Companies should seize opportunities to increase packaging efficiencies, improving profitability and sustainability

Since packaging is typically 10-40% of the retail price of products, there is no doubt it adds up to a relevant factor in product cost and waste. Packaging encompasses product design, prototypes and trials, materials, production, labor, shipping, and recycling and/or disposal. The most proactive companies pay close attention to opportunities to increase packaging efficiencies throughout the end-to-end supply chain to improve their profitability and sustainability.

Product Design Collaboration

Product design is at the heart of improving packaging efficiency. Our best clients take a collaborative approach to R&D and packaging design encompassing the end-to-end supply chain. For example, in a healthcare products manufacturer, the packaging engineer worked with R&D, manufacturing technicians, procurement resources, and logistics resources with a specialty in warehousing and transportation. In addition, customers, packaging materials suppliers, equipment specialists, and other resources took part in the collaborative design.

By involving these cross-functional resources, the full life cycle could be incorporated into the product design. In this case, they wanted to ensure the design encompassed the optimal packaging design to meet the customer’s visual, strength, and storage specifications while minimizing the materials, labor, and logistics costs. For example, the objective was to minimize the packaging materials while meeting product specifications. However, the team had to review potentially conflicting factors. For example, doubling the number of units of product per package would make the way the package fit in the box less efficient, the box might not be best designed to optimize the pallet, the pallets might not be optimized to fit on the truck, or the customer might not like the visual design or be able to fit the product in the storage area.

In addition, the product’s performance had to remain intact. Reducing the quantity of materials must not negatively impact the way the product worked for the customer. Compressing the product into the package must not negatively impact the absorbency of the product. Using redesigned materials in the manufacturing process must not impact product quality. This healthcare manufacturer successfully redesigned the product and reduced the total cost by more than 20% inclusive of materials, packaging, warehousing, and transportation costs.

Packaging Efficiencies in Bottling

There are vast opportunities to improve packaging efficiencies in the bottling industry. For example, Niagara has accomplished several key objectives in eliminating waste through packaging and innovation. They designed new packaging that eliminates the need for a cardboard tray in their cases and reduced the amount of plastic in their bottles by 60%. Thus, this packaging requires less materials and uses up less pallet space, allowing the company to reduce carbon emissions and ship more water per order.

Since 2009, Niagara improved its carbon footprint by 59% through innovations in design, lightweighting, and packaging. It has also increased its recycled content usage, which reduced greenhouse gas impact by bottle by 12%. Gaining these results requires a full lifecycle view of supply chain from product design through recycling.

Packaging Efficiencies at Amazon

According to Amazon, it continually works to reinvent and simplify packaging options. The company combines lab testing, machine learning, materials science, and manufacturing partnerships to accomplish this goal. Amazon notes that it avoided more than 2 million tons of packaging materials and reduced per-shipment packaging weight by 41% since 2015. The bottom line is that a significant reduction in packaging will reduce costs and improve sustainability.

Improving packaging efficiency can produce dramatic results. The healthcare products manufacturer, Niagara, and Amazon prove that by focusing on packaging design and innovation, tremendous savings in materials, labor, and freight will flow to the bottom line. In addition, carbon emissions are reduced and sustainability objectives are achieved.

Originally posted in Adhesives & Sealants, March 2024

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As the labor market tightens with changing demographics, companies will need to leverage technology and digitize their supply chains.

The world has never experienced a labor shortage quite like the one we are experiencing. According to the Bureau of Labor Statistics, employment growth will average .3 over the next decade; however, labor participation will drop from 62.2% to 60.4%. In essence, we have entered a secular labor shortage. Similarly, according to the German Chamber of Commerce and Industry, half of German companies are struggling to fill vacancies due to labor shortages. Thus, the only companies that will thrive in the next decade will leverage technology and digitize the supply chain.

The use of technology and automation will be of paramount importance to not just supplement the labor force, but also to meet ever increasing customer requirements and provide visibility across the end-to-end supply chain. Companies must be faster, focused, and perform with lights-out manufacturing and logistics to succeed. Thus, a modern ERP system will be an assumption, not a differentiator. In addition, companies must pursue advanced technologies such as business intelligence and predictive analytics to forecast the future and determine where to focus, artificial intelligence, and IoT solutions to support items such as predictive maintenance, and digital twins to optimize process and product performance.

Pertinent Examples

An electrical power solutions manufacturer struggled with an ERP system upgrade, and it impacted every aspect of the business, requiring additional resources to support customer requirements. A base ERP system is no longer acceptable. Instead, a modern ERP system that supports customer expectations such as configure-to-order (CTO), customer relationship management (CRM), and customer-related functionality — including customer portals, order fulfillment visibility and backlog management — is essential.

