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Global supply chains are on the move. Executives have been hit with the harsh reality that the risk (supply chain, geopolitical, cyber, IP, etc.) is far higher than they realized when they outsourced with an eye to cost. In addition to that 80 pound gorilla, they also have suffered with delays, disruptions, and uncertainty in serving customers due to lengthy distances and logistical risk. Thus, supply chains are on the move. Strategies need to be rethought, the end-to-end supply chain assessed, and future customer needs evaluated to get in front of this changing landscape. SIOP (Sales Inventory Operations Planning) is a key process and toolset for successfully navigating this transition with profitable growth fueling the process.

Risks Abound in the Global Supply Chain

Risks abound in the global supply chain. From Russia-Ukraine to China’s extreme risk including threats to Taiwan to the increasing cyber risk, executives are struggling to navigate the global supply chain. A few critical points that “tell the story” of risk include:

• Russia-Ukraine war: The war has disrupted the critical commodities of oil and natural gas. Europe put sanctions on Russia which left them in a bad situation in getting enough energy to power their current lifestyle as well as critical manufacturing, logistics and infrastructure needs. Thus, Europe has been scrambling to address backup sources of supply. In the interim, Russia sold oil and natural gas to China and India. The end result is price escalation in addition to “supply on the move”. Oil and natural gas is used in countless products from medical devices to glasses to phones, thus impacting the global supply chain.
• The China risk factor: China is simply a mountain of risk. China is the number one manufacturer in the world and accounts for almost 30% of the world’s output. Thus, from internal issues (severe water and energy shortages with “solutions” of permitting two coal plants a week) to threatening Taiwan (putting 90% of the world’s advanced computer chips and 60% of the world’s standard computer chips at risk) to monopolizing rare earths (produces 60% and processes 85% of the world’s rare earths) to buying up critical infrastructure around the world (such as controlling both ends of the Panama Canal) and controlling the South China Seas, China wants to control the world’s supply chains.
• Talent & Technology: Resources are limited around the world. For example, according to EY and an iMocha report, 81% of organizations are experiencing a shortage in skilled tech workers. Similarly, the risk of cyber attacks and supply chain security issues increase with each passing day. For example, according to Deloitte’s report 2023 Global Future of Cyber Survey 2023, 91% of organizations report experiencing one or more cyber incidents or breaches.

And now Israel is at war. Volatility, uncertainty, complexity and ambiguity (VUCA) is at an all-time high in recent history. The bottom line is that risks have reached a level that is unacceptable to many executives.

SIOP to Devise a New Path Forward

SIOP (Sales Inventory Operations Planning), also known as S&OP is a process that will help you navigate changing business conditions (such as these extreme risks). SIOP starts with a view into your future customer demand (sales forecast, customer orders, quotes, CRM) and translates that into manufacturing and supply chain requirements. The process will highlight capacity constraints (production, storage, resource), upcoming bottlenecks, forecasts for investment (equipment, inventory, resources), make vs buy decisions, and customer/ product profitability opportunities.

For example, when consulting with an industrial manufacturer that was concerned about risks in the end-to-end supply chain, and so used the SIOP process to visualize what should be done. Based on their demand plan, they were able to see impacts to their supply plans and where risks were in their current manufacturing and supply chain. Thus, they assessed and took action to transition to backup sources of supply, expand their supply base into India, pre-purchase critical commodities to give them time to assess their future needs, and they expanded regional manufacturing by sourcing offload suppliers. By taking these actions, they were able to secure supply to meet their aggressive growth plans.

Assessing Strategies

In our book, “SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth“, we discuss how SIOP will fuel transformative strategies for growth while mitigating risk.

