Tag Archive: volatility

What’s Ahead for Supply Chain?

January 18th, 2019

To think about what’s ahead in supply chain, it is important to put it in perspective with what’s ahead in business.  Read our article, What’s Ahead in Business? for details on the key trends impacting business:

  • Importance of the customer experience
  • Taking the holistic view has become a “must”
  • Volatility is the new norm
  • The coming power of manufacturing and supply chain

Given these trends, we predict our most successful clients will be thinking about these themes in the end-to-end supply chain:

  1.  Manufacturing is the Place to Be: Manufacturers are uniquely positioned to thrive. I have to say, I love that manufacturing is getting its due. According to NAM, for every $1 spent in manufacturing, $1.89 is added to the economy which is the highest multiplier of any economic sector.  
  2.  Distributed Inventory Management will be Key to Manufacturing Success: In today’s Amazon-impacted business environment, the customer expects rapid, low cost delivery. Given that the “last mile” has also become “last minute” with customers changing their mind frequently, predictive, distributed inventory management has become a differentiator.   
  3.  Additive Manufacturing will Rise to the Top: Customers want customized products on the fly. Yet, distributors cannot stock everything near every manufacturer, end user and the like. 3D printing can achieve this goal.
  4.  Customized, Rapid Delivery with Amazon-like Service and Efficiency is the Norm: In addition to additive manufacturing, re-shoring and near-sourcing (locating close to customers) are viable solutions to achieve Amazon-like service. The question is how to be efficient, cost effective and visible while serving customers.
  5.  Amazon Prime for Manufacturers is More than a Pipe Dream:  Subscription based models are becoming relevant to manufacturing, just as to Netflix and ERP systems. According to my friend, colleague and author Robbie Baxter, the membership model is just as relevant in manufacturing in transitioning from a one transaction/one-way communication to an ongoing relationship with the customer with a constant stream of feedback.  
  6.  We are Moving to a Digitized Supply Chain:  To address customers’ elevated expectations while continuing to make a profit, manufacturers and supply chain organizations are moving to a digitized supply chain. Artificial intelligence, IoT, the smart factory, robots and more. Don’t embrace technology as a fad.  Instead, embrace technology as a way to achieve a result.
  7.  To succeed, We Must Create a Resilient Supply Chain: Disruptions and volatility abound. Customers expect more. Boards expect more. People are harder to find and retain. Creating a resilient supply chain enables a proactive response to the current environment.

What will you do to get ahead of the curve in the New Year?

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

The Strongest Link in Your Supply Chain

What’s Next in Supply Chain?

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The Resilient Supply Chain: Video Interview on Global Competitiveness

October 26th, 2018

To kick off our supply chain resiliency value series, we are excited to share an interview with Mirna Elnar, CEO Acura Spa Systems Inc.  Thanks to Mirna for sharing her expertise at the  APICS Inland Empire Executive Panel & Networking Symposium panel is Spring!   

Mirna is responding to a question related to supply chain resiliency.  In essence, the key question for manufacturers is how to be competitive with overseas manufacturers in low cost countries.  Clearly, we are NOT likely to be competitive on cost (especially labor cost) alone.  However, all is not lost!

In her comments, Mirna provides several ideas and strategies for how to navigate these rough waters successfully.  

                                                   

Success Responds to Resilience and Repetition
Our most successful clients build innovation into their daily routine.  It is no accident that they are the most resilient as conditions change.  In today’s Amazonian environment which is full of volatility and changing conditions, resiliency has become a “must”!

Mirna also gave a compelling story about exporting to Brazil.  Instead of giving up when she found out the tariffs were unfair, she devised a way to collaborate with a company in Brazil and find a win-win opportunity.  We walked away thinking if she could turn an unfair advantage into an opportunity, why aren’t we looking further for these innovative ideas?

 



Imports & Exports: Which Companies Dominate and What are the Related Impacts?

June 28th, 2018

 

According to the Journal of Commerce, the U.S. imported double the amount of its exports (measured in TEU). In 2017, imports increased 6% whereas exports increased 1%.  This is quite an accomplishment since China (the top market for U.S. exports) announced an importation ban last year that cut across the various types of the top U.S. export, waste.

 

  

So, who do you think was at the top of the import list?  
Walmart!