Since the ERP team didn’t have the time required to fully prepare, the executives quickly supplemented with additional consulting and temporary resources, developed interim solutions for tracking backlog, and ordered ahead to support the transition. Even with one of the best management teams in the industry, until modern ERP functionality was available, they had to implement several stop-gap measures to avoid significant customer impact.

An industrial manufacturer struggled to forecast revenue accurately one month ahead, causing frustration with their board of directors. An assessment of their business processes and use of technology showed that their sales and order entry systems did not talk with their production and inventory control systems. Although Sales could estimate revenue, Operations had no idea which products would be required to support that revenue until Engineering completed design. Thus, although performing above expectations, the two rarely met.

To turn this situation around, we had to build a bridge between the two systems with a data model. However, that alone wouldn’t resolve the issue, as the product details were not known soon enough to ensure seamless delivery and revenue predictability. Thus, in addition, the team created a digital-twin-type capability to predict the product grouping and model information with a SIOP (sales inventory operations planning) process so that materials could be purchased and capacity planned. Once this information was built into automated dashboards, Production was able to transition from reactive to proactive, thereby creating predictability in shipping plans and taking it a step further with proactive margin enhancement strategies.

An aerospace manufacturer continually struggled with on-time delivery, and customers were losing patience. The issue was a bottlenecked area of the manufacturing process that simply could not keep up. They could not find enough high-skilled resources to run the machinery on second and third shifts, and overtime was maxed out. The team pursued an alternate strategy to employ a technological solution to run lights out around the clock.

They purchased a robot and focused their most advanced resources on modifying the robot to work in their manufacturing environment. With the upgraded robot, their high-skilled resources refocused attention on setting up the machinery during day shift, which allowed the robot to perform the repetitive tasks on second and third shift. Order delivery performance improved rapidly, and customer complaints disappeared as the bottleneck was removed. Later, they focused on upgrading their distribution processes with lights-out capabilities as well to further differentiate performance.

Forward-thinking companies will pursue smart technology upgrades while their competition focuses on containing cost. The companies that figure out how to do more with less and digitize their supply chain will thrive while the rest struggle. Resources will no longer be plentiful, and so pivoting with technology will be the only route to executing successfully while meeting ever increasing customer expectations.

Originally published in Adhesives & Sealants Industry.

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Clients that focus on providing a superior customer experience along with achieving optimal bottom-line results will perform better than competitors.

As companies are searching for ways to successfully navigate these turbulent times, the best ones are achieving a win-win focus on the customer and costs. Since the pandemic, there has been a heightened awareness of the customer experience as companies struggled with supply chain disruptions, delays, shortages, and the lack of resources. Similarly, as inflation has continued to be a drag on profits, companies are focusing additional efforts on cost reduction and margin improvement programs. Best yet, finding win-win solutions that improve the customer experience and cost will achieve substantial business results.

According to Zendesk CX Trends 2023 report, more than 50% of consumers will switch to a competitor after only one bad experience. This trend is not limited to consumers, as Zippia confirms with the finding that companies focusing on the customer experience increase their revenues by 80%. These are powerful statistics and demand attention. Clients that focus on providing a superior customer experience perform better than the rest.

Improving the customer experience without also improving the cost and margins will not support profitable growth. Thus, forward-thinking clients ensure cross-functional teams continually search for cost-reduction opportunities, experiment with new ways of doing business, and trial strategies to take performance to a new level. Continuous improvement alone will no longer cut it. The best companies focus on continuous iterative improvement as well as what can be seen as radical change.

Pertinent Examples

A healthcare products manufacturer wanted to grow sales after a prolonged period of product stability without an upgrade. In addition, key raw material costs increased significantly due to rising input costs derived from oil and natural gas. However, the company was owned by a private equity firm that wanted aggressive growth and a rapid increase in profitability, and they expected price increases to be offset as well as cost reductions to occur while increasing service levels. These conflicting goals could only be resolved with a cross-functional innovation team.

The leadership team empowered a cross-functional team including R&D, Packaging Engineering, Operations, Supply Chain, and Logistics. The primary focus was on redesigning the product so that it would provide improved performance for the customer while using less materials, optimizing packaging, and improving operational costs. The team involved both customers and suppliers in a collaborative design effort to find opportunities to redesign materials to work better yet reduce usage and scrap, optimize how the product ran on the production lines, and minimize warehousing and shipping costs with compressed packaging optimized for storage and transportation. The team launched an upgraded product line that spurred a 30% increase in sales while reducing costs by 20% in addition to offsetting key input price increases.

