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Originally published on Patrick Daly Interlinks Podcast on 3/12/2024

The post Building Agility and Resilience for Business in 2024 appeared first on LMA-Consulting Group, a supply chain consulting firm.

CLAREMONT, CALIFORNIA – February 26, 2024 –  Lisa Anderson, Lisa Anderson, MBA, CSCP, CLTD, President of LMA Consulting Group Inc., a leader in supply chain optimization and transformation, has recently launched the innovative Supply Chain Profitability Assessment. This cutting-edge tool prompts supply chain professionals, operations executives and senior leaders to introspect and critically assess various facets of their supply chains that affect customer performance, with a focus on flexibility and efficiency.

Participants respond to targeted yes/no questions, encouraging them to reflect on their current practices and identify potential areas for enhancement. The assessment covers critical factors such as order fulfillment tracking, production data accuracy, on-time delivery rates and inventory level forecasting,

“In today’s volatile supply chain environment, it’s crucial for professionals to focus on agility and thinking ahead strategically. Customers have high expectations. Keeping the supply chain optimized and agile can meet and even exceed expectations, resulting in continued profitability,” commented Ms. Anderson. “Even high-performing supply chains have room for improvement. The key is planning, communication and establishing contingencies to mitigate long-term effects of disruptions.”

The Supply Chain Profitability Assessment is built on LMA Consulting’s extensive experience in helping businesses navigate and thrive amidst supply chain disruptions and growth. It is an invitation for professionals to critically evaluate their supply chain operations and identify opportunities for strategic improvement.

LMA Consulting invites supply chain professionals to take the Supply Chain Profitability Assessment and embark on a journey toward optimized supply chain excellence. To take the Assessment, click this link. The tool serves as a gateway to transforming supply chain operations, ensuring they are maximized for efficiency and profitability.

LMA Consulting specializes in guiding businesses through turbulent times with strategic formulation, comprehensive supply chain transformation and resilience-building solutions. For more insights, download Ms. Anderson’s eBook, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., specializing in manufacturing strategy and end-to-end supply chain transformation.  A recognized supply chain thought leader, Ms. Anderson has been named a Top 40 B2B Tech Influencer by arketi group, a Top 16 ERP Expert to Follow by Washington-Frank, among the Top 10 Women in Supply Chain by Warner PR, in the top 55 Supply Chain & Logistics Experts by flexport, and a woman leader in Supply Chain by RateLinx.  Her primer, “I’ve Been Thinking.” offers strategies for creating bold customer promises and profits. An expert on the SIOP process, advancing innovation and enhancing supply chain resilience, Ms. Anderson is regularly interviewed and quoted by leading publications. For information, sign up for her Profit Through People® Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.                 
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Media Contact Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com

The post Lisa Anderson, Manufacturing & Supply Chain Expert Releases Supply Chain Profitability Assessment to Drive Customer Performance through Optimization and Efficiency appeared first on LMA-Consulting Group, a supply chain consulting firm.

CLAREMONT, CALIFORNIA – January 25, 2024 –  Amidst escalating global supply chain challenges, LMA Consulting Group remains at the forefront of offering strategic solutions. Lisa Anderson, MBA, CSCP, CLTD, President of LMA Consulting Group Inc., highlights the critical situation: “The recent turmoil in the Red Sea, triggered by Houthi drone and missile attacks, has significantly amplified risks in global shipping, particularly affecting the Suez Canal and Red Sea routes. These complexities, combined with ongoing disruptions at the Panama Canal, underscore the urgent need for agile and robust supply chain management.”  

The Red Sea, a vital maritime artery, is now a high-risk zone due to geopolitical tensions. Houthi attacks have forced a significant rerouting of shipping lines, with many opting for the longer journey around the southern tip of Africa.  This detour, while safer, adds around ten days and 1900 nautical miles to typical Asia-North Europe services, escalating costs and prolonging delivery times.  

Additionally, the Panama Canal faces challenges from drought-induced vessel limitations, further exacerbating global supply chain disruptions. Its reduced capacity is compelling more ships to navigate through the already stressed Suez Canal.

