Lisa Anderson was quoted in IE Business Daily recently on the state of the Inland Empire as a new year starts – will it be boom or bust? What’s in store for the industrial market in 2024? Anderson says you could be in for a bumpy ride.

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The days of a perpetually red-hot industrial market in the Inland Empire – record sales and leases, high vacancy rates, plenty of speculative development, and an endless absorption of open space – may be a thing of the past.

At the very least, with the start of a new year less than one month away, growth of the logistics manufacturing sector in Riverside and San Bernardino counties has been put on hold, and it might stay that way for a while.

The Inland Empire’s industrial market won’t be at full strength as it heads into 2024 if the most recent data is any indication.

To read the full article, click here.

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Simple metrics drive results. Whether a food and beverage manufacturer or an aerospace distributor, measuring the “right” metrics will focus attention on key issues and drive results. From OTIF (on-time-in-full) to projected past due to reasons for operational inefficiencies, metrics will rally the team on the appropriate topics and highlight the bottleneck issues to ensure success.

Manufacturing & Distribution Metrics

Proactive manufacturers and distributors monitor a core set of metrics. Most clients track revenue month-to-date (MTD) and year-to-date (YTD). Some clients track total backlog while others track booked orders. Many track past due and a customer satisfaction metric such as on-time-delivery (OTD), on-time-in-full (OTIF), or fill rate. Differences start at this point with some clients tracking inventory levels, purchase price variances (PPV), operational efficiencies, waste/ scrap, inventory accuracy levels, a measurement of production output, quality metrics such as parts per million (ppm), holds, warehousing efficiencies, picked, packed and shipped units, freight costs, customer complaints, quotes, and many others. For example, read our article on Walmart and OTIF metrics.

How to Choose Metrics

With so many choices, the question becomes how to choose which metrics to track. If you track too many metrics, your metrics lose meaning and waste precious time and resources. If you track too few metrics, your team might focus on the wrong activities to drive results. If you track the appropriate number of metrics but focus on the wrong metrics, your team will not focus on the “right” activities. So, how do you know how many metrics to measure and which are the “right” ones for your business/ department?

After consulting with manufacturers and distributors for almost twenty years, it has become apparent that common sense will provide the answer. Start with your company objectives. Every client has a sales (revenue) goal. Thus, measuring progress to that goal makes sense to focus attention on potential issues that could negatively impact achieving that goal. Similarly, what other objectives are important to your company? Your metrics must drive the correct behaviors to focus attention on what the executives want to achieve.

If you are in a cash crunch, you should highlight inventory. If you are experiencing negative consequences due to supply chain risk, develop a metric around % of products and /or suppliers within your control or # of products reshored, nearshored, or with backup suppliers. Use uncommon common sense to drive the results desired. Do not overcomplicate it with metrics that might be helpful but will distract from the mission. No clients have excess resources to track metrics that will not add significant value.

Client Examples

In a building products manufacturer, the focus was on pounds produced and sku-level efficiencies. Because every executive from the CEO to the VP of Manufacturing focused on these metrics, the sites found ways to increase the pounds produced regardless of impacts to customer service and other areas of the business. For example, if Operations could run certain products where they gained pounds more quickly, they emphasized those items and deprioritized the ones that required more effort to gain pounds. Unfortunately, the outcome was that the metrics did not focus attention on the appropriate actions to drive results. We refocused attention on schedule adherence, past due/ projected past due, and capacity availability. Executives gained visibility to see how to fit in additional orders to increase revenue without increasing capacity, and they were able to plan ahead to keep service levels high while optimizing manufacturing efficiencies.

In an aerospace manufacturer, the focus was on profitability at each site as the General Managers were incentivized by profitability and revenue. This led to a focus on profit, not inventory levels. Fast-forward a year later, and executives wanted to reduce debt and increase cash flow; however, the site metrics did not encourage sharing of inventory if one site leader would lose and the other won in terms of profitability. The executive team assigned an executive to focus on inventory, provided the teams with resources including our support as inventory and supply chain management consultants, and added an inventory levels metric to the site’s performance and tied it to potential bonuses. In the next several months, we reduced inventory in the core product lines by 30-40% while maintaining / improving service levels, and the inventory team achieved a collective “win”.

