Tag Archive: volatility

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



What is an Eagle Eye Strategic Focus?

July 1st, 2013

A keen eye for details can uncover big savings.

In my experience, I’ve found that watching trends is vital to success – if you can pick up on a key trends and get better positioned than your competition and/or jump on-board with strategic innovations early, you’ll be guaranteed success. In today’s new normal business environment where sales are no longer easy, talent is in short supply, and innovations are ever-more critical to profitable growth, you must be on the leading edge. Thus, having an eagle eye is paramount to success.
For many years, I underappreciated my eagle eye skill as it hasn’t always been popular – after all, who cares about resolving “unseen” roadblocks to achieving the strategy? Why would you want to create conflict among teams by addressing issues that haven’t yet occurred? However, it turns out that this sometimes cursed skill can provide significant leverage in ensuring success in the new normal. What are the key ingredients of having an eagle eye? 1) Understand strategy. 2) Consider profit drivers. 3) Think of design. 4) Watch for trends.

  1. Understand strategy: Interestingly, it starts with simplicity. What is the foundation of the business? One way to think of the critical importance of the strategic foundation of eagle eye is to consider if you didn’t have it. No matter how great an idea or project seems to be, it will be useless if you are speeding along in the wrong direction. Thus, understanding the strategy and its core components is essential to rapidly selecting just the right priorities.
  2. Consider profit drivers: In order to rapidly assess a situation, a set of priorities or an opportunity, it is essential to evaluate with the key profit drivers in mind. For example, if the core product line has narrow margins with high volume, your operational priorities would likely be quite different from a business focused on luxury product lines. In this case, understanding your break-even point and related volumes will be pivotal to pricing decisionsIn another example, if material cost is a significant proportion of cost, outsourcing will have a much different impact than if labor cost is the driver. In the first case, it’s likely that outsourcing of a peripheral product line could make sense but shouldn’t be a focal point (unless failure is your goal!); however, in the second case, it could be a #1 priority.
  3. Think of design: Design can also be an underappreciated skill. What is the design of your business model? Your ERP system? Your business processes? Your products? Services? Etc.? Why is this skill valuable to a non-engineer or non-architect?
    In my experience across many industries and globally, if you understand the basics of design and can identify where you are in the design, you’ll be able to remain agile and flexible in accommodating for business challenges and changes while keeping the razor-like focus on the required business outcomes. What could be more important?
  4. Watch for trends: Volatility is the new norm. Thus, we must not only become adept at rapidly evolving to ever-changing challenges, but we must also be able to spot key trends ahead of the competition. Train your eyes to watch for trends. Start by taking a step back to see around you. Are your customers ordering differently? Are your suppliers delivering slower? Faster? Should you adjust plans? Being aware of what trends are important to your business is a key component of having an eagle eye.

Developing your eagle eye abilities is paramount to success in the new normal business environment. What will you do to ensure you are not passed by?
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Strategy – It doesn’t Fail in Formulation, It Fails in Execution



Volatility in the new Norm

September 21st, 2012

In today’s new normal business environment, volatility is the new norm. Change is required to remain competitive or to become competitive. If you manage change better than your competition, you’ll have the opportunity to leapfrog the competition.

In the last several years, I’ve seen a multitude of examples of companies going through change – the implementation of a new enterprise-wide system, a company sale process, a company turnaround, double digit sales growth, business process change and improvement, etc. This trend is only increasing as Executives realize that change is not only a necessary evil but is also required to support continued and improved business results.

Based on my experience with multiple companies in multiple industries in managing change, I’ve uncovered a few secrets that apply to all of them in how to manage change while achieving positive results. Communication is the obvious path to success; however, the secret is in the communication process, material etc.

1. Explain the whys. This might sound obvious but it is often overlooked. Begin by communicating about the change – why is it required? What if we don’t change? Why is it important to the company goals? Once people understand why, they can accept the change. I’ve found that the opposite of the common thinking of “people don’t like change” to be true – so long as people understand the change and are communicated with proactively, they are typically fine with change – and many are even excited about it.

2. Communicate the plan. It doesn’t matter if you have a detailed plan; just communicate the basics – what is happening, what are the likely next steps, how will the change affect them, etc. Don’t worry about what you don’t know. Just tell them what you know and what you are able to communicate at this time, and let them know that you will communicate as you know more – and do what you say you will do. If it is a sensitive subject matter such as a company sale, communicate what you are able to tell them and let them know that there are elements of the process that you cannot share but that as you are able to share additional information, you will. The critical part is that they know that you will communicate what you can when you can – this avoids the large issue that arises when people with missing information fill in the gaps with what they think (and it is almost always much worse than reality – and it definitely results in significant roadblocks to success).

3. Listen. Provide a vehicle for people to communicate their concerns, ideas etc. You don’t have to have all the answers; just listen. Listening is an undervalued and underused skill – use it! You’ll be surprised by the results – the key is to truly listen. Don’t think about your next appointment or what you’ll have for dinner. Focus your attention on listening.

I’ve heard feedback that these secrets sound “too simple”. My response to that is “great” – I’ve found that it doesn’t matter if it is simple or complex. The result is what matters, and these secrets “work”. Why waste time with a complicated and hard to understand process if you can achieve the same results or better ones following a simple one?