Ms. Anderson advises, “In this volatile global context, businesses must swiftly adapt and strategically plan ahead. Exploring alternate routes, diversifying supply sources and considering nearshoring or reshoring are imperative to mitigate these emerging risks.“

LMA Consulting Group is at the forefront, aiding clients in traversing these intricate challenges. By implementing a comprehensive Sales Inventory Operations Planning (SIOP) process, businesses can boost agility, secure capacity and maintain a dependable supply chain despite these disruptions. Companies that had preemptively diversified their manufacturing and supply chain networks are now experiencing the benefits of reduced risks and enhanced customer service.

LMA Consulting specializes in guiding businesses through turbulent times with strategic planning, comprehensive supply chain transformation and resilience-building solutions. For more insights, download Ms. Anderson’s eBook SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., specializing in manufacturing strategy and end-to-end supply chain transformation.  A recognized supply chain thought leader, Ms. Anderson has been named a Top 40 B2B Tech Influencer by arketi group, a Top 16 ERP Expert to Follow by Washington-Frank, among the Top 10 Women in Supply Chain by Warner PR, in the top 55 Supply Chain & Logistics Experts by flexport, and a woman leader in Supply Chain by RateLinx.  Her primer, “I’ve Been Thinking.” offers strategies for creating bold customer promises and profits. An expert on the SIOP process, advancing innovation and enhancing supply chain resilience, Ms. Anderson is regularly interviewed and quoted by leading publications. For information, sign up for her Profit Through People® Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.                 

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Media Contact Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com

The post Lisa Anderson, Manufacturing & Supply Chain Expert Addresses Increased Supply Chain Volatility Amidst Red Sea Tensions and Global Disruptions appeared first on LMA-Consulting Group, a supply chain consulting firm.

The best consulting clients are razor focused on supply chain volatility, risk and capacity. The recent events in the Red Sea highlight these critical priorities. As Houthi drone and missile attacks create chaos in the Red Sea, shipping container lines play it day by day as to whether to brave an attack or sail around the southern tip of Africa. If they reroute, it adds approximately 10 days and 1900 nautical miles onto a typical Asia-North Europe service. Additionally, some ships go through the Suez Canal for the East Coast of the U.S. This route has increased with the recent reduced capacity of the Panama Canal. Read our recent article, Supply Chain Optimization Remains a Priority as the Panama Canal Worsens on those issues.

High Risk in the Red Sea

What started with an Iran-backed Houthi attack on container shipping lines sympathetic to Israel has blossomed into a volatile, risk-laden decision to sail through the Suez Canal. For example, there was an attack on an MSC ship sailing from Saudi Arabia to Pakistan. According to Freightos CEO, approximately 50% of ships have been diverted from the Suez Canal, reducing capacity (due to extended lead sailing time) and increasing rates by around 30%. Safety is top priority, and CEOs are evaluating risk on a daily basis.

Alternate Routes & Sources of Supply

Clients are starting to ship to the L.A. and Long Beach ports to transport across the country to the East Coast; however, this change cannot happen rapidly, and adds time and cost to shipments. For quicker needs, companies are sending product by air freight to quickly respond to changing customer needs. Certainly, air freight is more expensive, thus inflating prices further. More and more companies are realizing they must reshore, nearshore, and take control of their ability to serve customers. Some are finding backup sources of supply while others are expanding their manufacturing footprint. The bottom line is supply chains are on the move.

Mexico Border Closures Impact Intermodal Trains

According to the Journal of Commerce, a major intermodal rail connection between Mexico and the United States was halted after US authorities shut down border crossings at Eagle Pass and El Paso in Texas so customs officers could help US Border Patrol process a flood of migrants. The two major class 1 railroads, Union Pacific Railroad (UP) and BNSF Railway, were impacted. Unfortunately, this is the second time in three months the Eagle Pass Crossing was shut down due to a surge in migrant arrivals. Intermodal has opened up again; however, UP and BNSF have a logjam of laden containers built up that need to be transported to the US.

Again, customers waiting on this freight experienced delays and reduced capacity. It is clear that risk and volatility remains high throughout the world with goods movement.

Forward-Thinking Companies Thrive

Smart executives are thinking ahead, planning capacity and backup capacity with a SIOP (Sales Inventory Operations Planning) process and successfully navigating these ongoing disruptions. Forward-thinking companies are gaining an advantage as they have planned ahead to be agile, pivot quickly, and most importantly, are ahead of the curve in securing capacity. For example, a proactive client moved production from China to Vietnam ahead of the pandemic when China shut down production with Zero-COVID policies. Again, they are ahead of the curve by expanding capacity in Mexico and the U.S. to ensure sufficient capacity to supply key customers. While the competition struggles, they can provide rapid deliveries with increased prices and gain long-term customers.