The Bottom Line

Metrics will drive performance. Every company has limited resources, and so they need to focus only on what will drive results. Use uncommon common sense, and you will know which metrics to track and how many to track to achieve bottom line business results.

If you are interested in reading more on this topic:
SIOP Metrics: 5 Key Baseline Measurements

The post How Simple Metrics Will Drive Results appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson joined Food and Beverage Talk podcast to discuss supply chain challenges and opportunities in the food and beverage industry.

The complex and under-appreciated topic of production planning and supply chain optimization is the focus of this episode of F&B Talk. Lisa Anderson takes a look at the different components of production management and how they fit into the supply chain world. She discusses the steps of the production planning process, the importance of the sales forecast, common issues in the supply chain on the manufacturing and distribution sides of operations and keeping all the elements and players on the same page.

During this interview, Lisa talks through supply chain trends and where clients should focus to succeed in the current environment. Most importantly, she discusses food and beverage client examples and provides insights and tips for how to handle these common supply chain issues.

The post Pitfalls and Solutions: Common Supply Chain Issues in Manufacturing and Distribution appeared first on LMA-Consulting Group, a supply chain consulting firm.

The State of Affairs in Manufacturing & Distribution

Manufacturing is on a downward trend after eight months of PMI (purchasing manager’s index) below 50. It dropped to 46 in June. China’s manufacturing also shrank for a third month in a row to a PMI of 49. Yet manufacturers backlogs remain relatively robust in many industries, leading executives perplexed on what to do about capacity shortfalls.

Logistics is in largely the same shape as the Logistics Manager’s Index (LMI) hit a new all-time low of 47.3 for May, down 3.6 points from April and operating in contraction territory for the first time. Thus, not surprisingly, the Freightos Baltic Index, which measures freight volumes and prices globally, shows average daily spot rates from China/East Asia to the U.S. West Coast at $1,324 per 40-foot container, down from more than $14,000 a year ago. Yet, products aren’t easy to find and get delivered on the rapid expectations consumers expect.

On the other hand, supply chains are on the move. Smart companies are reshoring, nearshoring/ friend-shoring, expanding manufacturing capacity and getting ready to scale up rapidly to meet customer expectations. As manufacturers struggle with rising interest rates and consumers focus on services, weak ones will get absorbed or go out of business, leaving an opportunity for those ready to take on the volumes. The same is true on the logistics front. As the West Coast ports struggle to finalize labor negotiations, container ships are on the move to the east coast, leaving distribution and transportation suppliers ready to support the volume with aggressive growth. It is a time where the winners and losers will separate, leaving vast opportunities for forward-thinking executives.

What are the Implications for Capacity Planning?

Companies need to expand capacity yet remain resilient and flexible so that they can also maximize profitability and accelerate cash flow. In order to do that, it is vital to get on top of your capacity capabilities. The majority of clients do not have clarity of their capacity (upcoming requirements as compared with available capacity). Thus, they struggle to know if they can take on customer orders and deliver it with the appropriate level of customer service (meeting the customers’ expected lead time and delivery performance with high OTIF (on-time-in-full)). When opportunities arise, poor service will kill the opportunity quickly. Also, if you don’t understand your capacity, you will not allocate it optimally and maximize your capacity; thus, losing profit opportunities.

Capacity planning is a key element of the SIOP (Sales Inventory Operations Planning) process: it takes your demand and translates it into your capacity requirements (manufacturing, equipment, storage, transportation, talent, etc.). By evaluating capacity, executives can get in front of changing business conditions and determine how to optimize their capacity to scale up or down quickly to meet key customer needs while maintaining margins.

Client Example: Using Manufacturing Capacity to Scale Up to Meet Sales Forecasts

In a storage manufacturer, a key to success is to have the capacity capabilities where needed when customers need it. As logistics changes occur (such as the transition from the west coast to the east coast), storage systems will adjust in concert. Since storage systems are bulky and freight costs of inbound and outbound freight is expensive, it is important to have capacity available where its needed at the “right” time.

