The White House has launched a cabinet-level supply chain council as the criticality of the topic rises to the top. Although they emphasized the minimization of supply chain disruptions as it relates to inflation, our perspective is that the supply chain is much bigger than that. From national security to securing supply chains of the future, there is tremendous work that industry must take on at a dramatically accelerated pace for companies that want to thrive 5 to 10 years from now.

Why Supply chain Resilience Matters

China is the largest manufacturer of the world and there are many risks rising to the top. For example, China is quietly working on several fronts:

• Supporting Russia and Iran behind-the-scenes (buying up oil etc.)
• Threatening Taiwan (which produces 90% of the advanced computer chips in the world)
• Threatening goods movement in the South China Seas (risking shipments to/from Asia)
• Buying up and/or taking control of farmland, critical minerals, ports/ terminals (including control of the Panama Canal), and other infrastructure around the world
• While the US has decreased carbon emissions by 20% since the peak, China is expected to be at an all-time high in 2023. They permitted 2 coal plants per week in 2022.

There are other risks throughout the world. Look no further than the Russia-Ukraine war, the Israel-Hamas war, etc. Each of these events impact the supply chain. In addition, there are the many disruptions carrying on since the pandemic caused by a variety of factors including lack of resources (labor, materials), weather, strikes, etc. The baby boomers are retiring at a quick pace, creating a shortage of resources we haven’t seen in our memories.

Thus, supply chain resilience has become of paramount importance.

Supply Chain Resilience Path Forward

Unfortunately, there is no 5-step plan to check off to create a resilient supply chain. The bottom line is that it requires confronting reality, uncommon common sense, execution of process disciplines, innovation, and a willingness to take smart risks and invest wisely.

Our proactive clients are jumping on creating a resilient supply chain. In no special order, they are following several of the following strategies:

• Rapid assessment: It helps to know where you are starting (strengths, weaknesses, risks, priorities) so that you can focus efforts rapidly. Learn more about LMA’s complimentary supply chain assessment. 
• Reshoring: Getting manufacturing under better control
• Nearshoring/ Friend shoring: Bringing manufacturing closer to consumers/ customers to minimize disruptions and lengthy transit times.
• Backup sources of supply: Pursuing multiple backup sources of supply to cover for unexpected issues.
• Securing funding to support resiliency and growth: Investments are required (technology, people, infrastructure) to create supply chain resiliency.
• Implementing technology to support resiliency: Smart executives are upgrading ERP and related technologies (IoT, AI, CRM, customer/supplier portals, business intelligence, etc.) to increase visibility, automate mundane tasks, and upgrade the customer experience.
• Cross-training internal & external: In addition to cross-training resources to backfill key roles, smart executives are supplementing resources with consultants, collaborating with supply chain partners, and finding creative solutions to ensure customer service and profitable growth during volatile times.
• Moving from vendors to partners: Vendors will not be there when you need them. Vendors implies price. Upgrading to suppliers is a step in the right direction; however, during the risk laden times, partners are needed.
• SIOP (Sales Inventory Operations Planning): Upgrade your demand and supply planning to get in front of what’s needed to create a resilient supply chain with a SIOP process. Learn about SIOP, also known as S&OP, and read our recent article on moving manufacturing forward instead of backwards with SIOP.

The Bottom Line

There are many more strategies you should pursue to ensure supply chain resiliency. Start with a rapid assessment while jumping on at least one strategy that supports your company objectives. Don’t just add a program and assign your already limited resources to another priority. Instead, do the hard work to determine what will make a difference and focus your resources.

If you are interested in reading more on this topic:
A Resilient Supply Chain Built for Competitive Advantage

The post Supply Chain Resilience Has Risen to the Top with the White House Council appeared first on LMA-Consulting Group, a supply chain consulting firm.

The awareness of the importance of international supply chains has grown in recent years, not just among the business fraternity, but more widely in the media, among politicians and ordinary citizens as well. Because of the multiple crises that we have endured such as COVID, Brexit, War in Ukraine and geopolitical tensions with China people now understand much better that it is the correct functioning of these complex supply chains that keeps the show on the road.