Additionally, the manufacturer implemented a demand planning and vendor managed inventory (VMI) program for its number-one customer. By looking into its customer’s demand data and inventory position at its distribution centers across the United States, the company was able to optimize its replenishment plans and reallocate products in a way that maximized customer service levels and reduced lead times while minimizing inventory levels internally and at its customer. In addition, the company was able to plan, which enabled it to optimize truckloads, utilize ideal routes, and maximize the volume of product per truckload, thereby saving 20% in freight costs. Most importantly, it soared to the top category on its customer’s scorecard.

Another medical device manufacturer followed the same path by working closely with its key customer to optimize product designs to provide innovative customer solutions while making the product less expensive to manufacture. It also invested significantly upfront in upgrading to ISO 13485 to ensure compliance and customer satisfaction while expanding the value internally across the entire shop (medical and non-medical) to standardize and promote efficiencies throughout the product flow. The company expanded business with its key customers and improved efficiencies with standard processes and automation wherever possible. Additionally, it assessed customer and product profitability and reviewed operational improvement ideas to reduce scrap rates and improve efficiencies.

Forward-thinking companies think strategically about creating a win-win of enhanced customer value and bottom-line results. Clients that focus on the customer and develop innovative and collaborative solutions tend to also outperform their competition in profitability and performance. During times of volatility, the companies focused on customers and cost will rise above the noise.

Originally published in Adhesives & Sealants Industry, December 2023

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Proactive Backlog Management to Dramatically Improve Service

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With sustainability increasing in popularity and the carbon footprints of end-to-end supply chains evaluated, innovation and manufacturing will skyrocket.

Top manufacturers are prioritizing common-sense sustainability solutions to drive triple-bottom-line results. In fact, there is a significant opportunity for U.S. manufacturers to expand capacity and gain business with a significant advantage in sustainability over China and other manufacturing options. As sustainability continues to increase in popularity and end-to-end supply chain carbon footprints are evaluated, U.S. manufacturing will skyrocket. Technological advances and innovation drive sustainable manufacturing, and, according to the WIPO Index, the United States is one of the top countries in innovation.

Manufacturers are making significant strides in sustainability. There is a focus on sustainability in materials, manufacturing, product life cycle, and logistics. There are countless ideas for improving performance. For example, manufacturers are building sustainability into product design and partnering with suppliers to reduce materials, minimize waste, design for low-impact materials, and transport with a sustainable supply chain. In manufacturing, they can optimize processes to consume less materials and conserve energy and natural resources. There are a host of logistics programs rolling out across the board as well. For example, as regional manufacturing occurs, the distances travelled will be reduced, and as cleaner, energy-efficient modes and options are pursued, sustainability improves.

Pertinent Examples

According to GE, it launched the CFM RISE (Revolutionary Innovation for Sustainable Engines) Program as a part of its commitment to achieve aggressive goals for a sustainable future, including reducing fuel consumption and CO2 emissions by more than 20%. P&G is focused on water usage. Its goal is to increase water efficiency by 35% per unit of production and to recycle five billion liters in its facilities worldwide. Tesla is continually focused on sustainable manufacturing. For example, Tesla recently announced its goal to reduce the use of silicon carbide by 75%, significantly reducing its use of rare earth metals. Instead, the use of a permanent magnet motor will allow the company to scale production more efficiently.

Similarly, a healthcare products manufacturer put together a program to partner with suppliers to redesign materials to decrease usage without impacting product quality and manufacturability. Additionally, the manufacturer brought in the equipment supplier and raw-material supplier to assess how to best utilize its machine to minimize usage and waste, and installed visual inspection equipment to minimize waste due to quality defects. And finally, the manufacturer also brought its customers into the process to assess packaging to minimize plastic and packaging materials while ensuring that the product met the customer requirements, which positively impacted the sustainability of transportation as well.

Regional Manufacturing and Logistics Examples

For a multitude of reasons stemming from the pandemic, including supply chain risk and political risk, the transition to regional manufacturing clusters and reshoring/nearshoring of manufacturing is rapidly increasing in the United States and Europe. China is far less sustainable. For example, China is using the least efficient energy source that emits twice the amount of greenhouse gas than natural gas. According to NPR, China permitted two coal plants a week in the last year, which is six times more than the rest of the world combined. On the other hand, the United States uses mainly natural gas and has advanced manufacturing practices, frequently producing with the lowest emissions in the world.