It is not for the faint of heart to get a directional view of manufacturing capacity for a storage solutions manufacturer. The good news is that shop floor employees can move between machines and equipment to produce what’s needed; however, the bad news is that this makes understanding capacity availability challenging because not all products require the same number of people or skills to produce. By using a SIOP and demand planning process, customer orders, likely customer orders and quotes are available. Assuming engineering is on target in completing product designs, using a capacity planning process, this demand plan can be translated into directionally correct requirements (weight and hours) by plant and customer.

However, required machinery, equipment and labor requirements doesn’t provide valuable information if you can’t compare to available capacity. It sounds much easier than it is in reality due to the complexities. Typically in these types of operations, there are many different work centers (work areas) that are not alike in terms of capabilities and labor requirements. Similarly, products are not created equal; each product can require different numbers of people, different skills and it will go through multiple work centers before completion (fabrication, weld/ final assembly, paint). Storage requirements are also not created equal. Thus, a simple available capacity calculation across a work center or group of work centers is not feasible. However, using the forecast as well as historical run rates and weights by product, summarized by work center and production area can provide a directional view of available capacity.

Reviewing capacity requirements vs. available capacity by plant and production area will give Operations leaders their marching directions. For example, in one facility they had plenty of fabrication operators are had excess inventory of these parts yet customer service was suffering. The bottleneck was in weld operations, and so work in process (WIP) was stuck waiting for weld. As they trained weld operators and expanded the capabilities of a few fabrication operators, they were able to catch up and improve their OTIF (on-time-in-full) metrics.

As they gained a view into upcoming capacity, they could see potential bottlenecks in advance so that they could proactively handle them. For example, the plant could see that they had more requirements than capacity two months into the future; however, they could absorb it (level load) in advance if they could get engineering to complete the designs. Thus, a priority list was developed and managed with engineering. Additionally, they could evaluate whether they could fulfill a key customer project that another plant couldn’t handle on time and transfer the project to a nearby site so that it could be delivered on time without negatively impacting margin. On the other hand, if a critical project came up that required advanced manufacturing capabilities, they could see the impacts of transferring the volume to another facility with these capabilities and incorporate the cost impacts of the additional freight. They also had the opportunity to potentially transfer the volume to their Mexico facility which would add freight yet mitigate the labor costs. The bottom line is that capacity visibility supports revenue growth with minimal impact to profitability.

Client Example: Expanding to Storage, Freight , & Engineering Capacity

Although the focus has been on manufacturing capability, the next priorities are storage, freight and engineering capacity analyses. As the plants have the capability to see into the future and want to level load operations in a way that maximizes operational performance (running in the optimum sequence to minimize inefficiencies and waste), engineering capacity becomes the bottleneck. Seeing which orders / projects should be prioritized across sites will give a priority list to Engineering. If you add available engineering capacity into the picture, it might lead to hiring additional engineers or supplementing with short-term resources.

The same holds true for storage and freight capacity. Since the product is bulky and can only be stored outside for certain periods before fading, storage capacity should be managed. If you have significant customer orders coming down the pike, you could decide to produce ahead to keep customer service intact without adding unnecessary long-term manufacturing capacity. In this case, you could calculate storage capacity by region (to minimize freight costs). This goes hand-in-hand with transportation and freight capacity.

Final Thought

Capacity planning is cornerstone for any manufacturer or distributor as you must serve customers, maximize operational efficiencies, reduce waste, coordinate resources, right-size inventory levels, and execute plans.

Refer to our blog for many articles on capacity planning, production planning and related concepts. Also, read more about these types of strategies in our eBooks including SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth and The Road Ahead: Business, Supply Chain & the World Order. If you are interested in talking about implementing out best practices for production scheduling to drive cost reduction and inventory reduction while maximizing 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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Volatility is the New Norm

If there is one thing that is certain in today’s world, it is that volatility and change are the new normal. VUCA (volatility, uncertainty, complexity, ambiguity) is top of mind for every client. For example, clients ask the following questions:

• What will happen next?
• Are we prepared?
• Which are the likeliest risks with the most severe consequences?
• Should we take the appropriate steps to mitigate if we don’t know what the future holds and if our business can withstand the investment?

