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

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

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

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

To read the full article, click here.

The post IE Industrial Market to Face Challenges in 2024 appeared first on LMA-Consulting Group, a supply chain consulting firm.

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

Manufacturing & Distribution Metrics

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

How to Choose Metrics

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

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

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

Client Examples

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

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

The Bottom Line

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

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

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

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

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

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

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

Originally published on Adhesives & Sealants Industry on September 23, 2022

Logistics costs have been staggering. According to the 33rd Annual State of Logistics report produced by the Council of Supply Chain Management Professionals by the global consulting firm Kearney and presented by Penske Logistics, U.S. business logistics costs rose by 22.4% last year. The bottom line is that the global supply chain is out of alignment, and it remains out of alignment. Unfortunately, it isn’t a simple or quick fix to re-balance and right-size the supply chain and curtail inflationary pressures.

Current Challenges

Look no further than recent occurrences in the global logistics landscape. Shanghai was under lockdown for two months, and wait times reached a peak of 69 hours before reopening. During that lockdown, factories had to wait on raw materials, creating potential future disruptions in the supply chain. As Shanghai started shipping again, there are concerns of a new wave of container ships arriving at the U.S. ports, creating new congestion and delays. On the other hand, labor negotiations are creating concerns at the West Coast ports, and so some shippers are diverting containers to other U.S. ports, causing congestion, delays, and increased costs throughout the system.

From a shipping point-of-view, costs will remain high with rising interest rates, historically high fuel prices, increasing wages, and inventory carrying cost pressures. Fuel prices are likely to remain high with the Russia-Ukraine war, energy policies, and the inability to change the situation quickly. Inventories are up by double-digit percentages in the second quarter and warehouse vacancies are at historic lows, and so inventory management is taking on greater importance. Unfortunately, the right inventory is not in the right place at the right time. 

Successful Inventory Management

Those that manage inventory well will have the opportunity to grow and thrive, and the rest will lose customers, and/or be saddled with debt and have limited cashflow. Strategic decisions will have a direct impact on inventory levels. For example, a lawn and garden tools manufacturer had to keep a minimum of 16-20 months of inventory on hand to satisfy customer requirements and to offset the 13-week supplier lead time from Asia. Although most of the inventory was built into lead time, the manufacturer was able to minimize inventory levels vs. its competition with effective inventory management disciplines.   

Successful inventory management processes require exemplary planning disciplines. Thus, the tools manufacturer implemented best-practice demand planning processes to forecast future sales and product mix. The resulting demand plan was provided to manufacturing and purchasing so that the production schedule and purchase plan would make sure that the right items are available at the right time to best support customer requirements at the lowest cost. The distribution (replenishment) and logistics plans took it from there and made sure that the right product was distributed to the right location (its internal warehouses or its customers’ distribution centers) at the right time by the optimal modes of transportation to support its customers’ frequently changing needs in the most efficient and effective manner possible.  

Advanced Planning and Adapting

Although the tools manufacturer could reduce inventory to three months with effective inventory management, it decided the built-in lead time was no longer acceptable. Thus, for this reason among others, it also decided to move the bulk of its manufacturing from Asia to North America, thereby decreasing the inventory required to support the built-in lead time. These inventory strategies created a competitive advantage so that it could be more resilient with changing conditions.  

By implementing advanced planning principles across your organization, you will most effectively manage your assets and best support your customers. Since there are widespread supply chain disruptions, those companies that have the “right” inventory available for key customers and potential ideal customers will have the opportunity to grow and thrive while their competition struggles to navigate the supply chain chaos and inflationary pressures. The strong will continue to get stronger, creating more opportunities in the next few years than at any time in history except for during the Great Depression, while the weak get weaker. Reevaluate your strategic decisions as inventory gains in importance and focus on proactive inventory planning processes to take control and thrive during these turbulent yet opportunistic times.

The post Gaining a Logistics Edge with Inventory Management appeared first on LMA-Consulting Group, a supply chain consulting firm.

In this episode of Interlinks, I am joined by my colleagues from the Supply Chain Special Interest Group at the Society for the Advancement of Consulting:

• Lisa Anderson, President of LMA Consulting Group Inc. in the Los Angeles metro area in California
• Dr. Karen Y. Wilson-Starks, President and CEO of Transleadership Inc, in Colorado Springs

In this discussion we explore some of the challenges and remedies that companies across the sectors are encountering as they face into the post-COVID future and the challenge of a never normal world with ongoing supply chain disruptions, geopolitical tensions, and climate change.

Originally published on Interlinks, June 5, 2022 .

Click here to download.

The post Supply Chain Challenges, Remedies & Leadership appeared first on LMA-Consulting Group, a supply chain consulting firm.

Even with the ports open, getting the materials off the containers is still a challenge, especially as the trucking industry remains a drivers’ market. “You have to send the trucks to the appropriate terminals,” comments Lisa Anderson, Manufacturing and Supply Chain Expert, MBA, CSCP, CLTD, president of LMA Consulting Group Inc.

Click here for the full story.

The post Commercial Baking: Sounding the Alarm on Supply Chain: Q4 Shipping Crisis’ Impact on Bakery appeared first on LMA-Consulting Group, a supply chain consulting firm.

To understand the state of the B2B eCommerce market, where it’s headed and what drives CPG wholesalers and distributors to adopt omnichannel commerce, we surveyed 200 Pepperi prospects during 2021.

Respondents included CPG wholesalers and distributors across 3 regions including the US (106 respondents), EMEA (62) and APAC (32).

To understand more about why these changes are taking place, and where omnichannel can support, we took a closer look at the forces behind B2B eCommerce growth.

Over half of those that plan to adopt an omnichannel commerce approach are doing so with an eye on increasing revenues (58%). It goes very much in line with the 2020 Global Benchmark Report revealing that on a global scale, distribution companies experience an annual revenue loss in the range of 7.25% – 28.47% due to sub-par sales practices, and an annual margin loss in the range of 2.89% – 15.70% due to sub-par pricing practices. 53% reported they want to be more competitive in the market (53%), 47% are driven by wanting to satisfy customers and around 18% to increase product discoverability.

Despite the pandemic and the accelerated growth of B2B eCommerce, the majority (55%) of respondents still haven’t implemented a self-service portal.

Out of three sales channels, telesales and field sales are still the most preferred and widely used channels among wholesalers and distributors across all regions.

Lisa Anderson, President, LMA Consulting Group, Inc. comments on the future of B2B eCommerce.

Click here for the full story.

The post Pepperi: 2021 FMCG B2B eCommerce Benchmarking Report appeared first on LMA-Consulting Group, a supply chain consulting firm.

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

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

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

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

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

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

Click here for the full story.

The post ACHR News: HVACR Distributors Automate Warehouses to Save Costs, Keep Pace appeared first on LMA-Consulting Group, a supply chain consulting firm.

What is micro-fulfilment?

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

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

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

Did you like this article? Continue reading on this topic:
E-Commerce Has Exploded

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Manufacturing and Supply Chain Expert Lisa Anderson, president of LMA Consulting Group Inc. is part of a panel to discuss what the current big issues are in supply chain in the various regions the panelist are located.

Fully Story

The post Interlinks: Supply Chain: The Strategic Context appeared first on LMA-Consulting Group, a supply chain consulting firm.