issues for manufacturing and the supply chain.

Economic volatility and what Ms. Anderson calls the Amazon Effect – high customer expectations requiring rapid deliveries, accessibility and flexible, customized service – is putting pressure on costs and inventory levels.

“It’s like the perfect storm, tariffs, last minute changes, rapid delivery requirements and increased customer demands are challenging the supply chain. In turn, inventory levels are increasing.  Add in elevated labor and logistics costs and it gets tougher and tougher to control costs,” Ms. Anderson explains.

The result is an increased focus on improving inventory turns to accelerate cash flow, as well as an emphasis on re-shoring and near-sourcing.

“Aligning sales forecasts with operational capabilities is critical for manufacturers to thrive. In our 14 years of consulting, sales, inventory and operations planning (SIOP) has consistently delivered the strongest increase in business value. Leveraging best practices in demand planning and better aligning sales forecasts with operational capabilities will drive significant improvements in customer performance and the bottom line,” she says.

LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth. As a result of her work with manufacturers and distributors and financial knowledge of factors affecting the bottom line, Ms. Anderson has been appointed by the Logistics Council of the Inland Empire Economic Partnership (IEEP) to lead the effort to develop a consortium for logistics, supply chain and advanced manufacturing success.

“Inland Southern California leads California in job creation and manufacturing growth. We are in an ideal situation to become a global leader in logistics, advanced manufacturing and export excellence. I’m very excited to be spearheading the effort with the IEEP to create a Consortium of Excellence to support the future of the industry and accelerate regional growth,” she says.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation.  She focuses on maximizing the customer experience and enabling profitable, scalable, dramatic business growth. Ms. Anderson has been named a Top 40 B2B Tech Influencer by arketi group, a 50 ERP Influencer by Washington-Frank, ranked in the top 46 most influential in Supply Chain by SAP and named a top woman influencer by Solutions Review. She recently published, I’ve Been Thinking, an inspiring collection of 101 strategies for creating bold customer promises and profits. A regular content contributor on topics including providing a superior customer experience with SIOP, advancing innovation and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, tED magazine and the Wall Street Journal.  For information, to sign up for her Profit Through PeopleTM Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.
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Media Contact
Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com   
                                                         

 



Samsung Expanding Manufacturing in the U.S.

July 12th, 2017

Samsung announced that it is expanding manufacturing operations and its commitment to American consumers, engineers and innovators. They are putting money where their mouth is by investing $380 million with the plan to hire 1,000 workers for this new state-of-the-art facility that will manufacture appliances. This facility will take over manufacturing being done in Mexico. In this case, near-sourcing to customers in Mexico isn’t enough; they want to be even closer to customers, engineers and innovators!

manufacturing in the U.S.Manufacturing in the U.S. AND locating manufacturing to the U.S. is making sense! In Samsung’s case, there is a commitment to sourcing and collaborating closely with the customer in combination with incentives to relocate. Similarly, bicycle producer Kent International is re-shoring. In addition to the critical nature of customer proximity, offshoring costs were rising significantly (materials, labor, transportation and currency); thus, Kent decided to commit to an expansion of manufacturing in the U.S. Are you keeping an eye on your customers, costs and cash flow?

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

Samsung and Kent International are two examples of firms leading the way with a commitment to manufacturing and the U.S. How often are you re-evaluating your strategy and keeping a pulse on your strategy? A once-a-year review no longer suffices! Similarly, a 5-year strategic plan is a waste of energy in most cases. Does anyone know what will occur 5 years out that prohibits making strategy an ongoing priority?!

In addition, manufacturing is definitely on the rise! With that said, let’s not assume it will return fully to the “glory days” and start overreacting in the opposite direction. For example, folks outsourced because it was popular at time (sometimes with only a cursory review), whether or not it actually made sense from a total cost AND total customer experience perspective. As the U.S. and individual states become more competitive and technology and automation continues to evolve, change will occur. Don’t be caught off guard — what impacts will these changes have on your business? Are you prepared for them — or, better yet, are you in front of them so you can be proactive instead of reactive?

 



Is Outsourcing Dead?

July 3rd, 2014
re-shoring production back to the USA

As the cost advantages for outsourcing dry up more companies are bringing manufacturing back to North America. Re-shoring may increasingly be your best bet for improving customer service levels without going broke.

GE has started to rev up Appliance Park again – and is starting to bring manufacturing back to the U.S. A few of my key contacts and clients have asked about re-shoring. The buzz in the news is beginning to focus on re-shoring. Add it all up – re-shoring to North America is definitely on the rise. Are you positioned to leverage this new trend? First, it makes sense to think through WHY we’d be thinking of re-shoring. There are several key points to consider: 1) Service & quality. 2) Speed & flexibility. 3) Cash. 4) Total Cost. 5) Risk.

1. Service & quality: In today’s new normal business environment, there is little that is more important than service. For example, I have several client examples where if they can deliver 5% faster than their competition (reliably of course), they will gain the business – even if their pricing is a little higher (and in some cases, significantly higher).There are a multitude of issues that can arise which will negatively impact the customer with outsourced product. A laundry list of items that pop to mind include: a large customer of the outsourced supplier has an emergency that delays your shipment; since you are shipping in bulk, you have to wait for a large enough production run (or combine orders) to fill a container; issues at the port overseas; political unrest; port strikes; natural disasters impacting shipment; delays at customs; etc. Additionally, as customers’ expectations rise, they not only expect improved service levels but they also ASSUME high quality levels. Although outsourced product quality can be managed, “Made in the USA” has a positive quality image and is more within manufacturers’ control – and within a quicker timeline.

2. Speed & Flexibility: Speed is king in the new normal. Although this also relates to service levels, it is a critical enough topic to stand on its own. Speed can translate into delivery speed, product development speed, innovation speed, issue resolution speed, speed to replace parts or address expediting requests, etc. Clearly, North America will have an advantage with speed!

3. Cash: Cash flow remains critical in the new normal. Although companies have more cash now than they did during the recession, there is a heightened level of volatility in today’s environment which requires an increased level of cash reserves. Additionally, I’ve yet to meet an executive who wanted more inventory tied up in cash than is required to successfully manage the business. The longer the lead times and transportation time frames and the greater level of customer order volatility, the greater the need for inventory. Thus, producing closer to your customer is desirable. For North American customers, producing in North America requires less inventory.

4. Total Cost: Cost and specifically the vast difference in wage rates is the reason why outsourcing gained such steam for many years; however, wage rates in China have risen dramatically in the last few years (and is projected to continue rising). If labor is not a significant percentage of product cost, outsourcing is less likely to be a cost advantage. The other key cost is transportation cost. If product is bulky or heavy, outsourcing is less likely to have a cost advantage. Last but not least, when you add in the remaining total cost factors such as IP cost, travel costs, etc., the outsourcing cost advantage is murky at best.

5. Risk: The need to manage and mitigate risk continues to increase. In addition to service risk (inclusive of the laundry list referred to under potential service impacts), executives must consider supply chain risk, IP risk, security risk, etc.

If you haven’t taken a step back to re-evaluate outsourcing and re-shoring, it is an opportune time to do so. Those companies that notice key trends and find opportunities to leverage them will thrive – and surpass their competition along the way.

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

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