Unfortunately, there is no playbook. Only the proactive, brave, and resilient will thrive,

How Does Inventory Relate to Volatility?

As it relates to inventory, the entire point of carrying inventory is to cover lead time, mitigate risk, and address volatility. For example, if you purchase from China, you have to cover the manufacturing and transportation lead time (typically 12 weeks minimum). You would want to mitigate risk. Unfortunately, with China, there are many potential risks (Chinese spy balloons, Taiwan-China tensions, Zero-COVID policy shutdowns, lack of natural resource supply (energy, water), shutdowns, transportation challenges in the South China sea, potential weather, strike and other conflicts in its journey to its destination, etc.). And last but not least, inventory covers volatility. If Sales sells different products than predicted, if suppliers extend lead times, or if disruptions occur, inventory allows your customers to be served while you address the volatility.

Thus, executives are perplexed as to what to do about inventory. In fact, they are in a quandary.

• Volatility is high: Since VUCA is at an all-time high, both demand and supply are volatile, and therefore out of alignment. Inventory covers that gap, and so more inventory is required to successfully serve customers. Beyond required inventory to cover volatility, clients have also moved from just-in-time (JIT) to just-in-case. Inventory is piling up! Of course, unfortunately, it is typically the wrong items in the wrong place at the wrong time if demand isn’t aligned with supply via a process like SIOP (Sales Inventory Operations Planning), also known as S&OP.
• Cost is up: The cost of inventory is going up with inflationary pressures. Every client has experienced raw material, component, and ingredient price increases. Additionally, every unit of inventory has to be stored and transported. Logistics costs have increased significantly as well. Even though the cost of the increases are slowing down, if you compare costs to pre-pandemic, they are up substantially. Thus, every unit of inventory costs more.
• Carrying cost: Having “too much” inventory ties up cash unnecessarily. You purchase materials, pay for production, and have storage and material handling costs all prior to getting paid. In addition, if you have to finance inventory, the cost has been skyrocketing with the increase in interest rates. Even if you don’t finance inventory, you are tying up cash that you cannot invest elsewhere. This carrying cost is also adding up to simply cover built in lead time. For example, 12 weeks of inventory is not only tied up unnecessarily but the cost to carry that inventory has gone up substantially with increased interest rates, increased warehouse space cost, etc.
• Inventory accuracy woes: Although a bedrock fundamental, the more inventory you have, the more likely you’ll be to have inventory issues. For example, as warehouses overflow into the aisles, inventory gets lost. As more locations are added, complexity increases (a key element of VUCA) and inventory inaccuracies increase. For example, a client expanded rapidly to meet increasing customer orders. To meet this increased growth, they expanded operations. Resources are limited, thereby creating complications in keeping up with transactions. Also, they moved the stockroom to a different location to accommodate for the expansion, thereby creating further volatility. Additionally, they needed additional materials and components to support production, requiring additional space. They also purchased long-term supply of critical components coming from the Russia-Ukraine region to secure supply, therefore needing additional storage locations. And, to increase production, they had to produce work-in-process when capacity was available, thereby increasing WIP inventory while waiting for parts and capacity to be available to complete the job. Since they are located in a rural area, they had to expand quickly with multiple available buildings/ locations. What I love is the descriptive names for these locations – the barn, the swamp, the subway, and more. Nevertheless, quick expansion with multiple physical locations can be quite the inventory accuracy challenge.

Executives are deciding among conflicting factors – customer service, customer growth, margins, and cash flow. It is not for the faint of heart. The trick is to turn this “or” equation into “and” so that you can achieve a win-win-win.

Go Back to Fundamentals

The great news about inventory is that the fundamentals “work”. As challenging as it is to navigate volatility, the key is to focus on the fundamentals. Best practice processes paired with process disciplines will carry the day. However, that will not be enough. To thrive in today’s business environment, processes will have to be accompanied with the appropriate technologies. For example, barcoding is greatly more efficient than writing on papers and data entry. However, garbage in, garbage out. Focus on process disciplines before you jump to automate a “mess”. And none of this will matter if you do not have the resources to support these practices.

