Medtech companies’ focus on supply chain resiliency and mitigating supply chain risk has increased over the last few years as the pandemic triggered extended lead times, delays, and rising costs. Executives must now be able to pivot quickly to changing conditions, and they want to be in control of their ability to successfully serve customers. In reviewing options to meet these objectives, the critical importance of enterprise resource planning (ERP) and related manufacturing and supply chain technologies has risen to the top.

Taking Control of the Customer Experience

One way to take control of manufacturing and the supply chain as well as build resiliency into the customer experience is by focusing on expanding manufacturing and reshoring manufacturing closer to customers. Reshoring Initiative data show the combination of reshoring and foreign direct investment (FDI)-related job announcements last year reached record high levels—a trend that is expected to continue. As companies reshore, there is a significant emphasis on automation, robotics, 3D printing/additive manufacturing, and other supply chain technologies to reduce costs, minimize hard-to-find talent, increase quality, and keep abreast of customer requirements.

Nearshoring also remains popular for companies that want to improve customer performance by moving manufacturing closer to customers. Mexican exports, for example, rose 5.8% to $52.9 billion in May 2023, the second highest reading on record, according to Bloomberg. Mexico is also automating, digitizing, and employing advanced manufacturing methods. Case in point: Global automotive technology firm Luminar announced in April the build-out and ramp up of a new highly automated, high-volume manufacturing facility in Monterrey, Mexico. Moreover, Nuevo León Gov. Samuel García, said at the World Economic Forum in January that an “advanced manufacturing platform” would soon be launched in the state to focus on process digitization and automation.

Besides supporting reshoring and nearshoring initiatives, medtech firms also are interested in deploying advanced manufacturing techniques to augment their competitiveness. With skyrocketing inflation, manufacturers are paying more for materials, components, labor, and freight. In addition, the cost of capital has increased significantly, further decreasing margins, and limiting cash flow. Thus, manufacturers are searching for opportunities to increase efficiencies, automate repetitive processes, utilize robots, and embrace digitization as much as possible to decrease costs, increase margins, and better control customer pricing.

To grow their business, manufacturers are focusing on providing customers with a superior experience. In the current Amazon-impacted business environment, customers expect rapid deliveries, 24/7 service, and quick responsiveness—elements that once were considered forward-thinking and innovative but have now become essential. To stand out from the crowd, companies must go beyond these fundamentals and offer a differentiated or personalized customer experience. Thus, using a modern ERP system is essential to success because it will support these basic needs and augment them with such related technologies as customer relationship management, order fulfillment visibility, warehouse management system, transportation management system (TMS), e-commerce, advanced forecasting and planning, artificial intelligence, and predictive analytics.

A healthcare products manufacturer that distributed products throughout the United States wanted to improve their service levels, lead times, and inventory levels across its various facilities for customers. The manufacturer accomplished this goal by rolling out a vendor managed inventory system with suppliers and set aggressive scorecard metrics. The manufacturer used an ERP system to connect to its key customer’s demand and inventory data, and developed a forecasting and replenishment planning system. Hence, the manufacturer was able to establish an efficient system to maximize service levels for its customer while minimizing inventory levels and costs by utilizing business intelligence reporting to identify forecast exceptions and advanced planning functionality to proactively manage service levels. The software provided visibility into key customers’ distribution centers so the manufacturer could decide how to reallocate inventory to improve service while reducing inventory. Additionally, by integrating the replenishment orders to its customers’ locations with ERP and TMS systems, the manufacturer maximized multiple-stop truckloads and route in an optimal sequence to minimize freight costs.