The key is to proactively address these issues to mitigate the impacts to the customer and cost, and longer term, to revise your manufacturing and supply chain footprint and network to best support profitable growth and mitigate risk.

If you are interested in reading more on this topic:
Supply Chain Risk Has Risen to the Top with the White House Council

The post Supply Chain Volatility, Risk & Capacity Remain Critical Priorities as Highlighted by Mexico Train & Red Sea Delays appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in a Harvard Business Review report about supply chain volatility and uncertainty that are part of the new normal.

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Since early 2020, supply chain disruptions have captured global attention like never before. Newspaper headlines reported dramatic events ranging from surging toilet paper demand to empty store shelves to a ship blocking the Suez Canal. These events only worsened the existing global supply chain crisis. Much of the disruption was pandemic-related, but it hasn’t waned nearly as much as Covid-19 has. Many organizations find that supply chain volatility and uncertainty are part of the new normal.

Consequently, companies find it difficult to accurately predict demand. In
February 2023, Harvard Business Review Analytic Services conducted a
global survey of 459 respondents familiar with their organizations’ supply
chain operations. The survey found that of those whose organizations
execute demand forecasts, 69% say, on average, the accuracy of their demand
forecasts has been below 80% over the past three years. And respondents
are not particularly pleased by this result; only 8% indicate that they are
“very satisfied” with the average level of accuracy of their organization’s
demand forecasts.

Indeed, forecasts are inherently wrong. The questions often are just how
wrong a forecast will be and when that failure will occur.

Extreme Events Changed the Game

It is difficult for organizations to predict demand and plan operations if they can’t be certain about what lies ahead. Lisa Anderson, founder of Claremont, Calif.-based LMA Consulting, says the military term “VUCA”—volatile, uncertain, complex, and ambiguous—best describes global supply chains at present.

“Since the pandemic, new issues have arisen—the Russia-Ukraine war, for example—that are causing issues in many supply chains,” she says. “Oil and natural gas are used in the production of multiple products, and this affects everything from medical devices to fertilizer and food production. When you add the heightened tensions between the U.S. and China, and extreme weather events, the picture is one of continued disruption. We have to stop waiting for it to end. It’s not going to end.”

To read the full report, click here.

Originally published on Harvard Business Review, June 15, 2023

The post Forecasting in Flux: Importance of Supply Chain Flexibility appeared first on LMA-Consulting Group, a supply chain consulting firm.

Customer service has suffered in the last few years. Yet providing a superior customer experience is paramount to success especially during these turbulent times of volatility, uncertainty, complexity and ambiguity (VUCA). As we see this trend become a reality across a wide spectrum of companies and industries, proactive backlog management has proven effective in ensuring consistent high service levels (on-time-in-full OTIF, quick lead times, and proactive communications).

The Customer Service Priority

Only organizations that provide a superior customer experience will succeed over the long term. Customer service matters especially in volatile and turbulent times. According to Salesforce, 88% of buyers say experience matters as much as a company’s products or services. Do executives pay as much attention to customer service as they do product and profit?

Since customer service suffered during and post pandemic, it has provided opportunities for those companies that prioritize service. According to Forrester, customer experience quality levels have dropped almost 20% in the past year while consumers have less patience than pre-pandemic (according to Netomi’s State of Customer Service Report). As forward-thinking executives see this opportunity, there will be vast opportunities for growth.

Although companies have struggled to satisfy customers, they must flip the equation to drive growth. According to the Digital-First Customer Experience Report by NICE, 95% of consumers say customer service impacts their brand loyalty, naming easy access, self-service, and professional agents as important factors. Every client has numerous examples that reflect this priority. For example, a customer of a building products manufacturer requested an expedite to satisfy a customer request. Because the manufacturer was willing to prioritize what their key customer needed, that customer looked for opportunities to expand business with them down-the-line. They knew that service was essential during turbulent times, and so proactively decided they wanted to partner with suppliers they could count on.

Backlog Management Processes

Although one of the best ways to improve customer service is to improve planning processes so that the “right” products are in the “right” place at the “right” time (read more about these processes in our article, “Proactive Planning to Grow & Scale“), one of the most important processes to ensure success is a proactive backlog management process.

