Lisa Anderson was quoted in Food Logistics’ Top 10 Trends to Shape Cold Food Chain in 2024 recently. With the help of some supply chain visibility, sustainable measures, more focus on people and the ability to pivot at a moment’s notice, 2024 is anyone’s and everyone’s game to succeed.

Top trends to watch in 2024

Nearshoring, risk mitigation and building resiliency. The top supply chain trends to watch in 2024 include a keen focus on mitigating supply chain risk, reshoring and nearshoring to source reliable production closer to customers, finding backup sources of supply, creating resiliency in the end-to-end supply chain, digitizing the supply chain, and keeping an eye on cybersecurity threats, according to Lisa Anderson, president, LMA Consulting Group, Inc.

“Since there is heightened risk in the global supply chain due to geopolitics, conflicts over natural resources, ongoing concerns related to the Russia-Ukraine war, South China Seas, new threats in the Suez Canal related to the Israel-Hamas conflict, Panama Canal issues related to drought, and concerns about natural disasters, labor negotiations/labor shortages, and cyber threats, smart executives are taking control,” she adds.

Sustainability. Despite all of the challenges and disruptions the supply chain industry faces, sustainability still remains a key trend for 2024, especially as companies race to deliver on their net-zero commitments by 2030.

“In many sectors, Scope 3 emissions can account for up to 80% of a company’s total emissions. Lowering Scope 3 presents one of the most significant opportunities for decarbonization, and the industry will look for opportunities to gain operational efficiencies,” Gerdeman says. “For example, our clients are using our analytics to optimize the mode, route, and equipment selection for temperature-sensitive goods, saving money by protecting products from freezing or spoilage, reducing refrigeration costs when cold blankets do the trick, reducing fuel costs, and lowering their carbon emissions.”

In fact, global food and beverage production accounts for roughly 34% of global greenhouse gas emissions (GHG), and according to the Food and Agricultural Organization, the food and beverage supply chain is on track to become the industry’s largest polluter. OXFAM found that the emissions of 10 of the largest food and beverage fleets equaled the total emissions of all Scandinavian countries combined.

State of transportation

The driver shortage still exists, diesel fuel costs are still on the rise and U.S. container imports continue to experience an uptick month-over-month.

The Yellow Freight bankruptcy also created a ripple effect on the industry, one that is still somewhat being felt.

“Customers had to scramble, opportunities arose for competitors, and the supply chain evolved,” Anderson says. “Similarly, the threat of a potential rail strike and West Coast port strike caused customers to transition to alternate modes of transportation and pursue alternate routes. The same is occurring with the UPS strike and the UAW strike as supply chains are moving to account for these types of issues.”

State of e-commerce

E-commerce in grocery didn’t really become a thing until COVID-19 forced several supermarkets and grocery retailers to create a B2C arm of their business almost overnight.

Fast forward to what will be 4 years later, and the rise of e-commerce in grocery is here to stay.

Similarly, B2B channels are also growing.

“For example, cold chain needs will explode as computer chip capacity comes online with the expansion of manufacturing with the CHIPS Act,” says Anderson. “Thus, cold chains are expanding at a rapid rate and will continue to thrive in 2024. Cold storage is limited, and even though there are inflationary pressures escalating the cost to build cold storage facilities, growth will be robust. Innovation will be essential to meeting these needs in a way that will provide customer value in a sustainable and profitable manner in 2024.”

What’s to come in 2024?

While 2023 may have been the Year of Bottlenecks, 2024 opens the door to longevity, peace and prosperity.

Yet to achieve those elements, companies must be more proactive, more agile and more forward-thinking.

“Instead of being reactive, forward-thinking executives are making the shift to being proactive. Thus, they are setting up a resilient supply chain with the ability to scale up/ down quickly, utilize backup sources of supply, alternate logistics and transportation providers and routes, and educating a cross-functional workforce. They are also rolling out proactive and predictive demand and supply planning programs such as SIOP (Sales Inventory Operations Planning), forward positioning of inventory and capacity, and predictive analytics. As no client has enough high-skilled talent, the best organizations are automating, digitizing, and using robotics, autonomous vehicles, artificial intelligence, IoT and the metaverse (AR/VR) to best utilize limited resources while supplying customer needs,” says Anderson.