The post The Importance of Supply Chain Partner Relationships appeared first on LMA-Consulting Group, a supply chain consulting firm.

Improved supplier data will give your supply chain the competitive advantage to drive customer loyalty.

Netstock recently collaborated with leading supply chain transformation expert, Lisa Anderson, Founder & President of LMA Consulting, to discuss how businesses can improve supply chain processes and reduce supplier risk to ensure they meet demand.

According to Zippia.com, only 6% of companies report having complete supply chain visibility. With access to improved supplier data, you’ll better understand your supplier network and utilize these insights to ensure you make the best decisions to optimize your planning. Investing in a supply chain planning solution that monitors and measures suppliers’ reliability will increase supplier visibility across your supply chain. 

Use these five steps to manage and identify supplier risk across your supply chain.

Step one: Classify your suppliers. 

To prioritize your efforts, you should know the following information about your suppliers: 

1. Which suppliers deliver on time and in full
2. How many items each supplier provides
3. The average lead time per item
4. What stock items come from which locations

External disruptions also impact suppliers. By increasing the frequency of communication with your suppliers, you’ll know if they are experiencing any challenges in sourcing materials or potential delays in delivering your products. This information will help your business quickly adapt to any increased lead times so you can find an alternative solution.  

Step two: Use a dashboard to help disseminate the data. 

Work with improved real-time supplier data across your supply chain. During these volatile times, having a Sales & Operations Planning solution in place can help manage the data and provide visibility to make the best choices to help your business minimize supplier risk.

Click here for the full story.

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Material Availability: State of Affairs

Since the pandemic, it has been a constant battle to ensure material availability, let alone to proactively manage cost and service. Even the most proactive and successful clients have experienced brief shortages of key materials and extended lead-times. The rest have been plagued with these issues.

Material costs have been skyrocketing as inflationary pressures persist. We don’t need to look further than the impact of oil and gas prices. No matter the industry (food and beverage, building products, aerospace and defense, life sciences and healthcare), the increase in oil and gas prices has had an impact. Typically, oil and gas prices will relate to a material used in the manufacturing process somewhere in the end-to-end supply chain, if not in every link in the supply chain. And, of course, the price of oil and gas will directly impact the transportation costs in every supply chain. The same is true for labor cost and, unfortunately, a whole host of other inflationary impacts on materials.

During these inflationary times, every piece of material (or ingredient) is significant and will impact cost. Clients are experiencing escalating prices yet limited availability and extended lead times, negatively impacting service and margins. For example, a consumer products manufacturer experienced successive price increases with every purchase order for several months in a row. In a life sciences manufacturer, suppliers didn’t pass on successive price increases with each order; however, the price increased dramatically early on. It became a race to pass on price increases to keep up with changing conditions. Unfortunately, another industrial products client hadn’t kept up with price increases, and so when we helped them develop a customer and product profitability model, it became apparent that quick adjustments had to be made before customers refused to absorb the changes.

The Impact on Material Planning

Material planning becomes increasingly critical during these volatile times. Not only is production not possible without materials and components, but if schedules have to change or manufacturing runs cut short, the increased waste and reduced efficiencies have become increasingly costly. Certainly, if production runs behind and expedited transportation is required, not only will freight costs be higher due to rising fuel prices, but expedited freight charges will be staggering – if you can find someone to deliver it on an expedited timeline at all.

From the service viewpoint, it is quite clear that if you cannot produce to customer demand, your customer service will suffer. Although the most proactive clients have put a full-court press on managing OTIF (on-time-in-full) and jump through hoops on a daily basis to minimize impacts to the customer, the vast majority of companies have seen a negative impact on OTIF and lead times. The “average” companies have truly suffered. It is no longer good enough to be “average”.