An effective backlog management process sounds quite simple although no matter the type of business, it can prove to be essential to ensuring high customer service levels and OTIF (on-time-in-full). Backlog management can be as simple as downloading an open order report and “working” the report. In businesses that solely ship from stock, it can be essentially simple, assuming the “right” inventory is in stock. In this situation, the Shipping Department would go down the backlog report and ship orders with the only nuance being if they scheduled trucks or if customers picked up orders.

In most situations, the backlog will include orders that require more than just shipping. Typically, orders can be in multiple statuses. Several that pop to mind include:

• Customer orders with inventory to ship
• Customer orders with not enough inventory to ship
• Customer orders waiting on a replenishment order (transfer order) from another facility
• Customer orders waiting on a purchase receipt
• Customer orders scheduled in production
• Customer orders that have to go through multiple production steps in production
• Customer orders that have to go through an outside processing step
• Customer orders that require testing prior to shipment
• Customer orders waiting on customer approval of drawings
• Customer orders waiting on production engineering
• Customer orders waiting on design engineering
• Customer orders in a pre-engineering status
• Customer orders that are ready to ship but waiting on the truck to be scheduled or the customer to pick it up
• Customer orders waiting on international shipping paperwork.
• Customer orders waiting on payment. This could be payment upfront or a customer on credit hold.
• Customer orders waiting on quality holds.
• Customer orders waiting on customer holds.
• Customer orders waiting on responses from the customer.
• Customer orders changes.
• Customer orders that are backordered
• Customer orders that are past due
• Customer orders waiting on additional lines, items or orders so that they can ship efficiently
• Customer orders that are waiting on items that must ship together. For example, in aerospace, there are often right and left parts. Without both, the customer cannot proceed.
• And the list goes on……

Proactive Backlog Management Processes

Thus, given the number of statuses and situations that can arise during the order fulfillment process, proactively managing backlog includes determining which status orders are in and what it will take to get the order out the door on time. The reason it becomes complex can be due to several factors:

• The number of order status possibilities
• The number of people/ departments involved in the process
• The communication links between the departments
• System visibility of the order statuses and timeliness of transactions
• Reporting capabilities to support the backlog management process

Our most successful clients put together a cross-functional process with a daily and weekly cadence with key touchpoints.

Client Success Stories on Backlog Management

A building products manufacturer that was 80/20 make-to-stock with a small segment of make-to-order products struggled with OTIF levels. Thus, instead of constantly looking in the rearview mirror and trying to explain past due, we worked with them to look forward. We developed a view of the backlog report that was due to ship in the next week.

Next, we developed logic to assign the orders due in the next week to specific people or departments. For example, if it was on customer hold, it was assigned to Customer Service. If it was for the Canada location, it was assigned to a different group. If it was a certain product line and didn’t have inventory to cover all orders, it was assigned to the appropriate planner to see if it was scheduled and on track. If it had inventory, it was assigned to Shipping to check on the shipping schedule and to follow up on transportation.

Although reviewed daily, we set a weekly cadence to get together as a cross functional team. We met each Friday to review past due, reasons for past due (which were summarized by category), projected shipments and/or projected past due, reasons for projected past due and action items if there was anything that could be done to get the order done on time. We also discussed recommendations and improvements to the process. By following this backlog management process as well as working on production and replenishment planning improvements, service levels went from 38% to the 90%’s. To hear from our supply chain consulting client directly, listen to our client success story video.

Similarly, in an aerospace manufacturer, past due was climbing, and so we worked with the client to implement a backlog process. In this situation, there were multiple steps to the manufacturing process. Thus, the main focus in managing the backlog report was to trace the progress through the shop. For example, as the item was staged for production, it went into a staging status. As it went through the first machine, it was labeled as step 1 (noting the machine name). Although it was planned for steps 2, 3 and 4 based on standard run rates and queue times, knowing the order started production in step 1 alerted future steps of progress. If materials were short that impacted step 3, the issue was noted and status tracked daily.

By meeting with cross-functional group on a daily basis, service levels were improved from the low 60%’s to the low 90%’s. Once they gained visibility to upcoming work with better clarity, they saw capacity shortfalls. By adding capacity where required, they improved to the high 90%’s. Once ahead of the backlog process, we looked for advanced technology solutions to automate and improve visibility across order statuses to minimize meeting time and to focus on exceptions instead.