Read the full article here

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Lisa Anderson was quoted in the Snowflake blog about how data is critical to healthcare – especially in times of supply chain vulnerability as a result of natural and man-made disasters.

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The COVID-19 pandemic, coupled with increasingly common climate-based natural disasters, showed us how vulnerable global supply chains are. But while a broken supply chain in the automobile industry may mean a shortage of spark plugs at your local auto repair shop, the same situation in the healthcare industry can result in the inability to effectively treat illness or injury.

Many of us tend to be surprised when we realize healthcare is not immune to market forces. Medical logistics includes medical devices, from oxygen pumps to scalpels; prescription drugs and other medication; personal protective equipment (PPE); healthcare furniture; and disinfectants. These are channeled through almost 6,100 hospitals and 67,000 pharmacies handling about 6 billion prescriptions in the United States alone. Cast the definition of logistics a little wider and you have to account for the indispensable human equation: doctors, nurses, technologists, specialists, and administrators. 

By innovating data sharing and collaboration with partners and agencies, we may be able to better identify and more quickly analyze the most vulnerable links of the healthcare chain, predicting supply chain shortfalls and other issues before they happen

Data is critical to healthcare, said Lisa Anderson, President of the LMA Consulting Group. “Data can lead to figuring out better where your product is,” she said. “It allows you to track the demand for your product, to keep critical supplies in stock where they need to be. Everyone I’ve talked to believes data sharing is the future. The problem is, it is really quite hard to get competitors to agree to share data when you don’t know if you’re going to come out on the equal side of that situation.”

To read the full article, click here.

Originally published in Snowflake, April 11, 2023

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In today’s environment, understanding your supply chain is critical to the success of your business. Join us as we chat with Lisa Anderson, President of LMA Consulting Group, about what’s going on in the supply chain, technology trends, and why it’s important to have standards. 

Key takeaways:

1. The combination of business intelligence, predictive analytics, and other tools can drive positive results for companies and improve decision-making in areas like production, purchasing, and customer needs.
2. Labor shortage is a global issue that is causing bottlenecks and potential problems in the supply chain. Companies need to explore technologies and automation to address this challenge and navigate volatility in the supply chain.
3. Standardizing data and implementing technologies like barcoding and RFID can lead to improved business performance, better forecasting, resource allocation, and material management, resulting in decreased lead times and increased growth. Prioritizing resources and focusing on what will make a difference for customers, revenue, and employee engagement is key.

Click here to download.

Originally published on GS1 on 9/27/2023

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Lisa Anderson was interviewed on the Lou Desmond radio show to talk supply chain. John Tulac, international business attorney, hosted the show to talk the status of the supply chain and what opportunities will emerge. We discussed the status of the supply chain post pandemic including the impacts on inventory levels, cash flow and the Bullwhip Effect. The bullwhip effect is a supply chain concept that describes how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and supplier levels.

We also talked about supply chain risk as the conversation was on the heels of the Chinese spy balloon traversing the United States. John Tulac is an expert in China and the global economy and geopolitical risk, and so we talked about the implications of this risk and how manufacturers and distributors should respond. From spy balloons to the Russia-Ukraine war and changing relationships related to oil to the elevated risk of China, we talked about getting in front of supply chain risk, knowing what’s going on in the world and how to encourage executives to keep up with changing global conditions as it is vital to surviving, let alone thriving in the volatile business environment. Certainly, the supply chain risk topic was followed by what to do about it including backup sources of supply, reshoring, nearshoring, and taking control of your supply chain. This led to a discussion on examples and case studies related to computer chips, Tesla, and other types of companies moving supply chains to mitigate risk.

John wrapped up the show by commenting about the importance of energy and complex systems.