Given the significant impacts, there should be an all hands-on deck approach to upgrading material planning capabilities to best serve customers and minimize negative consequences on cost. It is a frustrating position to navigate on a daily basis, and so the best clients are also realizing that they must invest in these employees (provide support, training/ education, outside resources, etc.) to simply retain this critical talent.

Material Planning & Relevant Factors

Material planning (also known by many names including purchasing, buying, and production control depending on the company) focuses on how to ensure the “right” materials arrive at the “right” place (facility) at the “right” time. Frequently, material planning is also associated with MRP, material requirements planning from a process perspective.

Material planning should consider the following factors:

• Order frequency – have you set up purchase contracts or commitments to receive on a daily, weekly, monthly, seasonally, or sporadic basis?
• Order size – what minimum order size requirements have you set up in your supplier agreements? Is the order size by item, shipment, or blanket purchase order?
• Supplier reliability – how predictable is your supplier’s performance? Will your receipts arrive +/- a day, week or month? Do you receive advance notice?
• Supplier lead time – what is your standard lead time by supplier or commodity? How much notice do you receive for delays or shortages?
• Transportation lead time – where is your supplier located, could they produce and ship from multiple facilities and what is the typical mode of transportation and associated lead times for each?
• Service policies – what service policies have you negotiated in your supplier contracts? What has been their performance?
• Supplier network flexibility and recovery capabilities – if your supplier has multiple plants and/or locations that could produce and store your material, have you discussed this possibility? Have you worked with your supplier to run appropriate trials to support flexibility?
• Safety stocks – have you set up a safety stock agreement for critical materials and suppliers?
• Forecasts and/or consumption information – are you sharing consumption and/or forecast information with suppliers so that are in the loop with changing demand patterns, expected opportunities and/or deviations from the norm?
• ABC value – have you set up your items as A B or C based on volumes, value or another method to designate frequency and importance?
• Storage constraints and warehousing costs
• Inventory objectives

Material Planning Strategies

A material requirements plan should take the factors described above into account when building a plan. Typically, you’ll start with near-term work orders, and review longer term demand to determine your material plan based on what’s needed to support this master production schedule while considering your supplier agreements and associated service policies and your inventory objectives.

Depending on many factors including your manufacturing environment, supplier network, level of collaboration and agreements, your product and commodities mix, your tools (ERP and related technologies), and your objectives, there are multiple material replenishment strategies you could follow. Conceptually, consider the following options:

• Reorder point / Kanban strategies – in essence, your suppliers replenish an agreed upon reorder quantity when as materials are consumed.
• MRP strategies – in essence, you purchase based on the latest mix of work orders, sales orders, forecasts, and transfer orders as needed when reviewing your inventory and purchase orders in process.
• DDMRP strategies – demand-driven material requirements planning (MRP) which is more sensitive to variations in demand and supply.
• Supplier managed (also known as vendor managed inventory) – the supplier makes sure you have the appropriate inventory to support production requirements, managing within agreed upon service and inventory policies

There are tradeoffs, benefits and costs to each approach depending on your demand, supply, factors, and objectives. Frequently, we see a combination of approaches based on the supplier, commodity, relevance to the business, etc.

Incorporate Material Planning into a Monthly Review Cadence

Review your material 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 material plans required to support the master production schedule and related customer requirements. This will impact inbound freight, storage requirements, and production capabilities to support customer orders, and it will be directly impacted with changes to production sourcing (production facility, reshore/ nearshore, offload), supply chain networks and stocking strategies.

Refer to our blog for many articles on planning, capacity and related systems. . Also, read more about these types of strategies in our eBooks such as The Road Ahead: Business, Supply Chain & the World Order. If you are interested in talking about what it would take to purse the replenishment planning and SIOP journey in your business, contact us.

Did you like this article?  Continue reading on this topic:
Improving Service Levels, Logistics Efficiencies, and Inventory Turns with Replenishment Planning Best Practices

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“Manufacturers looking for any kinds of raw materials or ingredients are having to revise their schedules continuously, and it’s a daily challenge,” said Lisa Anderson, supply chain consultant and president of LMA Consulting. “There are issues from one end of the spectrum to the other.”