The Bottom Line

A secret to success in improving service levels is to roll out a proactive backlog management process. Depending on the complexity of the business, a proactive approach to backlog management could be as simple as prioritizing shipping based on customer due dates or it could involve tracking multiple steps and statuses across multiple departments. Changing from reactive to proactive will rapidly improve customer service levels. If you are interested in talking about implementing a best practice backlog management process tailored to your business needs to improve your customer experience, contact us.

Did you like this article?  Continue reading on this topic:
Production Planning Best Practices to Recover Capacity

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Global supply chains are on the move. Executives have been hit with the harsh reality that the risk (supply chain, geopolitical, cyber, IP, etc.) is far higher than they realized when they outsourced with an eye to cost. In addition to that 80 pound gorilla, they also have suffered with delays, disruptions, and uncertainty in serving customers due to lengthy distances and logistical risk. Thus, supply chains are on the move. Strategies need to be rethought, the end-to-end supply chain assessed, and future customer needs evaluated to get in front of this changing landscape. SIOP (Sales Inventory Operations Planning) is a key process and toolset for successfully navigating this transition with profitable growth fueling the process.

Risks Abound in the Global Supply Chain

Risks abound in the global supply chain. From Russia-Ukraine to China’s extreme risk including threats to Taiwan to the increasing cyber risk, executives are struggling to navigate the global supply chain. A few critical points that “tell the story” of risk include:

• Russia-Ukraine war: The war has disrupted the critical commodities of oil and natural gas. Europe put sanctions on Russia which left them in a bad situation in getting enough energy to power their current lifestyle as well as critical manufacturing, logistics and infrastructure needs. Thus, Europe has been scrambling to address backup sources of supply. In the interim, Russia sold oil and natural gas to China and India. The end result is price escalation in addition to “supply on the move”. Oil and natural gas is used in countless products from medical devices to glasses to phones, thus impacting the global supply chain.
• The China risk factor: China is simply a mountain of risk. China is the number one manufacturer in the world and accounts for almost 30% of the world’s output. Thus, from internal issues (severe water and energy shortages with “solutions” of permitting two coal plants a week) to threatening Taiwan (putting 90% of the world’s advanced computer chips and 60% of the world’s standard computer chips at risk) to monopolizing rare earths (produces 60% and processes 85% of the world’s rare earths) to buying up critical infrastructure around the world (such as controlling both ends of the Panama Canal) and controlling the South China Seas, China wants to control the world’s supply chains.
• Talent & Technology: Resources are limited around the world. For example, according to EY and an iMocha report, 81% of organizations are experiencing a shortage in skilled tech workers. Similarly, the risk of cyber attacks and supply chain security issues increase with each passing day. For example, according to Deloitte’s report 2023 Global Future of Cyber Survey 2023, 91% of organizations report experiencing one or more cyber incidents or breaches.

And now Israel is at war. Volatility, uncertainty, complexity and ambiguity (VUCA) is at an all-time high in recent history. The bottom line is that risks have reached a level that is unacceptable to many executives.

SIOP to Devise a New Path Forward

SIOP (Sales Inventory Operations Planning), also known as S&OP is a process that will help you navigate changing business conditions (such as these extreme risks). SIOP starts with a view into your future customer demand (sales forecast, customer orders, quotes, CRM) and translates that into manufacturing and supply chain requirements. The process will highlight capacity constraints (production, storage, resource), upcoming bottlenecks, forecasts for investment (equipment, inventory, resources), make vs buy decisions, and customer/ product profitability opportunities.

For example, when consulting with an industrial manufacturer that was concerned about risks in the end-to-end supply chain, and so used the SIOP process to visualize what should be done. Based on their demand plan, they were able to see impacts to their supply plans and where risks were in their current manufacturing and supply chain. Thus, they assessed and took action to transition to backup sources of supply, expand their supply base into India, pre-purchase critical commodities to give them time to assess their future needs, and they expanded regional manufacturing by sourcing offload suppliers. By taking these actions, they were able to secure supply to meet their aggressive growth plans.

Assessing Strategies

In our book, “SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth“, we discuss how SIOP will fuel transformative strategies for growth while mitigating risk.