Click here to download.

Originally published on the Lou Desmond Show on 2/13/2023

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Inflation and disruption are increasing again. Wholesale inflation as measured by the producer price index increased by .5% since last month which was more than expected. Core inflation (excluding food and energy) went up by .3% which was also more than expected.

These figures coincide with what we are seeing across a broad spectrum of clients. Raw materials, components, and other inputs continue to increase and are challenging to cover with increased pricing. Thus, margins decline, additional improvements and cost reductions are pursued, and clients prioritize customers and/or increase prices to cover costs.

Disruption is also increasing as the UAW strike persists, the Israel war started, and the China risk continues to escalate. Unfortunately, potential strikes and labor union negotiations / disputes seem to be contagious and are exploding across the supply chain. At the minimum, it causes supply chain partners to make preemptive moves and creates disruptions along the supply chain. Global risk continues to expand and appears contagious as well.

Inflation: Pivoting From Reactive to Proactive

If clients are not proactive in addressing rising input costs, margins decline. Unfortunately, during the height of the pandemic, they were racing to keep up to simply survive and didn’t always keep with inflationary pressures quickly enough. Your options become limited as time goes by. For example, a potential consumer products manufacturing client had significant price increases on purchased components. Fast-forward a year later, and the executive team wanted to address these issues. However, by then, customers were less accepting of price increases and too much time had gone by that cost reduction efforts were lagging.

We were brought on to provide business consulting assistance. Although time has passed, we helped them put together a customer and profitability model so that they could decide which products to discontinue, which customers to request price increases from (and how much), which customers and products to focus on and where to focus operational improvement efforts. We provided a roadmap for improvement; however, the benefits were muted from what could have been achieved if proactive earlier.

On the other hand, a building products manufacturing client also experienced rapid and frequent price increases with their raw materials. They quickly pivoted and pursued two paths forward. First, they assessed the impact on product groupings and key customers and passed on price increases for what seemed fair. As most clients did, they absorbed some of the price increases while passing on what made sense. We also proactively addressed service policies with the Sales and Operations teams. And they pursued backup suppliers, material changes, waste/ scrap reduction activities, and several other operational improvement strategies to maintain and improve margins. For additional ideas strategies for proactively navigating inflationary pressures, read our Brushware article “Case Study: Strategies to Successfully Navigate Inflation“.

Disruption: Pivoting From Reactive to Proactive

Similarly, if clients are not proactive in addressing disruption, it can lead to lost and unhappy customers and decreased profitability. Depending on each client’s end-to-end supply chain, the situation is different. For example, if the client is supplied from Russia or Ukraine, disruptions have already occurred, and there doesn’t appear to be an end in sight. If transported through the Suez Canal, they were likely disrupted by the stuck ship. Certainly, during the pandemic, if supplied by Asia, they experienced delays as ships mounted outside the L.A. and Long Beach harbors. Recently, if they went through the Panama Canal, they experienced delays and/or increased costs. If related to one of the potential striking entities, they could have experienced preemptive disruption, and if they related to striking entities, they will experience delays. And these are only the ones that popped to mind. We cannot wrap up a paragraph on risk without mentioning the heightened risk of producing in China.

Proactive clients were far more successful during the pandemic and post pandemic as sales pipelines were robust for those that are proactive and ready to pivot. For example, an industrial manufacturer was quickly able to move crews that were cross-trained to the most critical jobs. They also offloaded a portion of their volume to regional and local suppliers that could start up rapidly to supplement their volume. They also pursued creative strategies to hire additional resources and retain talent. They purchased ahead for high risk items and pursued backup sources of supply. Additionally, they also rolled out a SIOP (Sales Inventory Operations Planning) process so that they could get ahead of their demand plan and pursue proactive strategies to ensure Operations could execute the plan while continuing to focus on operational performance and profitability. For additional ideas in pivoting from reactive to proactive with disruption, read our article “SIOP / S&OP: Creating Predictability & EBITDA Growth“.