The logistics arena has also made vast improvements. For example, according to PMSA, the San Pedro Bay Ports together saw steep and dramatic emissions reductions in 2022. The combined numbers reveal drops of 90% for diesel particulate matter (DPM), 97% for sulfur oxides (SOx), 63% for nitrogen oxides (NOx), and equally remarkable declines for other emission categories, compared to the baseline year of 2005. Cleaner, smarter transportation is also a high priority with a multitude of sustainability initiatives being pursued across all modes of transportation including rail, truck, pipeline, and air.

Innovative organizations are partnering with their end-to-end supply chain to create sustainable supply chains. The best-in-class companies are driving the triple bottom line with benefits to people, profit, and the planet. As sustainability gains momentum and end-to-end supply chain visibility is achieved, a manufacturing resurgence will follow.

If you are interested in reading more on this topic:
Sustainability Gains but the Technology Isn’t Always Ready

Originally published in Adhesives & Sealants Industry, November 2023

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Originally posted in ASI – Adhesives & Sealants Industry – June, 2023

Innovation allows companies to achieve higher levels of growth, profitability, employee engagement, and success.

According to the Global Innovation Index (GII), Switzerland ranks first in the world with the US edging out Sweden for the second position. China continues to ascend and is in the eleventh position, and the only middle-income economy within the top 30. India also rated number one in the lower-middle income category. It is apparent that innovation, growth, and success seem to go hand in hand. This insight rings true in the business world as well. The most innovative clients have the highest levels of growth, profitability, employee engagement and success.

New Product Development

One of the most visible forms of innovation is developing new products and submitting patents. No manufacturer can thrive long term without a keen eye to research and development, designing new products, and upgrading existing products. The World Intellectual Property Organization (WIPO) reported that the demand for patents hit record levels in 2022. It is no accident that India’s patent applications shot up by 25% as they emerge in the manufacturing realm. China filed the most international patent applications, followed by the US and Japan.

New products can drive success. For example, at a lighting manufacturer, the CEO put a heavy emphasis on designing new products to enter new markets and maintain their top position in their industry. He was one of the only executives investing in people at the height of the Great Recession. Excellent talent was available, and so he hired when the competition cut and invested resources into research and development. Fast-forward a few years and they had developed new products, got architects to spec their products into plans, and they were growing steadily in the new market.

Supply Chain Innovation

Innovation does not come just in the form of new products. You can reconfigure, repackage, develop new services, and find ways to meet unmet needs. These forms of innovation can be far more important as few people develop the new sticky pad. Even the iPhone was an iteration of the iPod which was simply a better “Sony Walkman”. Supply chain innovation can be a critical ingredient to success in the next decade. During the pandemic, executives learned that supply chain should be integral to their strategy to drive profitable growth. Start with your ideal customer and find the best way to grow and innovate with them.

For example, in a piping insulation manufacturing company, providing high quality products and rapid service was cornerstone to growing the business. They had built a distribution network to position product closer to their customers to provide short lead times and quick turnaround service; however, since they didn’t store all items at these distribution centers, they also experienced increased freight costs to supplement customer orders and ship direct from the manufacturing facility when needed. Service suffered because the right product was not in the right place at the right time, and storage costs increased with this model and due to the bulky nature of the product. Thus, a focus was put on innovating the supply chain model to find a new solution to provide short lead times and high service levels while minimizing costs and inventory.

The executives invested in supply chain consultants, supported innovation with trials/ pilots of new replenishment strategies, rolled out advanced ERP and planning system functionality, reviewed and upgraded processes, and designed inventory analytics to support improved service at lower costs and inventory levels. Not only did service levels dramatically improve from the high 30%s to the 90%s for On-time-in-full (OTIF), but costs and inventory levels were reduced. As improved and predictive information became available with business analysis and reporting, they also were able to make key pricing, product rationalization, and service policy decisions sooner and created a resilient supply chain.

Operational excellence is no longer enough. Innovation has become cornerstone to success. There will be more opportunity than ever before during the next decade, but only for those companies continually innovating and improving with changing circumstances. Those that innovate will be ready to take advantage of market opportunities and will pivot with evolving conditions. Will you innovate and grow or decline and die?

Lisa is founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She recently released SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth as an e-book that can be found at https://www.lma-consultinggroup.com/siop-book/.

The post Supply Chain: Innovate to Thrive in the Next Decade appeared first on LMA-Consulting Group, a supply chain consulting firm.