• Supply chain footprint: SIOP looks forward to future customer requirements and determines how to reallocate manufacturing and change the supply chain footprint (reshoring, nearshoring, regional manufacturing, additive manufacturing) to support key customers and grow the business while mitigating risk in how product is manufactured, distributed, transported and delivered in the order fulfillment process. Vast changes are occurring. For example, Apple is moving from China to India, Dell is moving from China to Vietnam, HP is moving from China to Mexico, and Intel is building a ‘mega’ factory in Germany and expanding capacity in the U.S. with its first new manufacturing facility in 40 years.
• Supply chains on the move: As the supply chain footprint evolves, the global logistics landscape must change to support it. Thus, as I said at the IMUI international conference, shipping routes will change and evolve with changing business conditions and risks. For example, in addition to keeping up with manufacturing changes, as China becomes risk laden and the South China Seas becomes uncertain at best, companies will continue to move manufacturing and/or change shipping routes. As delays consume shipping routes such as the Panama Canal, companies will find alternatives, and as strike risks impact supply chains such as the West Coast ports, shipping routes move (and the East Coast gains in this example).
• Examining links: SIOP opens the door to examine every link in the chain. From enabling margin analysis by product groupings, customers, markets and regions to examining the customer experience, the SIOP provides for holistic as well as departmental strategies.
• Margin vs risk: SIOP also provides the data and process for evaluating cost reduction opportunities, pricing strategies, sales channel and marketing options, operations and supply chain alternatives, and inventory and capacity fulfillment options while assessing customer value-add business risk.
• Talent & Technology roadmap: Last but not least, SIOP translates demand and supply plans into talent and technology requirements. More importantly, the resource requirements can will be impacted by the technology roadmap, and so the best SIOP strategies proactively address talent and technology to optimize, digitize and thrive. There are simply not enough resources at any company. Only those that automate, utilize technology and innovate will survive, let along thrive.

As risks abound, the best in class will utilize the proven process of SIOP to proactively navigate changing conditions in a manner that is not only supportive of profitable growth but is also focused on critical risks and long-term success.

Innovation: A Forward Take on Risk

Beyond the uncommon common sense strategies to ensure predictable revenue and EBITDA growth, executives must develop a culture of innovation. The world has become not only complex and convoluted, but also a maze of geopolitical risk dependent on advanced technologies. These advanced technologies escalate risk further as they are dependent on commodities in risk abundant regions of the world and carry the threat of cyber attacks. Thus, the smart are innovating. Only forward-thinking innovators willing to do what most executives will not do (such as invest when everyone else panics) while remaining calm, resilient and strong will thrive for decades to come.

Did you like this article?  Continue reading on this topic:
SIOP/ S&OP Playbook: Creating Predictability & EBITDA Growth

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Executives are tired after surviving the pandemic, navigating supply chain disruptions, handling soaring inflation, and dealing with one challenge after another. However, it is not time to rest as supply chain risks abound. From the Russia-Ukraine war to China’s aggression in the South China Sea and as well as hurricanes, strikes, and bank failures, supply chain risks are not abating; they are simply changing.

Prepared companies will thrive. The rest will dwindle and die. For example, the recent labor unrest was the last straw for Yellow Freight after years where they struggled to stay afloat. Which will you be?

Prioritizing Supply Chain Risks

80% of success is derived from what you focus on. Thus, priorities are vital. Each industry is different, and each company is different. Assess the likelihood and impact of your risks. For example, if you have a union, evaluate your risk of labor unrest, and assess the impact if it occurs. For example, in working with a beverage manufacturer that had a union, their risk of labor unrest was higher than a non-union shop; however, the likelihood was small because of their proactive process. Thus, although the impact of production shutdown would be high with unhappy customers, it wasn’t considered a priority risk.

In another example, a household manufacturer purchased materials from China and so had a high likelihood of disruption if China gets into a conflict with a neighbor in the South China Sea, yet they had a low impact since they have been purchasing 20% of their materials from a backup supplier in the U.S. who agreed to ramp up as needed. In this case, although the likelihood of risk is high, the impact is low, and so it wasn’t a priority. On the other hand, an industrial manufacturer purchased a key material from the Russia/ Ukraine region and didn’t have an alternate supplier outside of the region. Thus, not only was the likelihood high, but the impact was also high since it could shut down production, elevating it to a top priority.

Preparing for Supply Chain Risks

Smart manufacturers will focus on prevention and preparation to mitigate priority risks. For example, instead of hoping your union will continue to function without increasing costs to the point where you might have to file for bankruptcy as occurred in the Yellow Freight example, smart manufacturers will proactively meet with the union, establish, and maintain lines of communication, and roll out advanced systems, technologies, and applications to improve employee engagement and the customer experience.

