Tag Archive: supply and demand

Beware of New Data Law in China & Its Impacts

February 27th, 2020

According to the Epoch Times and International Business Attorney, John Tulac, China’s new cybersecurity law poses a big risk for anyone doing business in China. In essence, if you send data to or from China, your data can be audited at any time. It certainly is concerning from many standpoints such as intellectual property, trade secrets, and more. Listen to my short video on this new law and impacts to consider.

John and I talk about this law as well as many other topics related to doing business in China, alternatives to China and the new USMCA trade deal. Listen to our new interview in our Future-Proofing Manufacturing & Supply Chain series. Undoubtedly, you’ll pick up a few worries along with ideas/ potential solutions. Let us know what you plan to do.

What Should We Consider and/or What Impacts Could Arise?
Many of our clients do NOT import from China.  So you might be thinking, why does this apply to me? If companies start leaving China in a mass exodus, you will certainly be in competition for new manufacturing options such as Vietnam, skilled labor in the U.S. and Mexico, technical skills to automate, use 3D technology, etc. And this is before thinking about indirect impacts. If the supply chain moves away from China, where will it move? There could be dramatic impacts on ocean lanes, political unrest throughout the world, raw material supply and supply and demand. We have never met a client unconcerned about these topics. After all, profitable growth is the name of the game!

At a minimum, no matter whether your supply chain relates to China, we recommend you re-think your manufacturing operations and extended supply chain. Are you dependent on any core suppliers? Are you spread too thin among suppliers? How are you selecting suppliers? And that is just the first topic in a line of many when re-evaluating your end-to-end supply chain. How about the broader topics of whether your manufacturing and supply chain is agile? Fast?

Start by re-evaluating your manufacturing and supply chain road map and think through related impacts. These topics certainly relate to our new LMA-i, LMA-Intelligence series including the Amazon Effect, the Resilient Supply Chain and Future-Proofing and contact us if you’d like an assessment path-forward plan to accelerate your bottom line and customer performance.


Should We Always Aim to Reduce Inventory Levels?

August 13th, 2015
inventory management

Though reducing inventory is generally advisable special situations arise when stocking inventory makes good business sense.

Certainly reducing inventory on hand is typically preferred as you can accelerate your cash flow. It is one of the key focus areas of my consulting practice. I have found that reducing inventory by 50% is typically quite achievable with the optimal mix of people/skills, processes and systems. Keeping money flowing is one great way to improve your business results. However, it is never black or white. There are times when increasing inventory is my recommendation!

The best practice process should not dictate low inventory levels for the sake of having low inventory levels. If it does, throw out your best practice process. I see this most often arise when implementing Lean programs. According to Lean, inventory is a waste. Thus, many people take this as black or white and reduce inventory regardless of how it fits with the company strategy and requirements.  Don’t blindly follow what seems to be a generic rule! Lean doesn’t not consider inventory a waste if it has a value.

There can be a purpose and value for inventory. For example, if you have customer volatility, you will need to cover for that volatility if you want to keep your service levels intact. Of course, you should also collaborate and partner with customers to reduce volatility. As volatility is reduced, inventory can be successfully reduced. However, unfortunately I’ve come into several clients with horrific service levels because they followed a mandate to slash inventory without a plan of how to accomplish this goal successfully.

Uneven demand is another reason inventory is required. Inventory can help level load production which is not only required to manage costs but, more importantly, if the uneven demand requires more capacity than is available at certain times, customer service will be impacted. Lean understands this as well; however, I often see this ignored when implementing Lean.

Last but not least, inventory can be of value for any number of reasons that makes sense for the business. For example, in one client, we wanted to increase inventory levels so that we could reduce turnover. Turnover can cost between 16-250% of the cost of the employee in lost productivity, training, reduced efficiencies, etc. If we could keep employees with a level load and offer options for time off during the grueling, hot timeframes, turnover improved.

Don’t make black and white statements without understanding the impact. I’ve witnessed too many clients calling me in to help resolve angry customers, higher costs and the like solely due to following a typically great, generic rule like reducing inventory is always good.

Did you like this article? Continue reading on how to be the Strongest Link in your organization:

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Leverage Systems for Growth

May 19th, 2015

If you’re riding a wave of growing demand put systems in place that can support the increased workload and not wipe out your goals.