• Supply chain footprint: SIOP looks forward to future customer requirements and determines how to reallocate manufacturing and change the supply chain footprint (reshoring, nearshoring, regional manufacturing, additive manufacturing) to support key customers and grow the business while mitigating risk in how product is manufactured, distributed, transported and delivered in the order fulfillment process. Vast changes are occurring. For example, Apple is moving from China to India, Dell is moving from China to Vietnam, HP is moving from China to Mexico, and Intel is building a ‘mega’ factory in Germany and expanding capacity in the U.S. with its first new manufacturing facility in 40 years.
• Supply chains on the move: As the supply chain footprint evolves, the global logistics landscape must change to support it. Thus, as I said at the IMUI international conference, shipping routes will change and evolve with changing business conditions and risks. For example, in addition to keeping up with manufacturing changes, as China becomes risk laden and the South China Seas becomes uncertain at best, companies will continue to move manufacturing and/or change shipping routes. As delays consume shipping routes such as the Panama Canal, companies will find alternatives, and as strike risks impact supply chains such as the West Coast ports, shipping routes move (and the East Coast gains in this example).
• Examining links: SIOP opens the door to examine every link in the chain. From enabling margin analysis by product groupings, customers, markets and regions to examining the customer experience, the SIOP provides for holistic as well as departmental strategies.
• Margin vs risk: SIOP also provides the data and process for evaluating cost reduction opportunities, pricing strategies, sales channel and marketing options, operations and supply chain alternatives, and inventory and capacity fulfillment options while assessing customer value-add business risk.
• Talent & Technology roadmap: Last but not least, SIOP translates demand and supply plans into talent and technology requirements. More importantly, the resource requirements can will be impacted by the technology roadmap, and so the best SIOP strategies proactively address talent and technology to optimize, digitize and thrive. There are simply not enough resources at any company. Only those that automate, utilize technology and innovate will survive, let along thrive.

As risks abound, the best in class will utilize the proven process of SIOP to proactively navigate changing conditions in a manner that is not only supportive of profitable growth but is also focused on critical risks and long-term success.

Innovation: A Forward Take on Risk

Beyond the uncommon common sense strategies to ensure predictable revenue and EBITDA growth, executives must develop a culture of innovation. The world has become not only complex and convoluted, but also a maze of geopolitical risk dependent on advanced technologies. These advanced technologies escalate risk further as they are dependent on commodities in risk abundant regions of the world and carry the threat of cyber attacks. Thus, the smart are innovating. Only forward-thinking innovators willing to do what most executives will not do (such as invest when everyone else panics) while remaining calm, resilient and strong will thrive for decades to come.

Did you like this article?  Continue reading on this topic:
SIOP/ S&OP Playbook: Creating Predictability & EBITDA Growth

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

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

Material Influences

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

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

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

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

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

Labor Pains

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

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

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

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

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

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

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

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

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

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

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

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

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Executives are tired after surviving the pandemic, navigating supply chain disruptions, handling soaring inflation, and dealing with one challenge after another. However, it is not time to rest as supply chain risks abound. From the Russia-Ukraine war to China’s aggression in the South China Sea and as well as hurricanes, strikes, and bank failures, supply chain risks are not abating; they are simply changing.

Prepared companies will thrive. The rest will dwindle and die. For example, the recent labor unrest was the last straw for Yellow Freight after years where they struggled to stay afloat. Which will you be?

Prioritizing Supply Chain Risks

80% of success is derived from what you focus on. Thus, priorities are vital. Each industry is different, and each company is different. Assess the likelihood and impact of your risks. For example, if you have a union, evaluate your risk of labor unrest, and assess the impact if it occurs. For example, in working with a beverage manufacturer that had a union, their risk of labor unrest was higher than a non-union shop; however, the likelihood was small because of their proactive process. Thus, although the impact of production shutdown would be high with unhappy customers, it wasn’t considered a priority risk.

In another example, a household manufacturer purchased materials from China and so had a high likelihood of disruption if China gets into a conflict with a neighbor in the South China Sea, yet they had a low impact since they have been purchasing 20% of their materials from a backup supplier in the U.S. who agreed to ramp up as needed. In this case, although the likelihood of risk is high, the impact is low, and so it wasn’t a priority. On the other hand, an industrial manufacturer purchased a key material from the Russia/ Ukraine region and didn’t have an alternate supplier outside of the region. Thus, not only was the likelihood high, but the impact was also high since it could shut down production, elevating it to a top priority.

