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: services
According to an Industry Week article on the US 500: Top Manufacturing States, which state is #1 in terms of having the most manufacturing headquarters? California! Certainly, CA is not a manufacturing-friendly state in most places (although there is an initiative to create an advanced manufacturing consortium of excellence in the Inland Empire which is gaining support across the board). Manufacturers account for 10.93% of total output in the state and employ 7.2% of the workforce. Neither of these figures is #1 but the total output of $300 billion with an average of 1.3 million manufacturing employees does! #2 is Texas, followed by Illinois, Ohio and New York.
One of the reasons manufacturing is bucking the trends so far is that there are a vast number of consumers and companies in California, and in today’s Amazonian environment, rapid, customized deliveries are the norm. Thus, proximity matters. California is larger than all but 6 countries! The powerhouse of manufacturing is Southern CA. Additionally, California and specifically the Inland Empire is #1 in logistics in the U.S. According to research by a University of Redlands professor, logistics is at the center of what’s called an onion structure. It is the lifeline of the economy. Manufacturing co-locates or locates next to the logistics lifeline. Supporting services form the next layer of the onion, followed by all others such as retail, construction, leisure and hospitality.
What Should We Consider and/or What Impacts Could Arise?
For one, all this talk about “manufacturing being dead and gone to Asia” is obviously an exaggeration. In fact, we are starting to see executives look at reshoring as rapid delivery is of paramount importance. After all, everyone is scrambling to provide one-day delivery to keep up with Amazon, and B2B customers are expecting B2C service as well!
Further, we are seeing a SHARP increase in concern over high inventory levels to support these service levels. Some clients are concerned about the cost impact of tariffs and inventory levels and others are just becoming more focused on managing cash so they can better utilize existing resources to launch new products and services, invest in the business and more.
Since manufacturing is directly correlated to logistics, trusted advisors and other industries, it is worth paying attention. Start thinking about potential impacts such as the following:
- Will your supply base change or move with the changing times?
- Will capacity be available? Suppliers, transportation partners, manufacturing operations, equipment, skilled resources etc.
- Are you agile so that you can meet changing conditions rapidly and without a significant hit to your customer experience or bottom line?
- Do you have a skills gap? Please take our brief survey.
If there ever was a topic related to the resilient supply chain, this would be it! We have recently upgraded and added content to our resilient supply chain series.
If you are reading our newsletter, I have no doubt you are interested in increasing demand. Whether an owner, executive or key player, increasing demand for your products and services has to be top of mind. Let’s put it this way. No matter the position of my client (typically a CEO, Owner, CFO, General Manager or Board member), he/she is interested in increasing demand. Consequently, the projects we work on are typically related to increasing demand, either directly or indirectly.
I was on a panel about increasing demand at the Anti-seminar Executive Luncheon. We had interesting discussions about demand from several diverse points-of-view. Thanks to Chase Photography, you can see them as a livestream on Facebook – video 1 and video 2 (about 60 minutes total). In thinking about how to increase demand, a few highlights include:
- Observe how your customer uses products and services –An often-overlooked gem is to follow Apple’s lead and observe how your customers are using your products and services and look for ways to enhance their experience. Have you taken a step back lately to look for areas where you can further help your customer? Do you make working with your company onerous? That’s an obvious one yet commonplace. Imagine if you looked further!
- Do you provide a superior customer experience? If you ‘shopped’ your business, would you want to buy from it? Do your customers receive their products and services as ordered and in good quality/ condition? On-time? Quicker than the competition? Do you allow for easy returns? Hopefully you answered yes to each of these. We’ve found that this solely achieves a base level of customer service. Thus, the question becomes, “What are you doing to go over and beyond to make your customer compelled to return to you?”
- Are you referable? First, people buy from people; not companies. Are you people referable? The #1 strategy to increase demand is referrals. No matter whether we are talking about a manufacturer, distributor, transportation partner or service organization, referrals can generate more business than any other method. Just as much as we enjoy buying the latest technology based on the referrals from our friends, the people working at companies also refer. When is the last time you attended an industry event or conferred with local CEOs? You better believe business gets done based on word of mouth.
- What can you take over for your customer? We have found that whether the industry is aerospace and defense, food and beverage, building products or healthcare products, there are opportunities to take over tasks for your customer. One common and prevalent one is to figure out what your customer needs at each of their branches/facilities and keep them replenished so that they have the ‘right’ inventory at the ‘right’ place at the ‘right’ time. We see this as gaining relevance. Distributed inventory is becoming an essential element of the end-to-end supply chain plan as customers expect Amazon-like service and will find someone else if you cannot meet their needs.
When at PaperPak, we won supplier of the year for two years in a row with our #1 healthcare products customer because we implemented vendor managed inventory and were able to maximize their service levels while minimizing their inventory levels (cash tied up throughout their system). It didn’t hurt that we also grew the business by partnering further with them while reducing our costs and inventory levels as well. Have you thought about taking a request from a customer and turning it into increased demand for you?
