Tag Archive: scalable

The Resilient Supply Chain: Do You Have Vendors or Partners?

December 1st, 2018

Since we did research on “The Squeeze” for a speech on the the squeeze in aerosapce (meaning:  how does the supplier in the middle between the Tier 1 suppliers who supply final assembly parts for an airplane and the powerhouse mills survive, or preferably thrive), we have been thinking a lot about the supplier relationship.  Coincidently, we also heard a lot on this topic at the Association for Supply Chain Management (ASCM/APICS) international conference as it is a hot topic across all industries. There was an almost identical discussion occurring with retail and the consumer goods industry. Last but not least, all of our clients are seeing the relevance of this topic.

What is the “right” answer?  Of course, it depends!
To manage “the squeeze”, one of the keys is to create partnerships with your key suppliers.  The rest can be vendors since they are not core or significant to your success. However, your key suppliers must be partners and collaborators.  For example, one of the best ways to handle the middle position in the aerospace world is to bring your customers and their demand together with your suppliers and their capabilities.  

Here are a few ideas that all depend on being a partner:

  • Collaborate with suppliers on new ideas/design concepts to reduce materials and waste for you AND up your supply chain.
  • Become a partner of your customer and gain access to demand information as it becomes available and help translate that into a benefit for your customer, you and your supplier.
  • Leverage pricing and volume across the supply chain for a win-win-win.

Although these ideas relate to aerospace, the same concept applies with every client.  When I was VP of Operations and Supply Chain for an absorbent products manufacturer, we used these same concepts to find win-win-win solutions in your supply chain.  We partnered with key vendors to redesign materials (that performed better at a lower cost), redesign packaging, reduce waste in our manufacturing process which required teaks and collaboration with both material and equipment suppliers and more.  By following a partnership route instead of the “vendor” negotiation/beat up on price route, we turned our situation around from bad to good.

We found private equity backers who wanted profitable growth.  However, soon after, the market changed and oil and gas prices were continually rising which significantly impacted our material costs (and were unavoidable) while our private equity investors still expected the same profit improvements as before.  Our business was also heavy in transportation cost since the product was bulky which was also an issue with rising oil and gas prices. Thus, we collaborated with customers, material suppliers and freight suppliers for win-win-win solutions. It “worked” and we were able to offset the price increases while growing the business in a profitable and scalable way.

These types of situations are common in today’s business environment.  

Do you view your suppliers as vendors or partners? And who are you hiring to manage these relationships?  Transaction-oriented purchasing folks or strategic relationship procurement resources?

 



The Resilient Supply Chain: Does Your Environment Support Fear?

November 27th, 2018

In today’s Amazonian environment, customers expect rapid delivery (same day/next day is preferred regardless of industry), 24/7 accessibility, easy returns, innovative collaborations and much more.  Add disruptors popping up all over (such as Uber, Netflix and more), trade war impacts and technology disruptors to entire industries (such as artifical intelligence to the accounting industry), it is quite clear we are in a new ballgame.  One of the keys to successfully navigate this environment is to rely on your people.

When it comes to your people, if they don’t feel empowered, they will not take a leap of faith and bring up ideas, test theories etc.  In essence, they need to overcome fear to rise to the occasion. What is the environment like in your office? Here are a few questions to ponder:

  1.  Will employees be shunned if they go against the grain?  For example, if employees bring up an idea that isn’t popular or one that the manager thinks puts him/her in not-as-good a light, will they get shunned?  Before leaping to the answer of “of course not”, perhaps take a second look one or two levels below you. You might find a different answer than you wish.
  2.  Is failure celebrated?  Of course, we don’t mean multiple failures repeating the same mistakes but is a single failure/learning experience celebrated?
  3.  Would failure still be celebrated if it impacts month-end numbers? Unfortunately, that is when it will occur.  It is just luck of the draw.
  4.  Is it OK to help a project team?  For example, if an employee helps a project team that requires his/her expertise even if it isn’t relevant or supportive to his boss’s success, will it be OK?  Worse yet, if this person is busy (which will always be true), is it OK if he diverts a few hours to help the project team for the greater good even if it doesn’t help his manager?  Will the manager answer the same way if he didn’t know you were listening?
  5.  Do you provide tools and training?  Some employees will take the leap on their own whereas others want the extra support to feel qualified to provide ideas and advice.  Are you willing to invest in these?
  6.  Will you provide mentoring and support? Beyond tools and training, ongoing mentoring and encouragement is needed to facilitate the process.  Whether formal or informal, do you have a process in place that provides this support?

It is definitely much harder than it appears to have your employees overcome fear when you aren’t looking.  

Are you willing to invest time and money into this effort to enable the growth of your employees and the scalable, profitable growth of your business?

 



According to the Industry Week U.S. 500, Manufacturing is STRONG!

September 21st, 2018

 

According to the Industry Week U.S. 500 (America’s largest manufacturers), manufacturing is STRONG!  In fact, the author uses the words VERY STRONG – most likely the largest opportunity for manufacturing since the end of World War II.   Now that is saying something….

The economy is strong and is supplemented by a tax overhaul that supports manufacturers combined with a deregulation focus.  The key is to leverage the opportunity. Even though there are lots of worries about trade wars and skill shortages, thus far, manufacturing continues to outperform.  Get ready for agile and speedy manufacturers with high tech tools to outpace the pack and further spur the economy! Will you be in the fast lane or watching them race by?

