Tag Archive: shipping

Biggest Shakeup in Decades Coming to the Shipping Industry with IMO Regulations

July 18th, 2019

According to Reuters, the biggest shakeup in decades is coming to the shipping industry as the IMO regulations go into force in January. Shipping owners have to cut sulfur emissions from 3.5% to .5% which is a reduction of 85%! This means they’ll have to use low-sulfur fuel, install exhaust gas cleaning systems, use expensive liquefied gas or go slower. None of these are nominal costs. And, certainly going more slowly will exacerbate an already problematic situation where customers’ Amazon-like expectations aren’t being met!

 

Analysts think the container industry could incur an extra $10 billion in costs. That isn’t pocket change! It is expected that there could be a 10-20% increase in operating costs in related companies. Twenty five shipping container executives said they plan to pass along costs to customers. The shipping industry is tired of absorbing costs. Are you prepared for the likely impacts of this massive change?

What Should We Consider and/or What Impacts Could Arise?
Are you keeping up on the latest news such as these changing regulations? If not, you must start unless you want to be run over by your competition! For starters, if you are in an industry related to the container and shipping industry (which almost every company has some relation because no one operates completely in isolation), figure out the likely impacts. Should you be doing what some beneficial cargo owners are doing in moving up shipments so that it is less likely you’ll get ‘stuck’ during the holiday season? On the other hand, last year, when the tariffs caused extra imports, rates increased and containers were held up.

If you are a manufacturer, are you re-evaluating sourcing? Perhaps it is time to re-shore and near-shore as the total cost is no longer compelling to source from Asia in most industries and non-commodity products. This is without considering the dramatic difference in lead times, inventory requirements and associated working capital considerations. Don’t just follow the fads. Find an expert and figure out what makes sense for your situation.

Trucking companies are also likely to be negatively impacted. Now, they’ll have increased competition for low sulfur fuel. According to the Reuters article, it could double the price of diesel fuel. Wow! If there ever was a topic related to the resilient supply chain, this could be it!

What are you doing to build flexibility into your supply chain and your organizational design? If you are interested in a resilient supply chain assessment, contact us. You’ll find more information on these types of topics on our resilient supply chain series.



Do You Need An ERP Upgrade?

June 2nd, 2019

A Client Question
A client was getting a lot of complaints from her team about the ERP system used to run the business – from taking orders to ordering materials and producing product to shipping and invoicing customers and reconciling financials. She was ready to throw the computer out the window when she called to find a new system so that they could build value in the business instead of suffering endlessly.

The Answer
In their case, there was no need for a new ERP system.  This was GREAT news as this investment is often-times the most significant undertaking a company can make. When they go wrong, which is statistically over 80% of the time, they go wrong in a BIG way. Lost customers, hundreds of thousands if not millions underwater (depending on the size and scope), unhappy employees and more.

Although the situation was dire with no hope for resolution (financials that didn’t reconcile and it couldn’t be used in any meaningful way to manage production and inventory), all wasn’t lost. The system itself would work for their type of manufacturing environment although the way it was implemented wouldn’t.  As a result, we found a new partner who had significant impact.  The partner helped them navigate through the clean up of their system, upgrade to the latest version and learn how to utilize the upgraded functionality, which was key to going beyond the base to new frontiers that would increase the value of their business.

Food For Thought
This executive is one of my favorite executives.  I’ve known her since I started consulting 14 years ago. She has an extensive background and is a business valuation expert in addition to being a business leader. If she can get caught up in the ERP maze, anyone can. Take a step back and make sure your assumptions make sense. Should you reconsider how you are using your system or whether it is the right time for an upgrade? If you are interested in an ERP assessment, contact us.

Did you like this article?  Continue reading on this topic:
Systems Pragmatist
ERP Selection: Why It Has Become a Strategic Priority
Are You Leveraging ERP Fully?



Amazon Disrupts Again

April 5th, 2019

According to Bloomberg, Amazon disrupts again. They have abruptly stopped selling products from their wholesalers and are instead encouraging suppliers to sell on their marketplace, transferring the purchasing, storing and shipping of products to the supplier. The marketplace business is already estimated at $250 billion in value which is more than double the online retail business. They also pulled volume from some suppliers less than $10 million annually. If you are in either of these positions, this could be a substantial disruption especially with no notice!

According to the Journal of Commerce, Amazon is also disrupting container shipping with its increased use of its ocean forwarding arm. For example, with its non-vessel-operating common carrier (NVO), Amazon is gaining greater control over its internal supply chain but the key is whether it is thinking about building a supply chain platform.

Amazon isn’t the only disruptor. Are you proactively thinking about navigating disruption?