In the industrial manufacturer example, the Purchasing team collaborated with their demand planning and SIOP (Sales Inventory Operations Planning) teams to confirm the sales forecast, secure supply for a year, and to pursue alternate sources of supply and the expansion of regional manufacturing. The best companies partner with suppliers to ensure excess supply and/or capacity availability in areas of strategic potential and differentiation so that they can take advantage of opportunities as they arise.

The Bottom Line

Those companies that prioritize, prepare, and prevent supply chain risks will be able to take advantage of opportunities to grow and thrive while the rest deteriorate.

Originally published in Brushware, September – October 2023

The post Prepared Manufacturers Will Thrive as Supply Chain Risks Abound appeared first on LMA-Consulting Group, a supply chain consulting firm.

Why Is Inventory Accuracy Foundational to Success?

Inventory accuracy is foundational to success. Most clients aren’t concerned about inventory, and they shouldn’t be if they can count on what their system says. However, in every case, inventory must be maintained to ensure your foundation is strong and will support customer service, revenue growth, operational efficiency, and cash flow goals. It is also foundational for maintaining financial records and a foundational requirement for Sarbanes Oxley.

For example, a security products manufacturing client called with concerns about decreasing profits. They were concerned that they couldn’t predict their costs and therefore their profit, and they thought it related to their use of the system. After performing an assessment of their people, processes and systems, it was clear that putting costs in their system didn’t make sense until they had a solid foundation to build upon. Inventory accuracy was one of those foundational elements that had to get in place before advanced layers of process and system capabilities were added. Fast-forward four months, and their inventory accuracy was intact, base product data was available, and they had gained control of their business and were better able to predict performance – and could advance from there.

Essential Inventory Accuracy Basics

Inventory accuracy boils down to a few simple concepts including:

• Process disciplines: The 80/20 of inventory accuracy success requires process disciplines to be implemented throughout your company. The tricky part of this equation is explaining the importance, establishing the connection points between processes, marrying the processes with the systems, and ensuring priorities are in place to complete processes and system transactions on a timely basis, in the correct sequence, and with the appropriate controls in place. Process disciplines cover from receiving and production to transfers (intercompany and intracompany) and shipments. In essence, any transaction that impacts inventory must be included.
• Use of the system: If process disciplines are intact, the only other root cause we’ve seen over a combined 100 years of manufacturing and distribution experience is the use of the system. Not all scenarios are created equal. For example, in several situations, intracompany transfers were an issue from an inventory standpoint. In a consumer products manufacturer, their system didn’t allow for tracking intransit properly, and so their inventory “disappeared” while intransit. In a building and construction products manufacturer, their system was highly capable, but the long-term processes didn’t account for transfers properly. Again, the result was “invisible” inventory.
• Root cause analysis: It is common to have inventory inaccuracies. No client has 100% inventory accuracy over the course of a year as perfection is cost prohibitive. On the other hand, many clients can maintain reasonable inventory accuracy with process disciplines and cycle counting. This suffices whereas only the best (around 20-30%) have substantial root cause analysis built into the culture and routines. If reasonable “works”, why strive for the best? They have fewer high skilled resources tied up in maintaining the foundation. Instead, these key resources are focused on profitable growth and advancing the business.

With these three essential inventory accuracy basics, a strong foundation is intact.

Maintaining Inventory Accuracy with Cycle Counting

The key to maintaining inventory accuracy is cycle counting. In essence, it is counting a subsection of your inventory on a daily basis to confirm your inventory accuracy foundation remains intact. Although there are many strategy options, common sense rules the day. ABC cycle counting means you count the material items (in terms of value, volume and/or customer impact) more frequently (that usually account for 20% of your items that equal 80% of your value) while counting the least material items (that usually account for 80% of your items that equal 20% of your value) less frequently. Instead of counting and adjusting, counting and adjusting in a vicious cycle, you focus attention on root cause analysis and resolution. Doing this for the “A” items will positively “B” and “C” items as well since the same process disciplines are required.

How Does a Physical Inventory Fit Into the Picture?