Best Practice Processes

There are several inventory processes required to have the “right” inventory in the “right” place at the “right” time without having “too much” creating financial woes or “not enough” to support customers. Several of relevant fundamental processes include:

• Transaction disciplines: Every inventory movement (receiving, interfacility movements, work order issues, work order completion, operational steps, shipments, interbranch transfers, intercompany transfers, outsourcing operation steps, etc.) requires a best practice process accompanied with the appropriate use of ERP system functionality performed in the correct sequence and in a timely fashion. Most clients overlook the critical importance of these fundamentals. Although theoretically ‘easy’, it requires an orchestrated effort with trained resources who understand the impacts of their work.
• Cycle counting: Cycle counting is more than simply counting and adjusting. The key is to focus on root cause analysis and remain vigilant on process disciplines, cutoff times, and prioritizing what’s most important (ABC counting). The bottom line is that cycle counting will maintain your inventory accuracy so that when you go to produce, distribute, or ship, the inventory is where you expect it to be in the quantity expected. 
• Costing: Cost accountants are often underappreciated. Good ones can be your most valuable asset! When I was VP of Operations, understanding the true cost of inventory was a critical basic. Otherwise, how do you make “good” decisions? It was surprising how challenging it was to get a directionally correct cost for materials (including freight), labor, warehousing, freight, carrying cost, etc. It is important to properly utilize your ERP system to get a reasonable view of costs. Adding variances into the mix can confuse almost everyone in your organization. Stick with common sense. Strangely, cost reduction programs also cause havoc as 80% of clients double count at least some of the cost reduction programs accidentally. Bring on experts that can dig in and help you know where to focus. (Thank you to my mentor on this topic, Marty Ostrow!)
• Planning processes (demand, production, replenishment, materials, VMI, etc.): The best way to ensure the appropriate inventory is in the “right” place at the “right time” in the “right” quantities to support customer requirements while not having “too much” is to roll out best practice planning processes. These processes go hand-in-hand with ERP functionality including CRM, demand planning, MRP, advanced planning and scheduling, DRP, and more.
• SIOP (Sales Inventory Operations Planning), also known as S&OP: Aligning demand and supply is cornerstone to managing inventory. Refer to our eBook, SIOP Creating Predictable Revenue and EBITDA Growth to learn about how SIOP can help your organization and the secrets to implementing a process and cadence to ensure customer success and bottom-line results.
• Inventory metrics: Make sure to track the key metrics relevant to your business. A few of the key ones include inventory turns, days on hand (DOH), inventory variances, and inventory accuracy.

Final Thought

Inventory management is bedrock for any manufacturer, distributor, or retailer. Although solid inventory management is always vital in supporting growth, profitability and cash flow, it takes on even more importance during times of volatility, uncertainty, complexity and ambiguity. Both inventory accuracy and inventory levels will either propel success or become a bottleneck to success. Remember to dedicate key resources to this foundational building block.

Refer to our blog for many articles on inventory management and related concepts. Also, read more about these types of strategies in our eBooks including SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth. If you are interested in talking about implementing out best practices for inventory management to drive stability, customer service, growth and profitability, contact us.

Did you like this article?  Continue reading on this topic:
Are You Managing Inventory or Is Inventory Managing You?

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Improving OTIF and Reducing Cost and Inventory

Every client wants to support growth goals while improving service levels (OTIF, on-time-in-full), operational efficiencies and inventory turns. These are timeless objectives for every planner. During the pandemic, the priorities shifted to service levels because clients struggled to keep up with dramatic increases in demand and extreme volatility. There has been an all hands on deck focus to improving OTIF (on-time-in-full), OTD (on-time-delivery), and fill rates.

As we did whatever it took to service customers, logistics costs started to skyrocket, even before the dramatic increases in oil and gas prices. Thus, logistics costs also came into closer focus. Depending on the supply chain network, logistics costs could relate to container costs (which have gone up four-fold since pre-pandemic levels), drayage costs, storage costs, freight costs, e-commerce fulfillment costs, and more. For example, a consumer products manufacturer supplied outside distribution centers across the U.S. and Canada to support short lead time customer requirements. As volatility increased, freight and logistics costs went up accordingly. Thus, additional focus was put on how to optimize logistics costs.