The current supply chain disruption has become a simultaneous viscous cycle and web of complications, where one setback can set off a chain of events in any number of directions.

A group of suppliers, associations, consultants and bakers sat down with Commercial Baking to assess their most recent challenges and their often-unanticipated side effects.

While bakers scramble for raw ingredient materials and items like packaging film, the equipment manufacturers are in the same predicament with items such as lumber, steel and electrical components.

The supply chain disruption is broader and deeper than just a problem between bakers and suppliers. It goes back to the beginning with agriculture and hits all the way to consumers.

The Purdue University Center for Commercial Agriculture (CME)’s latest Ag Economy Barometer, a monthly survey to measure agricultural producers’ economic confidence, indicated weakening sentiment among agricultural producers, dropping to the lowest levels since the early stages of the pandemic. September’s Ag Economy Barometer dropped 14 points to 124, representing the lowest reading since July 2020.

Click here for the full story.

The post Commercial Baking: Sounding the Alarm on Supply Chain: The raw materials ripple effect appeared first on LMA-Consulting Group, a supply chain consulting firm.

The COVID-19 pandemic has challenged supply chains like never before, but there are tactics and strategies companies can take to overcome its effects—and perhaps even emerge stronger. We explore them in this Insight Report.

COVID-19 and its effects on supply chains Often referred to as “The World’s Busiest Airport,” Atlanta Hartsfield-Jackson International is usually a picture of crowds, bustle and noise. By April 2020, however, the busy hub had been transformed into something akin to a ghost town. Passenger traffic was a trickle of its former self, down 85 percent. Cleaning and maintenance crews had taken on skeleton status. Restaurants were shuttered and TV monitors flickered their all-news stations to mostly deserted waiting areas. The stark scene was typical of not only airports around the world, but also hotels, restaurants, warehouses, factories and just about any kind of business setting that had been thriving only a few weeks earlier. The sudden changes were the result of the spread of coronavirus disease 2019, otherwise known as COVID-19, a disease caused by a previously unknown virus that was first detected in Wuhan, China in December 2019. As the virus spread to other parts of the world and the number of cases and deaths rose, with no known method to combat it available, citizens were advised to stay home and practice social distancing as much as possible.

Tactics for tough times

Keeping supply chains running as normally as possible within such unprecedented circumstances represents the biggest challenge ever presented to most of the managers who oversee them. Fortunately, there are a number of tactics that they can take to ensure their products keep moving and the financial impacts to the companies they work for are minimized.

Know your suppliers

One of the first things a company can do to ensure the stability of their supply chain may seem obvious, but it’s one that many outfits don’t have a handle on— know who your suppliers are. Take the time to create a thorough list that goes deeper than just the tier-one suppliers you deal with directly.

Set priorities

Once a full list of suppliers has been created, the next step for managing in the pandemic is to prioritize the most important of those on the list. This exercise should be based not so much on the volume driven by a supplier, but rather how critical they are to the health of your supply chain, says Lisa Anderson, founder and president of LMA Consulting Group Inc., a supply chain consultancy in Claremont, Calif. Identify what materials are absolute must-haves and who is providing them. “Make sure that you are intimately familiar with their operations, how agile they are, how quickly they can ramp up with volume,” she says. “Understand their finances to the degree of knowing whether a large disruption will run them out of cash quickly.”

“Knowledge, as they say, is power, and this idea is all the more true during times of crisis such as the current pandemic. Keep communication lines open with suppliers and be willing to alter pre-pandemic routines”.

Click here to read more.

Published in Intelex Technologies on Nov. 20, 2020

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In 2015, we kicked off the LMA Advocate awards to recognize those people who have been instrumental to our growth and success.  We started with 10 people to celebrate the 10 years since we started the business, and we now add one each year. Although I’ve learned plenty along the way, one thing I did “right” from the start was “collect” good people. Our LMA Advocates are the “best of the best” who we’ve worked with through the years.  I am eternally thankful and thrilled to work with them. For 2020, I’m excited to recognize Shannon Reininger.