Manufacturing and Supply Chain Technologies

There are numerous manufacturing and supply chain technologies that yield a substantial return on investment. 3D printing is providing a distinct advantage to manufacturers interested in providing quick prototypes to customers, and it is being used in several medical and industrial applications. According to G2 and Oxford Performance Materials, more than 75% of American patients with damaged skulls from disease or trauma received implants made by Oxford Performance Materials’ 3D printer. GlobalData predicts that customization, lower production costs, and quick turnarounds will drive the medical 3D printing market’s growth. Such benefits, along with the sector’s 23% compound annual growth rate (IndustryArc data), is prompting smart manufacturers to increasingly pursue clinical trials for 3D-printed products.

Augmented reality (AR), virtual reality (VR), and digital twins (a digital representation of an intended or real-world physical product, system or process) are some of the promising technologies in manufacturing and supply chain circles. They are particularly valuable in the current business environment as companies grapple with limited high-skilled resources, cost management concerns, and delivering a superior customer experience. AR/VR is used to train employees on ways to use and maintain equipment, about trials and simulations responsibilities, in collaborative product design, and in remote monitoring and factory audits. Digital twins can be used to evaluate “what if” scenarios to optimize the plant floor or data sets. An engineer-to-order manufacturer, for example, can utilize a digital twin to evaluate capacity with various configuration forecast models to stay ahead of customer requirements and result in a more efficient and responsive supply chain.  

The Metaverse can bring together customers’ wants and needs. In essence, it can accelerate the SIOP (Sales Inventory Operations Planning) process. In a metaverse collaborative room, retailers and their suppliers (or any set of customers, consumers, and suppliers) can meet virtually to review sales forecasts, projected production plans, and possible supplier limitations that could affect manufacturing volume. They can also visualize an immersive supply chain network map, see where inventory is, identify issues, and model possible alternatives.

The internet of things (IoT) and artificial intelligence (AI) are transforming the supply chain as well. As ERP systems, machines, and vehicles capture data with IoT, AI will learn how to predict breakdowns and recommend predictive maintenance plans, making preventative plans obsolete. Forklifts and autonomous vehicles will capture many signals and provide alerts to prevent impending safety incidents, and advanced planning systems will utilize machine and operational performance data to predict run rates and provide insights on how to minimize usage.  

Robots are bringing a new level of efficiency and repetitiveness to manufacturing. Industrial manufacturers are using welding robots to produce parts around the clock to minimize labor costs, quality issues, and injuries. Similarly, an aerospace manufacturer developed a robot that could produce on second and third shift with lights-out manufacturing a complex process to address a critical shop bottleneck. The aerospace firm quickly alleviated past due orders and got in front of its customer’s needs.

Manufacturers are also pursuing visibility across the supply chain so that customers can check status around-the-clock and supply chain partners can gain visibility and respond to changing conditions. Thus, digitizing information in the supply chain is a priority. This can range from simple concepts of barcoding/ RFID, lot tracing, and electronic data interchange to complex and collaborative topics such as customer portals, supply chain control towers, and port optimizers. Taken a step further, companies are investing heavily in blockchain to gain an immutable ledger of product and financial transactions across the supply chain.

The Bottom Line

Smart executives will leverage ERP systems as well as manufacturing and supply chain technologies to create a customer service edge. Equally important, they will automate, digitize, and turn data into insights to help their organizations become forward-thinking, resilient, efficient, cost effective, and predictable. Since only these uniquely positioned, innovative manufacturers that can scale up or down rapidly will be prepared for the change and volatility in the global supply chain, they will have the unique opportunity to leapfrog the competition, capture market share profitably, and be in the position to thrive for decades to come.

Lisa Anderson is founder and president of LMA Consulting Group Inc., a consulting firm specializing in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She is president of the Inland Empire Chapter of APICS, the leading trade organization of supply chain management. Anderson recently released Future-Proofing Manufacturing and the Supply Chain Post COVID-19 as an e-book. 

Originally published in MPO November/December issue.