Originally posted in Adhesives and Sealants Industry in May of 2023

As the healthcare industry supply chain faces more challenges, supporting industries must be proactive, resilient, and innovative.

Although the visible bottlenecks in the healthcare supply chains are getting calmer, volatility will remain high. From the impacts of increasing interest rates and bank failures to labor and material shortages to global conflicts, the risks in healthcare supply chain will skyrocket. This situation will create as many opportunities as challenges, and so the proactive, resilient, and innovative companies will thrive while the rest diminish. The key will be deliberately making that choice and ensuring your end-to-end supply chain partners are on that same trajectory.

Current Status of Healthcare Supply Chains

Since the supply chain is an interlinked series of suppliers, manufacturers, and logistics partners, the bottleneck moves from one link to the next as demand and supply are out of alignment. During the pandemic, the visible signs were abundant with ports stacked up at the ports. Fast-forward to post pandemic and much of China was locked down for almost a year, the Russia-Ukraine region has been in war and the Great Resignation has grown across the world (reducing the number of people in the workforce to lower than pre-pandemic levels), severely limiting supply while demand raged as people started to spend money, catch up on medical appointments and live life again.

Thus, critical shortages and extended lead times remain while there is a glut of inventory in the “wrong” products in the “wrong” place at the “wrong” time, leading to continued disruption, inflation caused by limited supply, and recessionary signals caused by the cost of capital and the oversupply of “wrong” products throughout the supply chain. To make matters more challenging, global tensions are on the rise with China and several other countries that supply essential medical devices, key materials, and active pharmaceutical ingredients, as well as other critical commodities and components.

Inflation, Workforce Issues & Labor Shortages Adding to the Volatility

Inflation, workforce issues and labor shortages are further disrupting healthcare supply chains. The country faces a shortage of up to 124,000 physicians by 2034, including 48,000 primary care physicians, according to the American Medical Colleges. Of immediate significance, according to The American Hospital Association, 136 rural hospitals closed from 2010 to 2021 alone. And, according to the Chief Healthcare Executive, the Texas Hospital Association has warned that 1 in 10 hospitals in that state is at risk of closure, with nearly half of that state’s hospitals projecting negative operating margins. As these medical professional shortages persist and closures occur, patients still require attention. Thus, healthcare is on the move, and the supply chains will have to catch up. Thus, more of the “wrong” items will be in the “wrong” places at the “wrong” time., thereby creating additional disruption, inflation to move and/or transfer them (from one owner to the next), and inventory stockpiles in the “wrong” place.

The Successful Path forward

There will be more opportunity than ever before for proactive, resilient, and innovative companies to gain market share during these volatile times. The successful companies will take control. Starting by targeting their ideal customers, they will focus limited resources on what provides the most value to these key customers, including providing value-add services such as vendor managed inventory so that their customers have the “right” products in the “right” place at the “right” time with minimal resources and risk.

They will go further into their supply chain to assess risk and mitigate shortages of critical components and supplies due to resolvable issues such as delays in transportation and material and labor issues at a third-tier supplier. Reliability will be prioritized over cost, and additional suppliers will be qualified even though the cost and time required is high. Backup suppliers will be scalable to mitigate issues such as those that occurred in the baby formula market. And taking control of essential healthcare supply chains will become a priority as reshoring and nearshoring production gains momentum. For example, Costa Rica and Mexico are building strong medical device manufacturing clusters to support healthcare supply chains. And the successful will deploy technology to support the sustainability and scalability of these initiatives.

It is no longer sufficient to leave manufacturing and supply chain reliability to chance. The proactive, resilient, and innovative will thrive and gain the opportunity to grab market share from those remaining on the roller coaster of volatility. Think ahead, be proactive and be willing to invest in supply chains of the future to support your ideal customers and be uniquely positioned to grow and thrive.

Lisa is founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She recently released SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth as an e-book that can be found at https://www.lma-consultinggroup.com/siop-book/.

The post Healthcare Supply Chains appeared first on LMA-Consulting Group, a supply chain consulting firm.

Originally posted in Adhesives and Sealants Industry in February of 2023

Transportation has been in chaos since the pandemic. It started with logjams at the ports that persisted for multiple years, continued with atypical events such as the ship getting stuck in the Suez Canal and truckers blocking the border of US and Canada, and continues to rage on with labor shortages across the board in rail, trucking, and all transportation sectors. Although these specific transportation woes will eventually come to an end, since the supply chain is interconnected, new disruptions will arise. Instead of responding to each issue, the best will use a proactive approach to successfully navigate and stand out from the crowd with high service levels.