As the pandemic unfolded, consumers switched from services to products, thereby increasing demand. Similarly, as stimulus packages were passed, consumers gained cash, further increasing demand. Finally, as lockdowns ended, demand has stayed at high levels even though services are skyrocketing, driving inflation. As supply chain disruptions abound, product availability is limited, thereby driving prices higher. There is a combination of inflationary and deflationary pressures going on simultaneously which is further exacerbated by the Russia-Ukraine war. These incidents have led to a return of focus on managing inventory to free up cash.
Utilizing Planning Best Practices to Optimize Service, Cost & Inventory Objectives
From a best practice point-of-view, in order to optimize service, cost, and inventory objectives, you’ll want to upgrade the appropriate planning processes. No matter your business type and complexity, demand planning will be a priority. From a supply planning perspective, the priorities will depend on your specific situation. If you produce internally, production planning, material planning and supplier management will be a priority. On the other hand, capacity planning, purchasing, and logistics planning will be important regardless of your supply chain network although to varying degrees. Replenishment will be more relevant if you have a more complex distribution environment or if you replenish your customer’s network for them (also known as vendor managed inventory or VMI).

If you have a more complex distribution network, replenishment planning (also known as distribution planning or DRP) will be a critical component to achieving your objectives. Replenishment planning should consider the following factors:

• Order frequency – are you receiving orders on a daily, weekly, monthly, seasonally, or sporadic basis?
• Order size – when you receive orders, are you receiving several small orders over a period of time, one large order covering the same period of time, or another option?
• Order volatility – how predictable are your customer’s ordering patterns?
• Lead time requirements – how much time do you have to react to customer orders vs. the lead time to replenish?
• Replenishment lead time flexibility – do you have options to decrease your replenishment lead time by shipping via a different mode of transportation (such as rail vs. truck)?
• Replenishment cost with various modes of transportation
• Replenishment frequency – how often do you replenish the distribution center.
• Service policies – can your customers change their orders after placed? Can they change it until the last minute prior to shipping?
• Network flexibility and stocking patterns – if you have a stockout in a distribution center, are you stocking that same product in another distribution center that could supply the customer within standard lead time?
• Safety stocks – how have you set safety stocks to cover for variability in demand and supply?
• Forecasts and/or consumption information – do you receive collaborative forecasts from customers, or, better yet, consumption information real-time? For example, when working with an absorbent product manufacturer, our key customer Allegiance Healthcare provided us with our consumption data from their distribution centers so we could sell real-time consumption. Additionally, when consulting with an aerospace firm, we received consumption information from Boeing so we could see when they used our parts in production of the plane.
• ABC value – are your items set as A B or C based on volumes, value or another method to designate frequency and importance?
• Storage constraints and warehousing costs
• Inventory objectives
• Sales orders, transfer orders, and purchase orders

Replenishment Planning Strategies

A replenishment plan should take the factors described above into account when building a plan. Typically, you’ll start with demand and determine your replenishment plan based on what’s needed to serve the customer with the agreed upon service policy, and then evaluate replenishment strategies, logistics options, and resulting inventory levels to determine the optimal schedule.

Depending on your network complexity, product and customer mix, your tools (ERP and related technologies), and your objectives, there are multiple replenishment strategies you could follow. Conceptually, consider the following options:

• Reorder point / Kanban strategies – in essence, you replenish the reorder quantity when you hit the reorder point inventory level
• MRP/ DRP strategies – in essence, you replenish to sales orders, transfer orders, and forecasts as needed when reviewing your inventory and orders in process.
• DDMRP strategies – demand-driven material requirements planning (MRP) which is more sensitive to variations in demand and supply.
• Advanced planning – these systems take what if scenarios, capacity, capabilities and costs across sites into account in replenishing

There are tradeoffs, benefits and costs to each approach depending on your demand, supply, factors, and objectives.

