CLAREMONT, CA— Recent disruptions in supply chain operations have highlighted how important it is for manufacturers to plan ahead to not just manage today’s operations, but to also take advantage of big growth opportunities, according to The Society for the Advancement of Consulting® (SAC). To achieve scalability and profitability, businesses will need to effectively handle cashflow, lead times, and customer demand as well as leveraging well-integrated digital systems, innovating, and understanding customer behavior patterns like never before.
Alert Executives are Monitoring Changing Conditions and Behavior
“Across the board, manufacturing and supply chain clients are growing,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and manufacturing expert known for creating supply chain resiliency. “Those with an e-commerce component, or who serve sectors like construction, healthcare, and biotech, are growing at a breakneck pace. Their executives are alert to scaling up rapidly and increasing resilience to deal with changing conditions and unanticipated disruptions.
“Sales, inventory, and operations planning (SIOP) is gaining in popularity for two reasons,” adds Anderson. “First, there’s the need to project future revenues. Second is the importance of understanding changing patterns customer buying and service. Both reasons are critical to create a superior customer experience, increase profitability, and accelerate working capital.
“Executives are using this information to re-evaluate sourcing, determine whether to insource or outsource, reconfigure the supply chain network, implement technological advancements, and decide how to scale successfully,” she adds.
Shrewd Executives Find Their Warp Speed
“The one thing the COVID-19 pandemic has ingrained in businesses is that market conditions and change now occur at supersonic speed,” says Art Koch, President of Arthur Koch Management Consulting, LLC, based in Miami, FL. “Now that more regions and countries are starting to exit the COVID-19 pandemic, it’s critical that organizations are responsive enough to seize the opportunities of unpredictable market demand.
“Shrewd executives are leveraging partnerships to reduce supply chain risk, increase velocity to market, and reduce total cost of ownership,” Koch notes. “Too many companies are managing by looking in the rear-view mirror, trying to predict demand profiles similar to 2019. That tactic is a defensive maneuver that will leave you flat-footed behind the competition. Coming out of the pandemic, the best way to attain your target market is to play to win, look forward, and plan for the unexpected.”
Now is the Perfect Moment to Exploit Innovation Opportunities
“Over the last year, many of us in the supply chain sphere have been compelled to innovate in response to the restrictions imposed upon us by COVID”, says Patrick Daly, Managing Director of Alba Consulting, the Dublin, Ireland based supply chain strategy consultancy, and author of the book International Supply Chain Relationships: Creating Competitive Advantage in a Globalized Economy.
“Some of us are also realizing, that many of these innovations—although thrust upon us by the COVID emergency—have been very positive and will stay with us for the long term,” explains Daly.
“We have also realized that we are more highly resilient and have a surprising capacity to absorb larger degrees of innovation and change than perhaps we suspected,” he adds.
“Armed with this knowledge and learning, we should be asking ourselves what other innovations we can exploit right now to take advantage of the opportunities that are already taking shape as we look forward from COVID,” concludes Daly.
Clients Have Not Seen Anything Like This
“Shattered records. Strained. Unprecedented. Phantasmagorical. These are all terms used to describe the current situation at American ports, especially the ports of Los Angeles and Long Beach,” notes Elizabeth Warren, Global Logistics Specialist and CEO of Dialed-In Partners. “My clients have never seen anything like it—and we haven’t even hit traditional peak season yet, which is still to come in August.”
“The backlog of ships in the San Pedro Bay averages 30 a day, with an average wait time of more than a week,” explains Warren. “There’s a confluence of backlog issues stemming from the pandemic. Working from home is driving online purchases, since there’s no other outlet for spending. Port workers, labor, and truck drivers are out sick or quarantining. There’s a shortage of equipment and full warehouses.
“Combined, these backlog issues make a poisonous cocktail of supply chain disruption. To resolve the backlog in the short-term, ports are focusing on vaccinating workers, maximizing efficiencies, and reducing dwell time to move cargo out of the terminal faster,” she adds.
Examine Your Processes and Connection Points
“Growth and scalability are always top of mind for my clients, especially as we see rapid shifts in consumer behavior, supply networks, and workforces,” says Diane L. Garcia president of Lorraine Consulting, LLC, a supply chain management consultancy based in Portland, OR, and co-author of Thriving in the New Business Environment: Why the Strategic Supply Chain Matters.
“To scale your business successfully, your supply chain processes need to grow and adapt,” Garcia points out. “For processes to improve, they need to be well understood and each connection point examined by different areas of the business. Start by making these processes fully visible across the organization. Then begin to re-shape these procedures to support the business plan.”
The Right Place to Generate Cash
“Growth is the biggest cash generator in the supply chain. At the same time, growth can eradicate cash generation if it is not sustainable,” explains Antonio Zrilić, Managing Director of LOGIKO CONSULTING based in Zagreb, Croatia, and author of Six Step Inventory Optimization. “Any supply chain management decision on how to continue and enable growth has a significant impact on cash flow.”
“Chasing sales growth is quite expensive, so you need all the cash you can get. And I know just the place where to get it,” Zrilić adds. “We mostly help our clients grow by reducing and optimizing inventory—one of the biggest ‘eaters’ of cash. Our clients’ second favorite service is ‘Process Accelerator.’ By speeding up the process from order to delivery, they are shortening cash-to-cash cycles (C2C), while raising customer satisfaction, and increasing logistics and production capacity.”
Businesses are Failing to Build Well-Integrated Digital Systems
“Growth can kill a business as it runs out of cash. Having effective supply chain management strategies and tactics that are resilient and scalable are critical to successful growth,” says David Ogilvie, of David Ogilvie Consulting based in Brisbane, Australia. With over 30 plus years as a business owner and consultant, Ogilvie is well placed to advise executives and business owners on supply chain and supporting technologies.
“My work with clients has demonstrated that effective use of well-integrated digital systems, such as ERP (Enterprise Resource Planning) systems can also be a fantastic enabler,” advises Ogilvie. “Unfortunately, over 80% of digital transformations fail to produce the promised outcomes—meaning this is rarely achieved.”
“Supply chain management is more than managing inventory,” he adds. “It’s about scaling your business while making efficient use of capital. Growth equals risky situations with costly consequences needing careful management.”
Scalability Very Difficult in Australia Over the Next Two Years
“Growth and supply chain scalability are going to be very difficult in Australia over the next two years,” says Evan Bulmer, Director of EBAA, Australia’s leading expert in privately-held business.
“The overwhelming demand for such goods as cars and material for housing renovations, combined with a lack of supply doesn’t help businesses grow,” claims Bulmer. “It only allows businesses to secure a pipeline of revenue into the future. Car retailers can’t get stock. Builders can’t get building materials. Yet they’re still selling at record rate—just with way longer lead times. If the supply chain wasn’t a strategic issue before in your business, then it must be now.”
Originally published on SAC website: May 24, 2021