Shannon Reininger and I have worked together for 10 years with clients, as well as with non-profit board collaborations. We worked together at two separate clients.  She is well-respected for her hard work, innovative capabilities (always finding new solutions to complex issues) and the value she brings to the bottom line.  In fact, a third client brought me on board solely based on her recommendation that LMA was the group to work with to achieve SIOP results. Shannon turned around planning/ production control, materials management, procurement and logistics functions at multiple clients and she never stops. She is one of the few professionals I’ve met who can manage effectively in turnaround situations, as well as profitable growth scenarios. It stands out in my mind that she not only took on a new area (reverse logistics) to learn the ropes, but she also found ways to work with the team to build morale and drive significant value to the bottom line.

We have also spent quite a bit of time together working on non-profit objectives related to ASCM/ APICS. She took on educating coworkers on the APICS body of knowledge. And, of course, she took it further than the typical instructor to ensure her coworkers learned and could apply the concepts. She has also helped me brainstorm topics such as how to manage cost up the chain in the aerospace industry, how to proactively manage demand in a make-to-order/engineer-to-order environment and many more. Shannon makes a positive, lasting imprint on her work places, colleagues and association members.

One Tip to Implement This Week:
Follow Shannon’s lead. Here are a few of the NUMEROUS options you can pursue that pop to mind when thinking of Shannon and her many accomplishments.

1. Never stop learning: Pursue your APICS certification. Don’t be afraid to dive into new topics, try new ideas, attend conferences and brainstorm with colleagues, etc.
2. Never stop improving: Research the latest trends, test new theories, trial new products, services and processes, implement what works and improve upon what doesn’t.
3. Never waste resources: Always look for ways to maximize benefit, minimize risks, reduce waste and utilize already-existing resources to achieve progress.
4. Never assume you know it all: Listen to your team’s ideas, remove obstacles and help the team turn ideas into reality.
5. Never lose sight of the customer: Keep your customers and their needs top of mind.
6. Never stop looking for new solutions: During COVID, Shannon quickly went to her local restaurant to use excess stock in a win-win deal while everyone else followed a panic shopping strategy.

Many of these strategies are simply uncommon common sense and best business practices. Read more about these types of ideas to navigate and successfully emerge post COVID-19 in my free eBook Future-Proofing Manufacturing & Supply Chain Post COVID-19. Please send your feedback and stories. I will them incorporate into a future article, video or interview.

Stay safe & healthy.

September 20, 2020

The post LMA Advocate 2020: Shannon Reininger – Tips for Success appeared first on LMA-Consulting Group, a supply chain consulting firm.

Manufacturing and Supply Chain Expert, Lisa Anderson, MBA, CSCP, CLTD, president of LMA Consulting Group Inc., tells companies to recognize workforce talents and take time to partner with the right suppliers. LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth.

“Stabilizing the supply chain has been critical these last few months for manufacturers and distributors. This has been necessary to minimize volatility and keep goods flowing, in turn, fulfilling customer expectations. Customers understand that these are different times, but they will be patient only so long. That is why it is critical to get the supply chain stabilized,” Anderson explains.

In past communications, Anderson has suggested understanding demand by connecting with both the customer and the customers’ customers. She has also discussed realigning demand with supply through the SIOP process (Sales, Inventory and Operations Planning). Yet, the most critical component in solving problems, disruptions or even expansion of the supply chain is a company’s talent. “I often ask our clients who in the organization, which disciplines and levels, is involved in the SIOP process and collaboration with customers and suppliers. If the answer is simply Supply Chain or Operations, they are missing out on solutions that their talent can bring to the table, and even more concerning is the potential loss of talent due to the lack of involvement in meaningful activities. I also ask about the depth of talent and cross-functional capabilities within a discipline. This is telling, especially when complex solutions are required to satisfy key customer requirements or resolve a situation within the supply chain. And, one of my final questions lies in the determining the kinds of relationships the company has with suppliers. Employees and suppliers can create new solutions or products and be champions of an organization,” she continues.