The Details
The largest segment of import is retail at 3.5 million TEU.  The next largest segment is foodstuffs at 700,000 TEU.  This is quickly followed by household goods around 645,000 TEU, conglomerate at 606,000 and auto parts and automobiles at 453,000.

On the other hand, the top exporter is America Chung Nam (largest exporter of recycled paper).  Thus, the largest segment in export is recyclables at 1.1 million TEU, followed by agricultural goods at 630,000 TEU, paper and forest products at 521,000 TEU and chemicals at 310,000.  

What is projected this year?  It appears to be shaping up to be the strongest international and domestic demand conditions in at least a half-decade.  It isn’t all rosy though.  There are plenty of concerns about tariffs and a tight trucking market. According to Wolfe Research, shippers expect a 5.2% increase in truckload rates and a 3.4% bump in less-than-truckload rates.  These are the highest expectations in the history of Wolfe’s survey.

What Should We Consider and/or What Impacts Could Arise?
Well, clearly growth and volume are robust (just like in manufacturing).  However, there is plenty of concern about potential disruptors (such as Amazon) and volatility.  Thus, we must stay on top of trends and likely impacts – and focus on agility. Are you able to respond rapidly to changing market conditions or will you be left in the dust?

We can expect freight challenges.  How significant is freight to your bottom line?  For example, when I was a VP of Operations for an absorbent healthcare products manufacturer (adult diapers, hospital underpads), freight was a BIG concern.  Although our product wasn’t heavy, it was definitely bulky. Thus, we focused a lot of attention on how to collaborate with customers and transportation partners on innovative programs. We invested efforts into product and packaging redesign that would reduce the size of the boxes while meeting/ exceeding customer expectations and more.  Aside from cost, tight transportation capacity might translate into late deliveries.

Do you have transportation partners or vendors? Perhaps you better take a more strategic view….

 



The Impact of the Volatility

January 27th, 2016

supply chainCertainly, you’d have to be hiding under a rock to not have heard about the wild swings in the global stock markets lately. Although we’ve definitely become more comfortable with volatility, it still can cause executives to take a step back and think. What if China’s slowdown affects manufacturers in the U.S. more than we realize? Should I be thinking about pulling back vs. a full court press on growth? Should I continue investing? What can I do about this wild foreign exchange market if I have suppliers and customers using different currencies?

Those executives who find a way to be comfortable with and leverage volatility will thrive! We might as well get used to it as it is the “new normal”.

One tip to implement this week:

In thinking about leveraging volatility, the first order of business is to not overreact to fluctuations. As hard as it might be to not react when you see money rushing out the door with currency exchange rates or some other factor, the key is to remain calm. Take a step back. Is this change some sort of reaction that will likely reverse itself? Or is it based in a fundamental change that will affect your business over the long haul? Dig into the changes that are most impactful to your business and determine if they will affect you over the long term. If not, don’t overreact. Instead, build flexibility into your work processes and business model. If so, put together a plan to proactively address the situation. Burying your head in the sand might seem like a good idea, but it isn’t! 

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…”

 



Cross-functional Experience is a Gem

December 3rd, 2013
Supply chain andf logistics.

Today’s supply chain managers need cross-functional experience to quickly grasp complex situations.

One of the keys to being able to select the “right” strategic priorities at the “right” time in order to ensure business results occur is to be able to take cross-functional experience into account.

It can be a challenge to make a good supply chain decision without complete facts.  Worse yet, in today’s new normal business environment, volatility is the new norm and no one has time to wait.  Rapid management and operations decisions are a must!  Therefore, you do not have time to absorb all related business process information before making a decision.  Instead, you must be able to ask a few key questions to glean the essence of the core information related to your decision.  Project managers and other decision-makers with a cross-functional background are better equipped to achieve this.

For example, when implementing a new logistics system, the person responsible for planning will have to participate in critical setup decisions for MRP variables.  If planning is their basis of experience, their decisions will likely work for planning; however, they could have down-the-line negative impacts for operations, customer service, etc.  Instead, if the person has cross-functional experience, it’s likely more of those impacts will be included in the decision.  As true as this is for this specific example, it also holds true for strategy decisions, key projects etc.  How can you gain cross-functional experience or make sure your team has access to opportunities to gain it?

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Success with Cross-Functional Integration