The transportation woes have certainly proven the importance of the transportation sector. If materials and ingredients don’t move, nothing will be produced and shortages such as the baby formula and children’s Tylenol shortage will persist. If fertilizer and food doesn’t move, grocery store shelves will be bare. If chemicals are not transported by rail, purified water will become scarce and medical devices will not be produced (as anything with plastic will be an issue). The one common element in every supply chain is the need to transport materials and goods from point A to point B. Thus, what could be more important than taking the proactive approach to navigating transportation woes.

Reshaping of Supply Chains

Do not assume that what worked in the past will work in the future. There is a reshaping of supply chains taking place. Supply chains are on the move. For example, manufacturers have realized they cannot rely on China and are reshoring, nearshoring, and friendly-shoring their supply chains. They are also sourcing new partners, putting backup suppliers in place, and derisking their supply chains. Distributors and retail has also realized they must take action to avoid the fiascos that occurred in recent history. For example, they are moving freight from the Los Angeles and Long Beach ports to the East Coast ports to avoid a potential port strike and backlog at the ports. Consumers have shifted to e-commerce, accelerating the need for last mile delivery. The only element staying the same is level of change.

Proactive Approach to Successful Navigation

Start by taking the long-term view and be willing to confront the realities of the changing landscape. Before jumping on the low price bandwagon as prices decrease across the transportation sector, think about the impacts of the reshaping of supply chains. As supply chains move, the transportation needs will evolve and change, creating further disruptions. Instead of negotiating price with potential suppliers, source reliable partners that will scale and adjust with your changing needs and who will provide the appropriate level of service for your target customers. Find win-win strategies to innovate, collaborate, and drive joint profitability.

Take a step back and assess your ideal customers’ future state needs. Using a SIOP (Sales, Inventory, Operations Planning), also known as S&OP, process, match these needs with your transportation capabilities, capacities, and contingencies. Proactively reshape and disrupt your supply chain and transportation infrastructure before it disrupts you. Change modes of transportation. Source new partners, divert resources to new regions, collaborate with unlikely bedfellows such as competitors, and secure resilient capacity when everyone else is cutting back. Success will follow if you persist.

It is no longer sufficient to respond to transportation disruptions. The resilient and strong will survive, yet the proactive and innovate will thrive. There will be more opportunity than any period in history including those who leapfrogged the competition for decades to come during the Great Depression. Think ahead, be proactive and create your future supply chain and transportation capabilities while your competition is securing a ten-cent price decrease. You will be uniquely positioned to grow and thrive.

Learn more about how to use SIOP to succeed during volatile times in our new eBook SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth. Download your complimentary copy.

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Companies must develop proactive and clear strategies that help them stay ahead of the ever-changing disruptions within the supply chain.

Although there are rumblings about the supply chain smoothing out, only the weak will ignore the new normal world of non-stop supply chain disruptions. The supply chain is a system of systems. Thus, for example, although the West Coast ports have caught up after intense focus, shippers transitioning to the East Coast ports, and the spring season of Zero COVID policy shutdowns in China, rail has been backlogged and the East Coast ports are experiencing delays.

Once rail is no longer an issue, the bottleneck could move to trucking or warehouse labor or another supply chain issue. In addition, there are many potential issues that could create new disruptions at any layer of the supply chain. For example, the hurricane in Florida caused transportation delays and manufacturing plants had to shut down temporarily. China has a new wave of Zero COVID policy shutdowns and is threatening Taiwan, the world’s main and vital source of advanced computer chips. And the war rages on with Russia and Ukraine, threatening commodities required to produce electronics and other critical products, just to name a few. The successful will switch from reactionary firefighting to proactive strategies to get ahead of these non-stop disruptions.

Supply Chain Strategies

The bottom line is the supply chain has become an excuse. Even though we are living in a new era of non-stop disruptions, we must get ahead of the curve if we want to survive, let alone thrive. Of course, it depends on your unique situation and set of circumstances; although there are several strategies that can get you moving in the right direction.

First, do a rapid assessment of your supply chain. Start by getting clear on your supply chain links or layers. Evaluate your suppliers, your suppliers’ suppliers, your customers, your customers’ customers, your products, your product supply network, your manufacturing capabilities and capacities, and your transportation partners. Identify your critical partners, your weakest links, and understand your customer and product profitability patterns. Prioritize, plan, and act.