Incorporate Replenishment Planning into a Monthly Review Cadence

Review your replenishment plan summary information and related impacts as a part of your monthly SIOP/ S&OP process. Gather inputs from appropriate parties, compile and synthesize data, and design a monthly review of the replenishment plans required to support customer orders. This will result in transportation volumes by mode of operation (truck, rail, air), storage requirements by distribution center, distribution / supply chain network changes and stocking strategies (and resulting inventory levels) required to support service policies, and appropriate resources and system capabilities to support the plans.

Refer to our blog for many articles on planning, capacity and related systems. . Also, read more about these types of strategies in our eBooks, Thriving in 2022: Learning from Supply Chain Chaos and Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in talking about what it would take to purse the replenishment planning and SIOP journey in your business, contact us.

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Recovering Capacity with Production Planning Best Practices

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Labor shortages exist in almost every industry and position. Manufacturing, transportation, distribution — none of these industries are exempt. And, most of these industries affect the consumer, who has felt the supply chain pinch the worst, said Lisa Anderson Manufacturing and Supply Chain Expert, MBA, CSCP, CLTD, president of LMA Consulting Group Inc..

Click here for the full story.

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Manufacturing and supply chain expert, Lisa Anderson, president of LMA Consulting Group Inc., discussed factors that are driving the move to automation.

Amazon recently introduced the world to Ernie and Bert, its latest generation of warehouse robots. The giant retailer has long been a leader in warehouse automation, but these days anyone who moves inventory is taking a long look at what functions machines can perform. And that includes HVAC distributors.

Several factors are driving the move to automation. One is the challenge in staffing warehouses. At the same time, e-commerce places new customer demands on warehouse operators. Third, the competition for space drives up operating costs. Automation can solve many of these challenges if applied properly. As other industries such as auto manufacturers have learned, automation is only as good as its implementation.

“If you automate a bad process, it’s only going to get worse,” said Kristi Montgomery, vice president of innovation, research development at Kenco Logistics Services LLC.

Kenco provides logistic solutions to a variety of clients. The company recently helped an HVAC warehouse set up an AutoStore system that will be fully operational in a few months. This arranges bins in a cube and then uses robots that ride over the cube to collect the bins and deliver them to humans at work stations. This frees people from having to walk through the warehouse gathering parts, increasing productivity and safety, Montgomery said.

Lisa Anderson, president of LMA Consulting Group Inc., said distributors need to make some investment in warehouse automation. It doesn’t have to be as extensive as an AutoStore system, Anderson said, but they need to find something that will reduce costs and make them more responsive to customers. If they don’t, Anderson said, their competition will. And if it’s not the direct competition, it’s a competitor who can move into an area quickly. Those competitors will then be more profitable and have an easier time scaling up operations to meet demand.

Click here for the full story.

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What is micro-fulfilment?

Let’s start with a definition of micro-fulfilment. It refers to small-scale distribution centers located closer to the end customer to address the issue associated with the last mile. These micro-fulfilment centers are often attached to local retail stores or contained in larger distribution centers. For example, grocery stores are turning the back area into micro-fulfilment centers. Retail space is reallocating space to micro-fulfilment centers.

• Increased delivery options: According to EFT’s global Supply Chain Last Mile Report 2020, 65% of retail delivery and logistics providers worldwide believe increased delivery options to be their most important focus over the next three years (Dassault Systemes).
• E-commerce fulfilment will grow: According to Agility, 35% of the logistics industry professionals believe e-commerce fulfilment will continue to grow. (Agility)
• Data and analytics rule: According to a PWC report, data and analytics is more important for the transportation and logistics industry than any other in the next 5 years.

Whether or not you are in an industry that might be a good fit for micro-fulfilment, you should pay attention. Evolving the supply chain for changing customer conditions and needs is a universal concept. Those that figure out how to reconfigure their supply chain to better meet customer needs quicker than the competition will lead the pack. Certainly, those that embrace technology to support their e-commerce business will be better prepared, and those that dig into data and can use it to make better decisions will increase revenues, profitability and working capital. If you are interested in assessing your supply chain strategy and data and analytics capabilities, contact us to discuss your situation and objectives.

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E-Commerce Has Exploded

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