In most situations, once you implement a solid cycle counting process where you cycle through your full inventory at minimum on a yearly basis, you can provide evidence to Finance Auditors that your inventory will be “better” than performing a physical inventory. For example, if the people counting aren’t familiar with the units of measure and products, counting errors increase. Thus, many companies no longer require a full physical inventory. On the other hand, if inventory accuracy metrics start going off-track, it might be time to regroup with a physical inventory and a reimplementation of cycle counting.

The Bottom Line

You don’t want to be sitting happily and unwittingly in a house of cards. Thus, don’t have your house sit on a faulty foundation. Prioritize the appropriate resources to set up solid inventory accuracy processes and tracking mechanisms. If you aren’t in front of inventory variances and root causes, consider bringing on a supply chain consultant. You won’t need significant expertise long term for inventory accuracy alone, and so a short-term expert might fit that bill. Once intact, provide training and education, and make sure a regular review of metrics with Executives is a part of the process. It can be incorporated into the metrics slides of a SIOP (Sales Inventory Operations Planning), also known as S&OP, process to get a regular cadence with Executives.

Please contact us with your stories, issues, and ideas on inventory accuracy and cycle counting. And, please keep us in the loop of your situation and how we can help your organization upgrade your inventory accuracy processes to support profitable growth in addition to satisfying compliance objectives.

P.S. To get ahead of the curve on where to focus for the best results to build on your foundation to get ahead of the competition, download our complimentary report, and The Road Ahead: Business, Supply Chain & the World Order.

The post Why Is Inventory Accuracy Foundational to Success? appeared first on LMA-Consulting Group, a supply chain consulting firm.

CLAREMONT, Calif., August 1, 2023/ExpertClick/ — Proactive innovation and disruption are helping businesses to succeed in the current volatile economic environment, according to The Society for the Advancement of Consulting® (SAC). The best companies are leveraging their culture of innovation and advanced technologies to enhance customer experience. Without it, companies risk extinction.

Advanced ERP Boosts Manufacturing in Current Unstable Economy

“Manufacturers must innovate and use advanced technologies to take advantage of these volatile economic times,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc and manufacturing expert known as the Strongest Link in Your Supply Chain®. “Manufacturers need to do something different than simply trying to navigate increased interest rates, labor costs, raw material, and component costs, while also managing elevated customer expectations.

“Successful executives will create a culture of innovation, so that they are more than simply resilient. They leapfrog the competition and take advantage of opportunities,” she adds. “Instead of focusing solely on continuous improvement, they fast-track progress by expanding the use of ERP with advancements in AI, e-commerce, advanced planning and scheduling, SIOP, IoT, digital twins, and much more. The appropriate use of systems and technology creates a superior customer experience, maximizes profitability, and supports sustainable growth.”

Five Crucial Questions to Standout in a Shaky Economy

“Stand out from your competitors!” advises Kathleen McEntee, president of Kathleen McEntee and Associates Ltd, a full-service marketing firm focused on delivering results by distinguishing businesses with straightforward messaging addressed in the right media to the right audiences. “When the economy gets wobbly, organizations need to shine.”

“Leaders should pose five questions,” she explains. “What is our customer experience? How can it be improved? How do we distinguish our products and services from our competitors? How do we leverage technology to raise efficiency and improve our service and product delivery? And, are our employees true brand ambassadors?”

“Customers want a great experience, with products and services that stand apart from competitors,” notes McEntee. “Technology improves the customer experience, expands our products and services, and creates internal efficiencies. And, our employees should be living the brand.”

Use This Time to Gain Competitive Advantage

Uncertainty and volatility may generate disruption, but they can also create opportunities. Those companies that look for ways to improve their customers’ experiences—in good time and bad—will thrive and prosper, says Linda Popky, president of Redwood Shores, CA-based strategic firm marketing firm Leverage2Market Associates, and author of the book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters.

“This is a great time to look for innovative ways to help your customers. Some times, that involves technology, but others it may mean adding a more human touch that your competitors are lacking,” she said.

Disrupt or Disappear is the New Business Reality

“The current economic conditions are not unstable but simply part of the New Normal® and new realities that all businesses will face,” says SAC Founder Alan Weiss, PhD. “Go on the offensive and create disruption and volatility if you intend to dominate your market. If you try to ‘wait this out’ you will probably disappear.”

As originally published on ExpertClick on August 1, 2023

The post Companies Eye Innovation and Disruption in Volatile Economy appeared first on LMA-Consulting Group, a supply chain consulting firm.