The Bottom Line

The business pundits do not see an end for inflation anytime soon. As interest rates rise, the rate of inflation has declined; however, it remains sticky. The same story holds true with disruptions. Although supply chains have leveled out, supply chain risk remains at an all-time high and disruptions continue to occur. Successful clients are pivoting from reactive to proactive to satisfy customers, establish priorities and grow profitably.

If you are interested in reading more on this topic:
How Smart Manufacturers are Navigating Interest Rate Hikes

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Although the supply chain challenges have abated since the COVID-19 pandemic, disruptions continue to persist and risks have increased. VUCA (volatility, uncertainty, complexity, ambiguity) has increased substantially in the world, negatively impacting the safety, security, and reliability of the supply chain. Successful executives are creating resilient supply chains to navigate these changing conditions, while the best find ways to create an advantage for future growth.

Most of the supply chain challenges have eased, creating an unrealistic expectation of normalcy. Yet, the risks still exist and remain elevated. Geopolitical tensions are high: The Russia-Ukraine war continues to rage, and Taiwan-China tensions are simmering. This leads to disruptions and shortages that don’t adequately support growth in customer service requirements, let alone overall growth trends in medtech.

Material Influences

Alloys are commonly used in medtech, but most are heavily concentrated in geopolitically challenged zones. Aluminum, for example, is used in many medical devices, yet the world’s top aluminum producers are China, Russia, and India.

Titanium is another key alloy used in medtech products, but the United States mostly sources the material from Japan, Ukraine, Russia, and other countries. The United States does not include titanium in the National Defense Stockpile. The reason for its absence is a mystery.

Cobalt—frequently used in such medical devices as hip and knee implants, surgical tools, and vascular stents—is sourced from the Democratic Republic of Congo, Russia, and Australia. The common thread with most of these alloys is their manufacturing base, which is concentrated in geopolitically challenged areas. Consequently, forward-thinking manufacturers must focus on the resiliency of these supply chains in order to avoid further disruptions.

Plastics—also used widely in medical devices—are derived from natural, organic materials such as cellulose, coal, natural gas, salt, and crude oil. However, the planet’s natural gas and crude oil supply is currently impacted by geopolitical events like the Russia-Ukraine war and regulations. The United States has limited crude oil production in order to save the environment but in doing so, it has become partially dependent on other countries and therefore is experiencing much more volatility in pricing and inflationary pressures. This limited supply and inflationary pricing will eventually be passed on to medical device manufacturers, potentially leading to cost-cutting pressures and inventory reductions. Unfortunately, this can become a circular issue because it leads to additional supply chain disruptions and a lack of agility in navigating these risks.

The dwindling reserve of computer chips during COVID-19 greatly impacted the medtech supply chain as well. Availability has eased considerably since the pandemic’s darkest days, when manufacturing in Asia ground to a near complete halt. It took quite a while to get supply moving again once the world reset, as China was plagued with intermittent Zero-COVID policy shutdowns. According to an April 2022 Deloitte study, more than 50% of respondents single-sourced semiconductors, although all were pursuing alternative suppliers. Such alternative sources were difficult to find, as 90% of the world’s advanced computer chips are produced in Taiwan and the largest overall producers are Taiwan, Japan, China, and Korea. Since the chip shortage, the United States has made significant investments to expand semiconductor manufacturing capabilities.

Labor Pains

There are a plethora of other reasons for continued supply chain disruptions. Labor strikes, for instance, can be particularly disruptive to supply chains. Both rail and UPS strikes were averted in the United States this past summer, but West Coast Canadian ports went on strike until a tentative deal was reached. The Southern CA ports reportedly have a tentative deal, but it hasn’t yet been ratified.

Since manufacturers cannot afford to be solely reliant on logistics providers that can bring production to a halt with foreseeable consequences, cargo volumes have been moving from the West Coast to the East Coast as a preemptive move. These types of changes occur frequently, which alter the global supply chain footprint and create additional disruptions. Proactive device companies will be able to successfully adapt to these changes with minimal impacts while unprepared firms will caught off-guard and risk losing business.