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According to the Hackett Group, 77% of companies have strengthened their commitment to digital transformation due to the COVID crisis. In fact, they are not only strengthening their commitment, but the pace of adoption is increasing. A McKinsey survey found that the pandemic has significantly accelerated the pace of adoption of digital transformation technologies. Clients and colleagues are seeing the critical importance of utilizing technology for a win-win-win, creating a safe working environment that is efficient, cost effective, resilient, and responsive to customer needs.

Even before COVID-19, executives were gaining interest in the digital transformation and Industry 4.0. The Amazon Effect has been driving the need for quicker deliveries, 24/7 accessibility, customizable products, easy returns, and a superior customer experience. Achieving these increased standards while maintaining margins had manufacturers searching for solutions. Thus, automation, digitization and Industry 4.0 concepts gained in popularity. Large companies pursued these strategies, but small and medium-size companies were more challenged with the upfront investments required and whether they would yield a return on investment near-term so that they could justify moving forward. Yet not investing and being passed up by the competition was not attractive either.

The pandemic has proven that those companies that were better prepared and further down the digital transformation roadmap fared better. These companies had better visibility into their supply chain, were better able to respond to changing customer requirements and were able to accommodate for social distancing and could flex capacity more quickly than their counterparts. All is not lost. It is time to jump into the deep end of your smart manufacturing and end-to-end digital supply chain journey.

Should we immediately purchase robots and 3D printers? Not necessarily. Start by understanding your new business environment. What will the next normal look like for your industry? Adapt your strategy for how you will thrive with changing customers, buying behaviors, an evolving competitive landscape and with your end-to-end supply chain. Think through how these changing conditions will impact your talent needs and adapt your talent strategies to accommodate. These will drive changing digital and technology needs, and so you will need to adapt your technology strategies to align.

Although you will need to reevaluate your technology roadmap to determine what will best support your business objectives, there is no doubt you will minimally need a modern base infrastructure to support scalable, profitable growth. Look at your enterprise resource planning (ERP) system. How does is support your changing customer requirements and ability to grow the business rapidly and profitably without hiring an army of people? Start with a modern base like starting with a solid foundation when building a house. Add customer differentiators and profit drivers by thinking about the broader digital customer journey in addition to how to increase operational effectiveness with concepts such as robotics, automation, IoT and predictive maintenance, augmented reality, and the like. Big data and predictive analytics will tie it together with an advanced business intelligence solution to not simply analyze data but to predict areas for future focus to increase business value.

The most successful executives will focus on those technologies that best support the successful execution of their strategy. Instead of jumping on the latest fad bandwagon, take a brief step back to realign your strategies and evaluate what will provide the greatest return on investment. On the other hand, do not delay for lengthy studies. Those companies that succeed post COVID will be those geared for speed, agility, and responsiveness simultaneously. Align your technology roadmap and take tangible steps forward with your digital transformation.

Published in Brushware Magazine, December 31, 2020

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The Pfizer/BioNTech Covid-19 vaccine has already begun to be distributed and administered in the UK following approval from the country’s medical regulator.

In November 2020, US-based pharmaceutical giant Pfizer and German biotechnology company BioNTech announced it’s joint Covid-19 vaccine was ready to be distributed.

This was swiftly followed up by similar announcements being made by US-based biotechnology company Moderna and the UK’s Oxford vaccines.

The Covid-19 distribution and vaccination process is seen by many to be the largest such undertaking in human history, only even vaguely similar to that of the flu vaccine.

Speaking to NS Packaging, Glenn Richey – Harbert eminent scholar and chairman of the department of supply chain management at the US-based Auburn University – says there are some differences, most notably that the flu vaccine is “not being transported at the scale we’re seeing here”.

What tests could the Pfizer vaccine supply chain encounter?

The reason why Pfizer/BioNTech is distributing the doses directly to the POU is, in part, to limit the amount of human handling of the vials there are.

One positive, specifically in the US, is the fact that Pfizer/BioNTech is utilising existing supply chain providers including FedEx, DHL and UPS.