What Should We Consider and/or What Impacts Could Arise?
Take a pragmatic look:  Are you in the fast lane, driving with the pack or in the slow lane?  

With the VAST opportunities for manufacturers to succeed, perhaps it is time to put on your turn signal and step on the gas!  As one of our LMA Associates has been saying lately, perhaps we should all “make hay while the sun shines”. Are you?

Making It Happen
Strangely, one of the most important to-do’s should be to not get carried away with all the negative “what if’s” (such as trade wars).  Of course, don’t hide your head in the sand. Stay up-to-date on what’s most likely and relevant to your industry.  Focus 95%+ of your energy on how to distinguish your company from the competition while providing superior customer experiences and enabling scalable, profitable growth.  

Make hay while the sun is shining. Bring your best team players together.  Bring in experts to accelerate progress.  Ignite innovation.  Create the environment to ensure success.  Remember your supply chain partners.  AND THEN, “get out of the way”. Success will follow.



Technologies: Paying Attention to What is Important

September 6th, 2018

There are so many new technologies and combinations of technologies, it is extremely hard to keep up.  How do you know which to pay attention to and which to ignore? Unfortunately, some clients have told us they get overwhelmed by it all and just go back to what they are expert in (running the business) and postpone the technology decision.

As much as we find that technology is NOT #1 to success, achieving scalable, profitable growth without technology is an uphill battle to be sure!  We also find some technology enthusiasts who get so bogged down in technology as the “be all, end all” to success that they actually struggle. Instead of either of these extremes, use a bit of uncommon common sense and determine which technologies are important.  A few points to consider:

  1.  Your Industry:  There is no point being an early adopter if unnecessary in your industry unless it is your competitive advantage.  Where is your industry headed? What would provide a benefit?
  2.  Your Position:  If your competitive edge is being on the forefront of delivering an exceptional customer experience, you better figure out what you need to succeed in this differentiator.  If this is the case, we bet you would need to invest in technology that would enable a superior customer experience. But it is unlikely you’d need other technology advances.
  3.  Return on Investment: As exciting as new technology can be, it pays to ensure you’ll gain an ROI.  Go through the exercise to determine if technology will enable growth, profitability, cash flow or another bottom line benefit.
  4.  Your Current State: A few of our clients have been in a position where they were limited in growth prospects without enabling technology.  Of course, they could grow by brute force with a stellar sales and marketing team; however, to grow in a scalable way, they will need to leverage technology instead of hiring just to ‘keep up’ with growth.
  5.  Your Strengths:  As with most priorities, focus on your strengths.   It can be tempting to “keep up with the Joneses” and buy the latest and greatest technology you think your competition is using.  However, instead of throwing good money after bad, think about your company’s strengths, your teams’ strengths and what makes the most sense to align those strengths with customer requirements.

In today’s Amazon impacted environment, evaluating technology to best support your business objectives is a “must”.  As much as can be accomplished through people and process alone, you will not thrive without at least thinking about technology.  

You want to be aware of what’s coming down the pike in terms of technology before you head over the edge in complete denial with your typewriter in hand.  After all, who would have thought network TV would trend towards becoming obsolete?



When is it the ‘Right’ Time for a Supply Chain Network Assessment?

September 4th, 2018

Supply Chain networks that are not set up to support scalable, profitable growth have a high likelihood of negatively impacting your customers, impeding your growth and consuming far more resources than they were ever imagined to sustain.  What is ideally mapped out one year is likely to change the next in today’s Amazonian marketplace. Thus, assessing your supply chain network from your suppliers’ suppliers through your manufacturing and logistics networks to your customers’ customers with an eye to customers, cost and cash will undoubtedly yield results.  

What are some hints to know when it’s the ‘right’ time?

  1.  Renew your lease, buy or move? – As your lease comes due, it is a natural time to re-evaluate your supply chain network to make sure you are positioned ideally to support your customer base at maximum value for your customers and your organization.
  2.  Cost considerations – As you think about how to reduce your cost base, re-evaluating your supply chain network is a ‘must’.  Most likely, you can save a few pennies here or there.  But, for substantial savings, you may need to review your infrastructure.
  3.  Customer demands – In today’s Amazonian environment, customer demands are ever-increasing.  Is your supply chain network positioned to support your customers’ needs, delivery points and sales growth expectations?
  4.  Space constraints – As you start to think about space, it might be an opportune time to re-evaluate your supply chain network.  First, do you know how much space is needed to support your growth plans (and where)? Do you have the opportunity to maximize space?  Or should you re-position?
  5.  Insourcing/ outsourcing– As you think about whether you should insource, outsource (ex. 3PL) or utilize a combination of both, it is definitely an opportune time to evaluate your supply chain network and logistics infrastructure.
  6.  Supply chain partners – If you are re-evaluating key supply chain partners, it is likely a good time to do a quick assessment of your supply chain network.   

We have found that a supply chain network assessment can be valuable even if you decide not to change a thing.  Performing a quick review of customers, suppliers, operations and logistics infrastructure from a customer, cost and cash flow viewpoint can provide substantial benefit every so often.  Contact us if you’d like to talk further.