What Should We Consider and/or What Impacts Could Arise?
Hardly a day goes by without some sort of disruption, natural disaster or other event such as the Boeing 737 Max concerns. There is no way you can be prepared for every potential issue that will arise. With that said, it is remiss not to consider the most likely and relevant risks. Do you have a process to incorporate these into your strategy and execution plans on a frequent basis? Gone are the days of the 5 year strategy, updated once a year. Business is moving at a much quicker speed!

In addition, start looking at how to build an agile and resilient end-to-end supply chain. Start internally. Are your people prepared for the daily, weekly and monthly changes most likely to impact your business? Do they have backup plans? Or will it take a lengthy approval process to get a critical decision made to navigate disruption? Don’t just assume you are covered. Go and find out. If you’d like some tips for managing disruption, take a look at our resilient supply chain series.

 



What Do Sears and Amazon Have in Common?

October 10th, 2017

Thanks to my client Dan Vest, I read a fascinating article about Sears and Amazon. Who knew Sears and Amazon had so much in common? Pretty startling! The Reader’s Digest version is as follows: Sears was the former Amazon about 100 years ago, growing 50-fold within a decade with its world-famous catalog and then transforming from a mailing company to a brick-and-mortar giant. They were the everything store with an uncanny feel for consumer demand. Sound familiar? So what might we learn from history and paying attention to trends?

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

Perhaps Sears isn’t something to be totally ignored… As transformative, customer-focused and growth-oriented as they were 100 years ago, they stopped looking for the next customer-focused innovation and have suffered mightily. Clearly, if you lose track of your customer, you are likely to lose track of your growth and profits. It is also easy to get lost as you get big – suddenly what used to be innovative is replaced with ridiculous rules and bureaucracy with no glance in the direction of the customer. Walmart came on the scene with amazing service and low costs. And now Amazon is the 80 pound gorilla.

There is another interesting development to note. Amazon tends to choose strange bedfellows and has partnered with the brick-and-mortar giant. Amazon will sell smart technology such as the Echo in Sears stores and the Sears flagship Kenmore brand product line will be sold online through Amazon. Unique collaborations seem to be driving success.  Just look at the partnership of innovative Amazon with “not-known-for-its-innovation” United States Postal Service (USPS), yet it works. Do you see postal trucks delivering on Sundays? I do.

In short, pay attention to history, trends and never stop thinking. Add collaboration into the mix and you might just hit a home run.

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Staples & the Power of Customer Service

August 11th, 2016

supply chain

When I’ve needed customer service the most, Staples has been there! A while back, my house burned down. When that happened, the manager of the local Staples went WAY out of her way to help dig up old invoices to assist with the arduous accounting process. However, the reason I’m thinking about Staples now is because they came to my rescue again.

Last weekend, I attended the APICS district meeting in Newport Beach. After Friday’s Presidents meeting, I went to dinner with two colleagues. I left my laptop sitting on the desk in the hotel, knowing I had to write a proposal upon my return. When I got back to the room, my laptop was DEAD. I tried all sorts of things to make it work, looked up solutions on my phone, etc. It was hopeless. Thus, instead of writing a proposal, I was searching on my phone for a new laptop and sending emails to IT support resources to try to get help. Of course, my laptop would crash on Friday night with no provocation.

I have to say, several of my IT trusted advisors responded Saturday morning (nice to work with the best!); however, I couldn’t do much more until Monday. I planned to miss a session on Saturday to find a Best Buy. I looked out the window in the morning and saw Staples.

The tech guy at Staples (who was also an Assistant Manager but he came to help because the regular tech guy was tied up) was EXTREMELY helpful and tried all sorts of things to get my laptop working. He went over and beyond and made me feel much better. Although he couldn’t fix it while there, he set me up with the right hardware and people to save my data and work next steps. And he charged me $0. I left with a broken laptop — and happy.

After the meeting, I stopped at the Ontario Staples on the way home to pick up an interim laptop I purchased. Unfortunately, it turned out, it was in Ontario, Oregon; not Ontario, CA, but they were so helpful and made sure the LaVerne store was prepared for my arrival the next day that I felt good about my experience anyway. They even offered me free items for my trouble. Next, the LaVerne tech guy actually found the magic formula (that no one thought existed) and got my laptop working — same day, on a Sunday. More than the laptop help, they shined when it came to customer service. I will be back!

One tip to implement this week:

None of these folks were technically in customer service yet I will return to Staples because of their customer service. They were exceptional. They made me believe that my laptop troubles and helping me with my problem was their most important item of the day. Do you make your customers feel that way?

If you are in customer service, sales or an executive, you are on the front lines with your customers. Believe me, they always have a choice. Customer service will help you stand out from the crowd.

If you are in any other support position, you still have customers. For example, if you are in production, you probably have shipping and warehousing as your customers. If you are in production planning, customer service, operations and accounting are your customers. Everyone has customers. Do they want to work with you? This is certainly something where you can make an immediate impact. Think of how you want to be treated. What would stand out for you? Pass on the goodwill.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”