These businesses have experienced full traceability, meaning they can see where the vaccine is at all times, and where it went along the stops.

Lisa Anderson, who prior to setting up her own supply chain consultancy worked for a company that distributed products to hospitals, nursing homes and at home care places, believes it’s a good idea to use existing networks.

Speaking to NS Packaging, she explains: “There’s a network already set up for those avenues, so let’s not create a new one and instead utilise an existing network, pretty much taking priority over other supplies that might get delivered – but it makes sense.”

Describing the track and trace capabilities of these companies, she adds: “There’s a lot of things you can do these days with IoT and technology to better monitor the vehicles and its drivers, with some even capable of knowing whether or not a driver needs to pull over for a rest.

“Some of these aren’t specifically about the vaccine, but there’s a lot they can do to trace where their trucks are.

“And for sure when it comes to the vaccine, they’re going to want to keep a secure supply chain because that’s important to the whole thing.”

Alongside this, planes are going to be leaving Pfizer facilities in the US daily to take vaccines around the country and the world.

Click here to read more.

Published in NS Packaging on December 14, 2020

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“As manufacturers realize what can be achieved with technology such as AI, IoT, robotics, and additive manufacturing, they are sourcing manufacturing closer to the customer to create a customer experience advantage (rapid customization and delivery) with a lower cost base” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and president of LMA Consulting Group, Inc., Claremont, CA.

US manufacturing recovered slightly in January but isn’t out of the woods

Dive Brief:

• The U.S. manufacturing sector showed signs of life in January, with the Institute for Supply Management’s purchasing manager’s index (PMI) rising from 47.8% in December 2019 to 50.9% last month. A reading above 50% marks sector expansion, while a reading under 50% signals contraction. 
• “Rising demand from households has helped support production in recent months, but January saw a marked slowing in new orders for consumer goods,” Chris Williamson, chief business economist at IHS Markit ​said in a statement. “Production of capital goods such as business equipment, plant and machinery meanwhile fell for the first time in almost four years, hinting at weakened business investment.”
• In 18 of the manufacturing sub-sectors ISM tracks, eight reported seeing some growth in January, namely consumer electronics, furniture, food and beverage, and tobacco products. Eight saw a contraction including apparel, leather and allied products; textile mills; electrical equipment, appliances and components; and petroleum and coal products.

Dive Insight:

January marked the first month of expansion since July 2019, however, the manufacturing sector isn’t out of the woods just yet.

“US manufacturing limped into 2020, with falling exports dampening output growth and causing a pull-back in hiring,” Williamson said. “The survey data are consistent with factory production falling moderately, meaning the manufacturing sector looks set to act as a drag on the overall economy once again in the first quarter.”

Click here to read more.

Published in Supply Chain Dive on Feb. 3, 2020

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Client Question

Should we pay attention to all this high tech talk? Certainly it seems like everyone and their brother is talking about artificial intelligence, the internet of things, and even the use of technologies such as virtual reality and autonomous vehicles. And this is aside from mundane topics such as ERP systems. In the interim, we need to function on a daily basis. We need to serve customers and deliver value to the bottom line, and we prefer not to get distracted unless necessary.

The Answer

We have seen clients get carried away with the latest and greatest technology fads. Although it was an interesting personal education, it typically didn’t result in a return on investment. On the other hand, we have also seen clients ignoring technology that becomes vital to their survival in their industry. After all, it is easy to do. When Sears used to be the Amazon of the age, no one thought they would be going out of business.

Thus, as usual, the answer is “it depends”. You must pay attention, learn about and invest in technology so that you can make a good decision as to which to pursue and which to ignore for your go-forward business strategy. If it were easy, we would all be successful for 100 years running yet there are VERY few companies in this position. Do you have a position or a person who is dedicated or allocates part of his/her responsibilities to this role? If you don’t call it out, it will fall by the wayside. This should be similar in concept to an R&D/ new product focus. Why should we focus only on new products and not new technologies?