If you are heavily reliant on manufacturing in other countries, especially those far away, unfriendly, or with governments that can dictate your success or lack thereof, rapidly assess reshoring and nearshoring opportunities (also known as friendly shoring) as well as expand capacity and/or partner with manufacturers closer to customers. If you perform a total cost analysis, it is likely to be breakeven or a benefit to pursue these options; however, don’t wait for the outcome. You must invest in your ability to control your future and secure manufacturing capacity to support your target customers’ needs.

Identify your target customers and ideal future-state customers. Determine which products and services will meet their needs this year, next year, and five years from now. Quickly assess a directionally correct path forward, and incorporate these findings into your SIOP (Sales, Inventory, Operations Planning), also known as S&OP, process. Your SIOP process will provide clarity on potential bottlenecks, decisions required (such as pricing, reallocation of capacity), and manufacturing and supply chain adjustments needed to support your growth and profitability goals.

Finally, assess your technology and human capital requirements to support your objectives. Although 90%+ of clients can better leverage their ERP system and related technologies to a greater degree to drive customer service, on-time-in-full (OTIF), profitability, and working capital improvements, it is no longer enough. Upgrading to a modern ERP system with advanced data analytics and business intelligence capabilities has become the new baseline to automate, digitize, predict, and provide a superior customer experience.

It is no longer sufficient to successfully navigate supply chain disruptions. Only the resilient and strong will survive, whereas the proactive will thrive. As the weak retire, sell, or get absorbed, the proactive will stay ahead of changing conditions with supply chain strategies and will be uniquely positioned to grow and thrive.

Originally posted in Adhesives and Sealants Industry in January of 2023

The post Proactive Strategies to Get Ahead of the Non-Stop Supply Chain Disruptions appeared first on LMA-Consulting Group, a supply chain consulting firm.

Originally published in Adhesives & Sealants Industry Magazine, December 2022

Companies can focus on win-win-win strategies to impact people, profit, and the planet with supply chain strategies that reduce packaging, modify materials, improve processes, and reduce transportation and logistics costs.

By Lisa Anderson, Founder and President, LMA Consulting Group

With the increase in interest in the three P’s of the triple bottom line (people, planet, and profit), packaging rises to the forefront. It is controllable, and there are several options for how packaging can contribute to the triple bottom line. Starting by expanding your view from your suppliers’ suppliers to your customers’ customers, you’ll find several opportunities for recession proofing your business by partnering with supply chain partners to achieve the ultimate win-win-win.

Almost every raw material and finished good requires packaging. If you can minimize packaging without impacting product quality, you will have a direct impact on the triple bottom line by reducing materials and waste while increasing efficiency, effectiveness, and profitability. You could also redesign packaging to better utilize the packaging design to improve the carbon footprint, profitability, and people’s lives.

When assessing sterile medical applications, you could research the clinical requirements for the barrier. Good packaging design, material selection, and composition can minimize the requirements for the barrier. In a non-sterile application, you might evaluate the use of recycled content and biomaterials.

Pertinent Examples

As it relates to packaging design, material selection and composition, an adult incontinence manufacturer wanted to redesign the materials to perform better yet use less materials in the product for a win-win-win for the customer, manufacturer, and supplier. The R&D, Package Engineering, Purchasing, and Supply Chain teams collaborated closely with the supplier to develop new materials that would achieve the objectives. After several iterations, trials, and revisions, the team accomplished the triple bottom line. Less materials were used in the product, less packaging was required, less waste occurred on the lines with close alignment between operations, equipment suppliers, and key suppliers, and the product performance and customer satisfaction improved.

From a logistics perspective, the resulting packaging was designed optimally to maximize the product in the box, on the pallet, in the warehouse, and most importantly, in a truck so that they could gain up to 20% additional product on the truck for the same price. It also optimized warehousing and storage requirements so that they could shut down an overflow storage facility, not only reducing the movements but also reducing damage and wasted packaging materials.

In another example related to this manufacturer, the team was able to minimize the waste associated with the construction and elastomeric adhesives as well as the fastening tapes by focusing on the manufacturing process. Operations put attention on centerlining the process, asset care, and people development, and these “basics” delivered consistent results over time. Since materials were a preponderance of product cost, these saving went straight to the bottom line, but, more importantly, the people felt engaged, and the customers could count on receiving quality products that met their specifications on-time so that they could serve their patients.

In a life sciences manufacturer of proteins, a cross-functional team focused attention on forecasting sales by package sizes so that they could better align their operations resources to priority tasks to have the right products in the right package in the right place at the right time. Since they had several custom products in custom sizes, it wasn’t a simple task to standardize what was achievable while gaining a directionally correct view by package sizes so that they could set their bottling schedule to align with customer demand. However, after creating a demand plan to support sales growth objectives and translating that plan into bottling requirements by size, they were able to reduce waste, minimize non-essential inventory, and support aggressive growth targets with high on-time-in-full percentages and reduced lead times, creating loyal customers.