With high levels of ambiguity and volatility, the leader’s role is more important than ever. Anderson suggests three ways to immediately leverage talent to stabilize the supply chain. “Talent is key to stabilizing the supply chain. 1) Get your salespeople and your customers involved in the forecasting process. Sales tends to be on the outskirts of demand and supply. They need to be as involved and accountable in the demand planning and fulfillment phase as they are in generating orders. 2). To stabilize internal operations, fill gaps and keep teams focused on the customer while maximizing efficiency, formal and informal leaders must monitor progress, adjust plans and stay on top of morale, training and developmental needs. 3) Do not assume the past will repeat. Deep dive into critical supplier relationships and future viability. Make sure you have the right supplier partners, not simply the least costly vendors, and track progress frequently. And, make sure you do not have all of your eggs in one supplier basket” she concluded.

Anderson recently released a short video, What’s Happening in Manufacturing & Supply Chain: Consider Your Top Talent. Anderson has also released, Future-Proofing Manufacturing & the Supply Chain Post COVID-19, an eBook that provides practical go-forward insights, advice and experiential value.

Published in Today’s Medical Developments on September 18, 2020

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May 22, 2019

Supplier management has been a theme this week. I taught a CSCP (certified supply chain professional) class session about supplier relationship management and SRM software last night. An attendee had a great example of the impact of poor quality because her company was sending an entire container load of product back to Asia with defective parts which was bound to have negative impacts on the customer. After all, they were already delayed, and now they were spending another month on the water to just start over again. That led us to discussions on backup suppliers. 

Next, I spent quite a bit of time on webinars and calls today talking about the critical importance of supplier lead time, reliability, safety stock, lot size and how these factors impact our ability to maximize service, profit and cash flow. And then I presented to APICS Ventura on “The Resilient Supply Chain” this evening, and we had intriguing discussions on the trends of vertical integration, supplier consolidation, allocation of key materials (and how consumer products are gaining priority access with the leftovers being allocated to industrial companies), the impact of tariffs on sourcing, and several more topics. 

The bottom line of each of these discussions is that proactive management of suppliers is of ever-increasing importance in today’s Amazon impacted business environment. If you don’t have what you need, when you need it, where you need it, in good quality, and within cost guidelines, you are likely to lose vs. your competition. And this includes last minute changes! Do you consider your supplier your partner or someone to negotiate with and gain an advantage over?

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

It is NOT all about cost. Of course, the hot topic on executives’ minds is how to achieve scalable growth, and so profit and cost are important topics, yet smart executives realize it is quite easy to sacrifice the future by saving pennies in the present. Similar to the mistakes made several years ago when it didn’t matter whether it made cost-sense or not (ie. Boards were demanding outsourcing regardless of the financials), many Boards are demanding supplier concessions without looking at the extended supply chain impacts. Instead, stick up for looking at total cost and taking the value viewpoint! Of course, this means you’ll be focused on costs but it won’t be your sole focus.

We talked about several scenarios where you had to invest extra cost upfront to achieve longer-term success. For example, we talked about keeping a more expensive backup supplier and giving them 20% of the volume. Boards and private equity backers weren’t too happy with the extra cost yet this risk mitigation technique saved the day on more than one occasion. When the material went on allocation, the main supplier struggled or the ports/ transportation infrastructure broke down, those who planned for the inevitable bump in the road had uninterrupted supply from the backup supplier and satisfied customers while the competition fell further behind. Are you thinking about your suppliers like a cost or a partner?  You’ll find more information on these types of topics on our resilient supply chain series.

The post Why Supplier Management is More Important Than You Think appeared first on LMA-Consulting Group, a supply chain consulting firm.