Food For Thought

No two clients are alike. Some ask us this question and it is an obvious, YES, you must invest to stay relevant and increase business value. For others, it is an emphatic, NO. Why waste resources on additional technology when we haven’t implemented or used the available systems capabilities that will move the business forward? As it seems to go in business, it is usually the best executives and CIOs who are on top of their technology road map who ask these questions. The rest won’t even invest enough to find out where they should prioritize limited funds so they don’t become the next Sears!

At a minimum, once you get to a certain size or complexity, the minimum you should do is upgrade your ERP system so that you have a modern technological backbone and can scale up quickly as needed. With that said, it is rarely enough if your goal is profitable growth. If you’d like a technology and ERP systems assessment, please contact us. At a minimum, read our numerous articles and get started in evaluating your situation!

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Client Question

Should I really invest time and resources into technologies I don’t know will pay back? For example, there is a lot of conversation about the value (or lack thereof) with blockchain, IoT, AI and more. This concern continues to arise and is on every executive’s mind. They do not want to be left in the dust “holding the bag” (old and slow) while their competitors race by. On the other hand, they do not want to dump all sorts of money down the drain on technology that might not prove effective in their industry. And, in some cases, what they could invest would be a drop in the bucket. It would be like trying to refill the Pacific Ocean with a pail. Remember that fabulous song by Harry Belafonte “There’s a Hole in the Bucket“?

My colleague Diane Garcia and I set out to find the latest answer to this question at the Association for Supply Chain Management International Conference. There were several panels and presentations on each of these topics, and there were several exhibitors talking about the latest and greatest technology integrations.

The Answer

Undoubtedly, there is a lot of noise about these technologies. According to Gartner, AI augmentation will generate $2.9 trillion in business value and recover $6.2 billion hours of work productivity. Thus, it is easy to see why AI is gaining investment with the large companies and with leaders of large organizations. I love this quote from Harvard Business Review, “Over the next decade, AI won’t replace managers, but managers who use AI will replace those who don’t.” That about sums it up! We need to at least be aware so that we can make good decisions when it comes to these technologies.

As it relates to AI, according to McKinsey Quarterly, across all functions, respondents report that the most significant benefits come from adopting AI in manufacturing! Coming in second is risk with supply chain management just behind in third place. Thus, if you are in manufacturing you cannot afford not to at least consider the opportunities. Do you need to do this on your own? NO! We are seeing small companies come together to share resources and invest jointly to drive scale with results (and so they can compete with the large companies). There are also groups that facilitate this type of collaboration. At the most digitized companies, the adoption of AI capabilities is greater including machine learning, virtual agents, robotic process automation, computer vision and more.

According to Forrester, 90% plan greater investments in data and according to MIT Sloan, 85% view AI as a strategic priority. These two technologies cross over and seem to have the upper hand with the most immediately applicable technology. With that said, there were even more sessions about blockchain and whether it was hype or hope. The bottom line on blockchain is that it is a real opportunity for certain industries such as the food industry (related to food safety); however, it is still in early stages and will require a consortium of companies to come together to bring to reality. According to a leader from FedEx, whether big or small, no one company will be successful on its own. Yet all the “big guys” are interested and participating. Stay tuned to see where it goes. Last but not least, IoT is integrated into many conversations about big data, AI, autonomous vehicles and more because it connects technologies. In manufacturing, IoT is connecting machines and data for predictive maintenance and the possibilities abound.

Thus the bottom line is to pay attention but resist exploring technology in isolation. Learn to collaborate.

Food For Thought

As much as these technologies should be on your radar, don’t get carried away and forget your fundamentals. Do you have a scalable ERP system to support your business growth and profitability? If not, start there! Do you have reporting and business intelligence systems so that you can slice and dice information to make instantaneous, informed decisions as key customer questions or business opportunities arise? If not, start there! How about a simple CRM solution? Certainly in the Amazon Effect era, we must pay attention to customers.