Labor issues remain a considerable pain point for the medtech industry as well as almost every manufacturing segment worldwide. Recruiting the appropriate amount of people to manufacture, distribute, and transport products is challenging, and can significantly impact a company’s ability to support customer requirements. The opening of a new semiconductor facility in Arizona, for example, has been postponed by a year due to labor challenges. The most successful companies find the best way(s) to attract, retain, and engage their employees and partners.

There is no shortage of potential supply chain risks and issues to address. Our most successful clients are turning these obstacles into opportunities by getting ahead of the game and preparing for success. Given the abundance of risks, a disruption will undoubtedly arise somewhere along the line, impacting competitors and other industry players. The best industry players will be prepared to absorb volumes from their struggling cohorts and service their customers. These companies will grow, expand their market share, and prosper. There are likely to be more opportunities for growth than at any other time in history for medtech organizations prepared for success and ready to take the plunge.

Although there is no shortage of supply chain improvement opportunities, it will be important to focus on the top priorities to gain maximum momentum. Otherwise, if everything is a priority, nothing is a priority. One priority across the board is to review supply sources. Securing backup supply alone will not suffice. Given the level of risk, at some point in the future, when things go wrong, it will not be feasible to secure supply at the scale required to satisfy demand unless a more robust plan is in place. For example, the best clients will purchase 20% continually from their backup supply sources so these sources can help them in the future.

Although the backup source may have to double or triple volume for a period of time, it is unrealistic to do that for extended periods of disruption. Thus, this strategy must be accompanied with additional methods.

Diversifying and expanding supply sources will be essential to prepare for success as opportunities arise. Smart executives are researching what makes sense in their industry, for their products, and given their supply chain footprint and expertise. One size doesn’t fit all. Medtech manufacturers are moving production and/or expanding capabilities in countries that support North American customer requirements. Mexico, Costa Rica, and the Dominican Republic are gaining significant volumes but they cannot produce to scale for the North American market rapidly. Mexico has the best opportunity as that country has experienced resources and is in close proximity to the United States.

Reshoring is another alternative. In today’s digital, automated, and robotic world, labor costs are not nearly as relevant. With investment in a culture of innovation as well as a deep dive into manufacturing and supply chain advancements and technologies, expanding U.S. manufacturing can be the best option. Reshoring enables companies to control their ability to scale up to meet customer demand and to control costs and inventories when scaling down. Investing in the appropriate technologies to improve the customer experience while minimizing labor and maximizing output will give medtech firms an advantage in the marketplace.

Reshoring in a regional cluster can provide further advantages of scale, flexibility, and responsiveness, resulting in rapid product development, quick problem resolution, and collaborative innovations, thereby improving margins.

Another critical supply chain process is SIOP (sales, inventory, operations, planning). SIOP will be essential in supporting an agile and forward-looking supply chain because it continually monitors changes to customer demand, changes in the business environment, how demand stacks up against manufacturing capacity and other sources of supply, and the risks and costs associated with alternate strategies. It also brings visibility to key strategic decisions so alternatives can be evaluated, and new options/ strategies developed. Most importantly, the process forces the organization to think about the future, evaluate and prioritize risks, and provides guidelines for decision making to ensure profitable growth and scalability.

Smart executives will establish a control tower to monitor their supply chain to ensure speed of responsiveness and resiliency. Although these actions will be essential to improving performance, the best, forward-thinking executives will take advantage of the disruption and confusion to turn disruption into opportunity. Preparation, innovation, and forward-thinking will create medtech’s future leaders. 

Originally published in MPO – Medical Product Outsourcing, 9/25/2023

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There has been a run of strikes or threats of strikes lately with the latest UAW strike impacting the Big 3 automobile manufacturers. If it lasts longer than a few days, there will undoubtedly be a huge impact on the end-to-end supply chain as well as the economy.