Preparing for Supply Chain Risks

Smart manufacturers will focus on prevention and preparation to mitigate priority risks. For example, instead of hoping your union will continue to function without increasing costs to the point where you might have to file for bankruptcy as occurred in the Yellow Freight example, smart manufacturers will proactively meet with the union, establish, and maintain lines of communication, and roll out advanced systems, technologies, and applications to improve employee engagement and the customer experience.

In the industrial manufacturer example, the Purchasing team collaborated with their demand planning and SIOP (Sales Inventory Operations Planning) teams to confirm the sales forecast, secure supply for a year, and to pursue alternate sources of supply and the expansion of regional manufacturing. The best companies partner with suppliers to ensure excess supply and/or capacity availability in areas of strategic potential and differentiation so that they can take advantage of opportunities as they arise.

The Bottom Line

Those companies that prioritize, prepare, and prevent supply chain risks will be able to take advantage of opportunities to grow and thrive while the rest deteriorate.

Originally published in Brushware, September – October 2023

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As originally published in ExpertClick on August 31, 2023

CLAREMONT, Calif., August 31, 2023/ExpertClick/– Manufacturing and Supply Chain Consultant Lisa Anderson, MBA, CSCP, CLTD, known as the Strongest Link in Your Supply Chain® and President of LMA Consulting Group Inc., emphasizes the critical importance for owners and business leaders to understand how current events can significantly impact their supply chains. 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.

As the Panama Canal grapples with drought conditions causing serious delays in goods transportation, the ripple effect is being felt worldwide. “The Panama Canal’s crisis underscores just how vulnerable global supply chains are to current events,” commented Ms. Anderson. “With a 40% market share in containers moving goods from Northeast Asia to the U.S. East Coast, these disruptions reverberate worldwide.”

Due to inadequate rainfall, the Panama Canal authorities have reduced daily container ship passage by 20%, from 40 to 32 ships. The maximum allowable ship draft has also been restricted to 44 feet, compared to around 50 feet before the drought conditions. This situation has led to a backlog of 130-160 ships, creating substantial supply chain delays. An alternate route would add 8,000 miles to the journey.

While many companies have diversified their supply chain strategies in light of the pandemic, switching from just-in-time (JIT) to just-in-case inventory models, this latest disruption has far-reaching consequences. Costs are surging with $300 – $500 per container becoming increasingly common. “The shift from JIT to just-in-case inventory has buffered the impact to some extent, but we’re still facing an escalating issue that is driving up costs. A comprehensive understanding of the factors impacting the supply chain can equip companies to respond more effectively to disruptions, minimizing risks and costs. As the Panama Canal issue shows, a lack of awareness is not an option. In today’s connected world, staying informed is not just good practice – it’s a business necessity,” she concluded.

For more insights on how to navigate the complex landscape of global supply chains, download Ms. Anderson’s special report The Road Ahead: Business, Supply Chain & The World Order. She has also released: SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth to help organizations implement a proven process. Download it at: Amazon and Apple. 

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Supply chain risks are exploding. Just look at the news, and you’ll see a potential UPS strike, a Canadian port strike, potential hurricanes (Hawaii, Florida), China stirring up potential conflict with China, the Crimean bridge attack, and much more. Any one of these issues could have a detrimental impact on the economy and could put a business in the wake of the issue out of business. Clients must prioritize preparation and prevention of significant risks.

For example, when I was VP of Product Supply for a mid-market manufacturer, our largest production facility (70% of the volume) was located in an area that could flood due to hurricanes. The Board of Directors wasn’t happy about purchasing excess stock year after year in preparation for hurricane season although we made a good case for it and continued to prepare. It used cash that couldn’t be invested elsewhere.

One year, a hurricane arrived that completely flooded the area. The cars were under water at the airport and no one could get to work, let alone trucks arrive with materials or leave with shipments to customers. The products were used in hospitals and nursing homes and so lengthy delays were not acceptable. Luckily, the builders of the plant had the foresight to build on a hill so that it was one of the only buildings in the area not affected; however, employees could not get to and from work.