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The article discussed the fact that IoT has been quite successful at driving results but the larger companies are the ones pursuing it. Certainly, with our clients, the small and medium size clients have less resources and need to prioritize, and we are seeing the same set of priorities. With that said, there is a lot of interest in IoT as it relates to connecting equipment, vehicles and more; however, it is a more complex topic with multiple vendors involved. It just hasn’t been rolled out in any significant way because manufacturers and distributors see more potential for customer and bottom line improvement with automation/ AI, ERP systems and additive/ digital manufacturing. Are you considering any of these options?

What Should We Consider and/or What Impacts Could Arise?

Since we work with clients that are small and medium closely-held organizations to private equity backed to multi-billion dollar enterprises, it is interesting to note what is in common across the board. Certainly, there is no doubt that almost every executive is at least thinking about automation and robots! 

Are you keeping up on the latest thinking on the benefits of technology? We NEVER support technology for technology’s sake. In fact, it is a common mistake for clients to get carried away with the latest and greatest concepts and lose sight of the return to the customer experience and the bottom line. With that said, you have to be aware of what’s out there and be continually evaluating what might make sense for your business. 

I just talked with a commercial banker about collaborating on a robotics education session. Why not seek out information and figure out which technology will align with your business strategy and objectives? Then, put together a trial to test the concept without a significant financial commitment. There are also resources to collaborate with to share in these learning opportunities. For example, we are creating a consortium for advanced manufacturing and logistics excellence in the Inland Empire focused on just this topic. Also, our non-profit APICS Inland Empire group, which is a chapter of the Association for Supply Chain Management provides symposiums, webinars and tours related to these types of topics. You’ll find more information on these types of topics on our resilient supply chain series.

August 7, 2019

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To think about what’s ahead in technology, it is important to put it in perspective with what’s ahead in business.  Read our article, “What’s Ahead in Business?” for details on the key trends impacting business:

1. Importance of the customer experience
2. Taking the holistic view has become a “must”
3. Volatility is the new norm
4. The coming power of manufacturing and supply chain

What’s ahead in technology lines up with these same themes. In order to achieve scalable, profitable growth, technology is an important enabler. The most relevant technology trends include: 

1. ERP upgrades – More and more companies are realizing that their system infrastructure must keep up with business requirements and customer expectations. As tough as an ERP upgrade can be, it is one of the only ways to make the leap from manual, labor-intensive processes to providing a superior customer experience efficiently.
2. e-commerce/ customer portals – Amazon. Alibaba. Customer collaboration. Need we say more?  
3. Business intelligence & data analytics – We are overwhelmed with mountains of data. We are so anxious to gather data yet we don’t seem to have the appropriate information at our fingertips when we need it. That’s where data analytics comes into the picture. Beyond that, predictive analytics is gaining steam.
4. Artificial intelligence – even my Mom counts on Alexa. In addition, who wouldn’t want a car that self corrects? Predicting customer patterns and behaviors is becoming more important. AI is set to transform many industries over the next several years.  
5. IoT– Smart factories. Smart homes. Connected devices and machines. According to NEWGENAPPS, 60% of global manufacturers will use analytics data tracked using connected devices to analyze and and optimize processes. 
6. Robotics & automation – Robots aren’t taking over the universe tomorrow morning, but they are working hand-in-hand with people to achieve many benefits such as to improve safety, increase speed and consistency, improve customer satisfaction, fill capacity shortfalls and and increase productivity.
7. Autonomous vehicles – Beyond self-driving cars and trucks, autonomous vehicles are used widely in manufacturing and distribution environments.  

Are you thinking about which of these technologies will support your business objectives?  Or which are likely to impact your industry?  Consider technology as a key part of your strategy and plans. If you’d like an expert to evaluate which, if any, of these technologies will be relevant to your business, contact us.

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