The two sides appear to be far apart in labor negotiations with employees asking to work 32 hours and get paid for 40 with a 40% raise while management agreed agreed to a 20% raise so far. As the strike spreads, it will impact additional manufacturing facilities and down-the-line supply chain partners. Unfortunately for the Big 3 automakers, Tesla and foreign automakers with facilities in the U.S. will be ready to pick up the slack. Alternatively, the workers have realistic concerns in that they haven’t been receiving cost of living adjustments with rampant inflation and regulations dictating electric cars which threaten their jobs. On the other hand, the non-union automakers do not have higher wages.

The economy doesn’t take sides. According to the Anderson Economic Group, if 143,000 UAW employees strike for 10 days, it could have greater than a $5 Billion dollar impact.

Supply Chain Impacts

In addition to severe economic impacts, the UAW strike will spread throughout the end-to-end supply chain.

• Suppliers: Suppliers will be impacted as orders are delayed and cancelled.
• Suppliers’ suppliers (multiple supplier tiers): The extended supply chain is vast supporting the auto industry. Impacts will carry down-the-line.
• Mix changes: If consumers need to purchase a car, they might switch to a different brand, changing the product mix of parts for the end-to-end supply chain. This is likely to lead to shortages, overages, and challenges. In essence, the right inventory won’t be in the right place at the right time because the demand has become unpredictable.
• Dealers & service centers: If the strike extends, it will impact dealers, service centers, parts and much more. Again, in this industry, it can spread like wildfire.
• Pricing: With limited availability, prices can go up. Inflation is already 20% higher overall vs 2019, and so additional inflation isn’t desirable as it directly impacts product cost, margins, investment, and consumers.
• Tesla & other car companies: If they can ramp up rapidly (scalability), opportunities abound. On the other hand, for consumers, prices are likely to increase.
• Wage increases: Strikes bring about more strikes. After all, if the railroads, ports, UPS and others didn’t gain a decent outcome due to the threat of strikes, it is doubtful the UAW would strike. As wages increase, price increases get passed on to the consumer and it spreads to other areas of the economy.

Transportation, goods movement, and industries with extended supply chains have such a large economic impact that these issues must be addressed rapidly to mitigate substantial supply chain risks.

Be Proactive

Don’t wait for strikes, down-the-line impacts, unhappy employees, or any of these issues to occur. Instead, take control of your supply chain. Here are a few strategies to deploy:

• Engage employees: One of the best ways to avoid strikes or stay non-union is to engage employees in their work.
• Empower employees: This goes hand-in-hand with engaging employees. Empower employees to make decisions within a reasonable guidepost.
• Prioritize your union negotiations & relationship: Clearly, if you have a union, there is a risk of a strike. How is your relationship? Are you prioritizing this relationship?
• Assess supply chain risk: Detail out the scenarios about how the strike might impact your business, your suppliers, your customers, and/or your extended supply chain.
• Backup sources of supply: No matter if you are related to this industry or not, you should prioritize backup sources of supply.
• Your supply chain network optimization: How should you change your supply chain to be resilient and prepared to scale up/ down etc.?
• SIOP (Sales Inventory Operations Planning): Put a SIOP process in place if you don’t already have one to stay ahead of changing conditions so that you are prepared to pivot, understand your alternatives, and are forward-thinking.

Don’t wait for problems to arise, especially when there are known risks. Stay on top of the risks in your industry, business, and end-to-end supply chain. Set your company up to be resilient, and monitor and adjust as needed.

The Bottom Line

Fingers crossed that a deal will be reached to avoid severe economic impact; however, we don’t want to trade an immediate economic impact for a long-term economic impact that will continue to spread through industry. Be vigilant, involve your executive team and get ahead of potential supply chain risks. If you want to learn more about SIOP, read our book of best practices for designing and implementing SIOP, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

Please contact us with your stories, issues, and ideas on how these types of disruptions impact your company and end-to-end supply chain. And, please keep us in the loop of your situation and how we can help your organization with supply chain optimization, risk mitigation and supporting SIOP programs.

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

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