Lately I’ve been talking with many clients and potential clients who are interested in growth. Although rapid growth is exciting, it can also be one of the most challenging to navigate. Systems can provide the perfect tool to leverage for success – whether your company is small or big.

Even the strongest of my clients are deterred with rapid growth. In many cases, the client is still relatively small and concerned with cash flow yet they are starting to experience “big company” problems. For example, customers do not care what you have to do to service them. They expect you’ll have what they need where they need it when they need it. Just think about Amazon. Same day and next day delivery has become commonplace. E-commerce capabilities and mobility (seeing the information on your cell phone and iPad) are expectations.

Similarly, larger companies also can benefit from systems. One of the best ways to gain new customers, new items and to cross-sell is to upgrade your capabilities. If you can stand out from the crowd by leveraging systems behind the scene, you can achieve great success. So, how can systems be leveraged for growth? There are several ways: 1) Volume.  2) Best practice processes.  3)  Automation.

Undoubtedly, one of the tenets of a system is that it is a vehicle to be leveraged to support significantly higher volumes without additional effort. Whether your customers buy 1 or 100 and whether you have 5 or 1000 customers does not matter to a system; however, it matters greatly if these transactions must be completed manually. The system will then figure out how many components and materials are needed to support these customer requirements. In essence, the system can function as a “big calculator” to cover these types of volume increases.

Next, the system will support best practice processes. Unfortunately I’ve seen clients (and people) who have the latest and greatest technology available yet they fail miserably. The reason this occurs is that they do not take the time to think through the optimal process to be utilized with the system. One way to think about this is “garbage in, garbage out”. A system will only calculate “junk” faster if you don’t focus time and attention on your processes. How can you set up your daily, weekly and monthly routine to best support your business? Build these into your system, and your system will become invaluable to growth.

The opportunity to automate is another advantage of leveraging a system for growth. There are countless opportunities to automate in every business. I’ve yet to walk into a new client without significant potential to take steps out of processes by having the computer perform steps and calculations for you within a set of guidelines. For example, instead of manually calculating what you need to produce in order to meet your customers’ needs, an ERP system will figure that out for you and provide you with a recommended plan for review. Then, our job becomes managing exceptions and adding value instead of performing routine tasks.

There are countless reasons to consider implementing a new system, upgrading your system or further leveraging your system to support growth. I see it as one of several “capacity items” that need to be put in place to support growth. If your sales people can sell without inhibition because they know you’ll have the capacity (people, processes, systems, machines, etc.) available, imagine what can be achieved!

Continue reading on how to become a Systems Pragmatist:

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What are the Benefits of SIOP?

January 7th, 2014
Companies that conduct effective Sales, Inventory and Operations Planning (SIOP) are able to balance supply with demand an exceed customer expectations.

Companies that conduct effective Sales, Inventory and Operations Planning (SIOP) are able to balance supply with demand and exceed customer expectations.

Sales, Inventory and Operations Planning (SIOP) is a process that manufacturers and distributors utilize to align supply with demand.

What are the key benefits?

•      Happy customers:  Lately, I’ve seen this objective rise in importance – customers want more for less NOW. Lead times must decrease! The SIOP process can have a direct impact on on-time-delivery percentages, past due dollars and lead times.

•      Increased margins:  One of the key benefits of aligning demand with supply is that it provides the opportunity to increase production efficiencies (because you have more time to plan effectively), increase logistics efficiencies (by having more time to optimize and through customer collaboration opportunities), reduce purchase spend (with a longer forecast, there is opportunity to develop contracts and collaborate with suppliers), and increase revenues (through customer partnerships).

•      More cash: By balancing demand with supply, you have more of the right items at the right place at the right time.  Thus, inventory levels can decline without negatively impacting service levels.  Thus, cash is freed up for better investments.

•      Improved teamwork: The SIOP process has also proven extremely effective in bringing cross-functional teams together to agree on one plan.  Although it doesn’t sound difficult, I’ve worked with countless companies that have multiple plans – one for Wall Street; one for sales, yet another one for production and potentially yet one more with new product development goals.  Once everyone is working from the same sheet of music, results follow and morale improves.

•        Increased revenues:  What else could you ask for to round out the benefits?  By collaborating with customers on their demand (and often on collaborative inventory programs), you become a dependable, more valuable partner.  I’ve seen volumes increase multiple times as a result.

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