Winning Strategies

In each of these examples, the manufacturer communicated and coordinated across the end-to-end supply chain to achieve success. Within each supply chain partner, a cross-functional team participated to ensure the packaging and product was designed, redesigned, and adjusted with the supplier, manufacturer, customer, and even the end customer in mind. The most successful companies are focusing on win-win-win strategies to impact people, profit, and the planet with an eye across the supply chain to reduce packaging, modify materials and composition, improve processes, and reduce transportation and logistics costs while improving overall performance to the customer.

The post How Packaging Can Contribute to the Triple Bottom Line appeared first on LMA-Consulting Group, a supply chain consulting firm.

Posted in Adhesives & Sealants Industry, November  2022

With the increase in interest in sustainable materials and manufacturing, there will be a significant opportunity for U.S. manufacturers that use common sense, good manufacturing practices. In fact, because manufacturers have realized that it is far less environmentally friendly and energy efficient to produce in Asia, India, and the like, as sustainability increases in popularity and end-to-end supply chain carbon footprints are evaluated, U.S. manufacturing will soar. Technological advances and innovation drive successful sustainability in manufacturing, and, according to the World Economic Forum, the United States is one of the top countries in innovation.

Are you focusing on sustainable manufacturing? Successful companies are stepping up their efforts in sustainability. There are countless ways to improve sustainability while following common sense manufacturing practices. For example, manufacturers have rolled out lean initiatives, maintenance improvements, and machinery and equipment upgrades that have reduced the waste of materials. There has also been significant focus on rolling out improvements to reduce energy, material, and water waste. Additionally, companies have started using cleaner energy such as natural gas and renewable sources.

Pertinent Examples

According to Siemens, Coca-Cola HBC Australia has a priority to be as environmentally friendly and carbon efficient as possible in manufacturing. It has invested in a high-speed line that is not only one of the fastest in the world, but also energy efficient and water efficient. Additionally, 100% of the electricity comes from renewable sources, and Coca-Cola HBC Australia has put metrics and reporting in place to measure energy and water consumption.

Similarly, an absorbent products manufacturer focused on how to reduce materials, packaging, waste, and transportation costs to achieve the win-win of margin improvement and carbon-footprint reduction. Since pulp is one of the most water-intensive manufacturing processes, the manufacturer focused attention on updating and maintaining equipment, waste reduction and recycling, and auditing water usage. In the converting process, there was an intense focus on reducing waste and scrap by working with equipment suppliers, engineering, and operations resources, and by partnering with suppliers on material development. The company partnered with several suppliers to adjust material compositions and to jointly develop materials to run more efficiently on the lines with 20%+ less scrap and to reduce material composition without impacting product quality.

From a transportation standpoint, the R&D engineers and the packaging engineers redesigned the products, packaging, and manufacturing process to compress the product as much as possible without impacting quality. They also reduced the packaging materials and designed the product to maximize the pallets that would fit on a truck. Additionally, the logistics professionals implemented a transportation management system (TMS) to analyze transportation routes, carriers, and how to maximize the number of boxes on a truck. The system put together multiple-stop truckloads for shipping lanes to minimize transportation expenses as well as the carbon footprint. The bottom line equated to a 20-40% advantage.

A building products manufacturer focused attention on electricity costs and usage. It pursued several improvements to become more energy efficient. In addition to partnering with the local electric company and hiring an energy expert, the company conducted an energy audit and put together energy plans. It incented its people to work in non-peak hours to strategically schedule downtime during peak hours. The company also retrofitted and upgraded equipment, optimized air compressors, and improved its industrial furnace energy efficiency.

Resilient and successful organizations are partnering with suppliers on material formulation and adjustments, partnering with equipment manufacturers to optimize the use of the equipment to minimize waste and maximize efficiency, and are innovating within their organization to find ways to reduce energy, water, and material usage. Sustainability will not occur without internal and external focus. The most successful companies are focusing on win-win-win strategies to impact people, profit, and the planet. As sustainability gains momentum and end-to-end supply chain visibility is achieved, there is an opportunity for a U.S. manufacturing renaissance to follow.

The post Common Sense Manufacturing Practices Driving Sustainability Improvements appeared first on LMA-Consulting Group, a supply chain consulting firm.