As originally published in Aftermarket Business World – May 2, 2019
Lisa Anderson, president and founder of LMA Consulting Group, is a supply chain consultant for manufacturers and distributors. Earlier this year, LMA released a report, “Manufacturing & Supply Chain in the New Normal”, that includes insight from a number of industry experts and executives on current trends in logistics and supply chain management.
In the report you talk about the “Amazon Effect,” which has pushed more companies to accelerate shipping and lower costs. How has this impacted manufacturing, particularly when it comes to near-shoring production?
Everyone is asking for rapid delivery. Most of my clients do not have Amazon as a customer, but even in aerospace and other industries, companies are asking for quicker delivery. Even more of a challenge these days is the idea of last-minute changes to the order. The order can change whenever the customer wants to change it, even after it ships. They just expect that to be dealt with. You have to have a very integrated, visible supply chain, one that is agile and flexible. That can add a lot of complications if you are sourcing in Asia.
More companies are looking at reshoring or near-sourcing in the U.S. and in Mexico. But they also need to be located very close to their customer base. It really depends on where that customer base is. It becomes attractive to manufacturers, particularly if you can implement automation technology, advanced manufacturing and 3D printing so you can be more flexible and lower costs, yet still be on-demand with customers and close by.
What changes are companies making to their logistics networks to accommodate these demands?
It depends on the industry, but everybody from manufacturing to transportation and distribution is getting squeezed in terms of margins and efficiency. They are looking at automation, robotics, artificial intelligence, and how they can do what they are doing while having lower labor costs. Beyond that, it’s hard to find talent. You don’t have to hire a machine; you can buy a machine.
Is there any indication that there may be some relief when it comes to logistics cost in the future?
There are mixed messages. Most of my clients are not seeing that happening, but there is a general feeling that it might. Right now you have to pay more to have reliable transportation. Its very important because customers are demanding higher levels of service. There is some thought that you should be flexible moving forward in terms of transportation capacity.