Our most successful clients are thinking about these types of strategies to increase and manage demand. Why not spend a few minutes to listen to the expert panel and walk away with a few insights? If you’d like an expert to assess your situation to partner with you to achieve these types of results, contact us.
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Our most successful clients always ask “What’s next?” as they want to stay ahead of the curve. It is quite clear that staying on top of current trends and what is expected down-the-road is essential to successfully navigating your business to scalable, profitable growth.
For example, if you think your industry might develop a new way of servicing customers, you need to attack it quickly as you afford to be left in the dust. Clearly, providing an exceptional customer experience is important but so is developing this new service method in a scalable, profitable way. It will be much harder if behind the eight ball. Are you thinking about what is next?
With our definition of the supply chain from creation to customer, there are countless topics to be thinking about when it comes to What’s Next:
- New Products and Services: What new products and services will your customers want? We have found that most customers (just like most of our clients) might not know yet. You better be thinking about it and prompting ideas!
- Suppliers: What new materials, components and supplies will you need to improve performance at a lower cost? (These win-win successes require innovation and collaboration.)
- Transportation: What’s next in transportation? Think of the relevance – from suppliers to manufacturers, from manufacturers to manufacturers, from manufacturers to distributors, from distributors to end customers, from one facility to another facility, and so on.
- Technology: What’s next in technology as it connects each of these people along with equipment, and much more (think IoT) with data and information flows. We find that this often-times can be the bottleneck to achieving scalability.
- Manufacturing: What’s next in manufacturing? Even if you aren’t thinking about using 3D printing, you should be considering the impacts if your competition, your suppliers, your customers and more start using this additive manufacturing capability. It is likely to impact every step of the supply chain. What else is likely to happen in your industry?
- Distribution: What’s next in distribution? In your industry, what is essential? To think about distribution, you must think about your customers’ needs. You also should be thinking about the rest of your supply chain. For example, if 3D printing takes off, it changes the distribution model. If e-commerce continues to be important, your entire setup would change if you are more traditional currently. Do customers want you to take over worrying about what to stock and where to stock it? Perhaps you should suggest taking on VMI/ replenishment.
- Customers: What’s next with your customers? How about your customers’ customers? Are you even talking with your customers’ customers? Do you understand the industry trends throughout your chain? If you aren’t getting out of your office with an internal focus, you won’t. Who have you called lately? Who have you visited? Do you ask questions? Attend conferences?
- People: What’s next with your colleagues and partners? Nothing else will be achievable if you don’t have the best people on the team. It wasn’t that long ago we thought virtual meetings were a big deal. Now they occur daily. (Remember, illennials often-times like coming into the office for the community – and prefer the Google-like environment.)
Thinking about what’s next can distinguish you from your competition. Eventually, a decision will arise that requires this knowledge. If thinking of the future is part of your daily culture, you’ll pass by the rest!
While sitting in a conference today, I received several updates from Amazon Prime – that my mom’s subscription service to a cleaning product would be delivered; that my cat Smokey would be able to eat well this week since his food is ‘on the way’; a confirmation email for an order I placed with ‘1 click’ for a book that a colleague recommended and more.
In the last week, how many of us have placed an order using Amazon Prime? Over 100 million most likely. If we consider how often we take out our phone to order an obscure or quickly needed item via Prime using free 2-day shipping, it is frequent.
10 years ago, I had zero thoughts about receiving Amazon updates on my phone, let alone that I could do anything about time sensitive needs that arose at the last minute. Amazon went from selling books to transforming into a subscription and e-commerce powerhouse, driving continual disruption! Are you thinking about the value of subscription services?
What Should We Consider and/or What Impacts Could Arise?
Have you put thought into what has become commonplace – subscription services like Prime? What has Amazon actually achieved? Are you more likely to go to Amazon because you already belong and get free shipping? Are you excited that you have a special video and music subscription service for free as a Prime member? Do you go to Amazon because it is easy and they seem to know you and what you need? Perhaps we’ve become subscription junkies….
Now take a step back and think about what type of subscription service your company could offer? What value would your customers come to expect that they might not even know they ‘need’ at this point? After all, who knew they needed to be Amazon Prime before it came out?
Would your customers be more loyal and likely to go to you as a first priority if you developed some sort of subscription / value-add service? Gather your team, ask customers, talk with suppliers, attend industry events, brainstorm with people who have nothing in common with your industry – you never know where the best subscription/value-add service idea might come from. I just got back from dinner with a consultant that overlaps 0% with my market, and I got more ideas from him than anything I heard in the conference thus far.
Let us know how you are addressing the impact of the Amazon effect and any ideas you have had as you brainstorm with others.