Supply Chain Briefing

According to this week’s GDP report, the real growth rate was minimal (around 1.1%) during the first quarter. On the other hand, inflation remains high, around 5.3%. This seems to reflect stagflation. Unfortunately, business equipment spending was around -7.3%, and inventories are down. PMI (Purchasing Managers’ Index), an indication of manufacturing activity, cooled in March to 46.3% (anything less than 50% is negative). Yet the consumers kept spending. The bottom line: Businesses are concerned about this business environment yet it appears inflation will not ease.

On the other hand, what are companies experiencing? Orders remain strong. Clients continue to gain orders. Companies are expanding/ reshoring some production (such as Tesla, Taiwan Semiconductor Manufacturing Company (TSMG), Eli Lily, and many more), and orders are extending through the supply chain. Also, since inventories are coming down, businesses will have to ramp back up to meet customer orders. P&G, Coca-Cola, Caterpillar and others are saying demand is higher than they thought it would be. From a client point-of-view, some clients are prioritizing customer orders. After all, it is quite the challenge to find high-skilled manufacturing workers.

What Are the Smart & Successful Doing?

The smart companies are seeing the opportunity to TAKE CONTROL of their future. There will be more opportunities than at any other time in U.S. history to move into a market leadership position. The only time that comes close is the Great Depression. More companies shot up for decades to come. Interestingly, they were the ones that invested wisely when everyone else battened down the hatches.

What should you be thinking?

  • Start by being practical: Right-size inventory, implement best practice demand and supply planning and scheduling processes to improve your customer service, operational performance (reduce costs in a smart way), and working capital simultaneously. Roll out technology and automation to minimize costs and meet customer commitments. Focus on uncommon common sense supply chain and operational improvements.
  • Look to the future: You have to stay ahead of rapidly changing conditions. Roll out a SIOP (Sales Inventory Operations Planning) process, also known as S&OP, to see into the future so that you can make key decisions ahead of time (make vs. buy, source new suppliers, establish partnerships, capital investment needs, cash flow requirements, etc.)
  • Be Resilient: You have no option but to build resiliency into your organization. How do you scale up or scale down rapidly without losing your key talent, customers, etc.?
  • Innovate: Focus your people on the future. What do your ideal customers need? How can you do it better than the rest? Best yet, it will engage your people on thinking forward.
  • Invest smartly: When your competition struggles, will you be ready? You will need to have the ‘right’ talent, technology, and infrastructure in place to succeed.
  • Leverage technology: You will not succeed walking when you competition is 5 steps ahead and can get “there” 20 times quicker in a higher quality way, with a superior customer experience, and with less cost and complication (automation, robotics, predictive analytics, AI, IoT, digital twins, ERP, etc.).

Please contact us with stories, issues, and opportunities on what you’re doing to succeed and take advantage of the opportunities while your competition cuts costs and loses marketshare. And, please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Learn more about these topics in our blog and download your complimentary copy of our eBooks including our new release, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Success.