The backup plant went into overdrive with production although it couldn’t produce everything that the main facility could produce. Because prevention and preparation were a priority, as soon as the roads were passable, trucks could pick up the excess stock and production could start full force because raw materials were already on hand. Thus, we were able to supply our customers with seamless customer service.

Unfortunately, most clients and colleagues are not in this position. They must prioritize preparation and prevention.

Preparation & Prevention Priorities

Preparing in advance will be far less expensive than waiting to respond once the issue occurred with contingent action. Once the hurricane arrived, no suppliers could get through with raw materials. Even if they could, they would have multiple priorities for businesses impacted by the hurricane. Most likely, we would have ended up on a waiting list. The best case scenario is that we would have to pay expedite fees if we could gain priority, and we would have waited a week to several months to get the required materials. Worse than that, our customer service would have suffered and we might have lost customers.

In today’s supply chain, the risks are much higher and voluminous, Thus, instead of suffering these unacceptable consequences, executives must prepare.

• Safety stock: Safety stock of key items or at certain times of the year (such as hurricane season) or for key customers make sense.
• Treat key suppliers as partners: Suppliers are not going to come through for you if you treat them as a vendor. Instead treat them as partners so that they will come through for you when these risks occur. You most likely should cut back on the number of key / critical suppliers and increase your focus on these partnerships. Be upfront with them, hold them accountable but also share in wins and losses while working towards win-win solutions/ path forward.
• Safety preparedness: Think about how to build safety into your process; it is not a one-time activity, and it isn’t something you should prioritize after the fact.
• Risk assessments: Develop meaningful risk assessments. Unfortunately, I’ve seen many risk assessments throughout the years that were more of a “check the box” exercise and not a focus on which risks to prioritize with accountabilities for leaders to mitigate those risks. Lots of paperwork with little sustenance will not lead to success in the coming decade.
• Inspections: You should follow up the assessments with the appropriate inspections to ensure everything is in order. These can be physical inspections, process inspections and systems inspections. Every client will be in deep trouble if their ERP system or IT infrastructure goes down. Inspect your critical manual work processes, your backup systems, etc.
• Insurance: Get the appropriate types of insurance to protect your company. You will need property insurance, D&O, automobile (potentially), cyber, etc. It isn’t easy to get insurance when you need it. You must get insurance before you need it.
• Other forms of insurance: Consultants can have an insurance like quality. There has been significant turnover and transition occurring since the pandemic, and several clients have kept us on board as an “insurance” to run decisions by to gain additional insights and to jump in and fill gaps while upgrading processes as needed. Trusted advisors and consultants can fill these types of roles.
• Sprinkler systems: You should install “contingent actions” as well such as sprinkler systems although prevention is better than preparation in this case! When you need it, you must have these contingent actions “ready to go”.

Please contact us with your thoughts on preparation and prevention stories, issues, and ideas. And, please keep us in the loop of your situation and how we can help your organization prepare to thrive and mitigate your highest risks. We are introducing a new SIOP (Sales Inventory Operations Planning) assessment to ensure your supply chain is ready to support your growth plans while mitigating critical risks. Contact us if interested to discuss further. Learn more about these topics in our blog and download your complimentary copy of our recently released special report: The Road Ahead: Business, Supply Chain & The World Order.

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There are mountains of geopolitical threats going on with significant impact on the supply chain. Most, if not all of these also relate to natural resources. For example:

• China’s threats to Taiwan: China has gone beyond tensions with Taiwan to threatening Taiwan. In the Taiwan Strait, China has normalized incursions into Taiwan’s Air Defense Identification Zone. The number, frequency, and danger behind these incursions have increased dramatically, and now China is conducting naval operations just outside Taiwan’s contiguous zone. Since Taiwan produces 90% of the world’s computer chips, you don’t have to think hard as to one of the reasons why. Not only is China #1 in the world in manufacturing including several products related to healthcare, other critical industries and national security, but its control over the South China Seas can impact the supply chain in a far greater way than the pandemic. Listen to a Supply Chain Chats video on this topic.
• Russia and Ukraine: The war has been going on for over a year and there is no end in sight. Russia and Ukraine produce many vital items for the U.S. and the world including oil (which relates to countless critical products), food and fertilizer, and several key commodities such as aluminum, nickel, and copper. These are used in products considered critical and related to national security. Listen to a Supply Chain Chats video on this topic.
• China’s Belt & Road Initiative & shopping spree: China has been investing in infrastructure and going on a shopping spree around the world in strategic places with the goal to “control” the world. For example, they are buying terminals at key Latin America ports, investing in infrastructure in places with natural resources, and buying up U.S. farmland at alarming rates. Clearly, these moves are gloomy for the outlook in supply chain.
• China’s water: China has a horrific scarcity of water in their Northern China Plain. Water is required for manufacturing, electricity, drinking and more. If China doesn’t figure out how to resolve these issues while keeping their manufacturing base intact, they might look to the water nearby in India. What will that mean for the robust manufacturing activity going on in India? Read additional details about the China water situation in our blog post.
• The need for natural resources & rare earths: Given advances in civilizations, industry, and consumer’s expectations, there is a ridiculous need for rare earths and natural resources. For example, in rare earths, we will need in next 27 years more than has been mined in the last 3000 years. Regarding copper, we will need more copper in next 10 years than we would have consumed in history of mankind. Not only are there vast shortages with these figures, but the areas related to geopolitical threats are the ones producing/ mining these items currently.

I discuss these issues at length in a recent webinar for Supply Chain Brief: Brief: Geopolitical & Regulatory Issues: The Path Forward in Supply Chain and Logistics (link direct to webinar below).

Action Plans Related to the Supply Chain

Clearly, hiding your head under a rock will not resolve these issues. Instead, we must immediately take action.

• Assess your risk: Rapidly perform a supply chain assessment. Your assessment should include your manufacturing operations (including offload suppliers, outsourced products, contract manufacturers, and internal sites inclusive of their dependency on their supply chain), suppliers (including your suppliers’ suppliers and further into your extended supply chain, your backup suppliers, etc.), your logistics (transportation, distribution, warehousing, e-commerce) partner network, your customers (and their dependencies), your infrastructure, etc.
• Upgrade your processes/ systems to proactively manage your supply chain: Roll out and/or upgrade your SIOP (Sales Inventory Operations Planning) processes, execution planning systems (demand, production, labor scheduling, distribution, replenishment, transportation), manufacturing operations and logistics capabilities, supply chain visibility and related processes/ systems. You will have to stay on top of issues, potential bottlenecks, and current status of your supply chain and be able to quickly pivot to address changing conditions.
• Supply chain control tower: Hand-in-hand with upgraded processes/ systems, you will need a supply chain control tower to understand your footprint and timely status of materials and products in your end-to-end supply chain.
• Find new sources of supply & source backup suppliers: In addition to the clear need to find / expand new sources of supply, ensure you have backup suppliers. Backup suppliers are always critical. These suppliers should not be “in name only”, meaning you need to continuously purchase a small percentage from them. For example, when VP of Operations & Supply Chain for a mid-market manufacturer, we purchased 20% of our needs for a critical raw material from a backup supplier. When that material went on allocation, we were able to source from the backup supplier and beat out larger companies because we had an ongoing relationship.
• Reshore, nearshore, friendly-shore, and expand manufacturing and mining: No doubt about it. We need to increase manufacturing capabilities near our customers and consumers. Producing to scale will be the key to success – in a site and logistics network we can “control”.
• Proactively manage demand and supply: Prioritize your SIOP (Sales Inventory Operations Planning) / S&OP process to not only align demand with supply and Sales with Operations, but, more importantly, to alert your team to strategic decisions that must be made to serve your customers profitably while maintaining your working capital so that you can invest/ expand and take advantage of upcoming opportunities. Learn more about SIOP in our newly released book, SIOP: Creating Predictable Revenue & EBITDA Growth.

Please contact us with stories, issues, and opportunities on what you’re doing to succeed and how these issues will impact your business. And, please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Learn more about these topics in our blog and download your complimentary copy of our recently released special report: The Road Ahead: Business, Supply Chain & The World Order.

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