99% of the companies that bring us on board for consulting projects can accelerate bottom line business results by better utilizing their ERP system. The typical 80/20 equation holds true – at least 80% of companies underutilize their ERP system by a significant amount. Even the 20% that utilize their ERP system to a better degree than most have opportunities.

In almost 20 years of consulting, we have found only 1 client that couldn’t utilize their ERP system to a greater degree as their manual work around processes would fall apart. They required an ERP upgrade before they could utilize their system to a greater degree. Every other client could make progress (improve customer service levels such as OTIF on-time-in-full, reduce lead times, increase efficiencies, reduce waste, automate manual functions, reduce inventory, etc.) by better utilizing their ERP system. It didn’t matter if they had a tier 1 ERP system such as SAP or Oracle, or a tier 2 or 3 system such as Epicor, SAP Business One, Microsoft Business Central, Sage 100 etc. It didn’t matter the industry – aerospace, building products, life sciences/ healthcare products, or food and beverage. These statistics apply across the board. To learn more about how to better utilize ERP, read our article, The MacGyver Approach: Leveraging Your Underutilized Asset.

Building Products Manufacturer Case Study

A building products manufacturer struggled to get the “right” inventory to the “right” distribution center at the “right” time to service customers successfully. There were four production facilities supplying around 12 distribution centers across North America. Each production facility also functioned as a distribution center for their region. This consulting client used SAP, and although they were on an older version of the software, the system could support a complex distribution network. However, they were underutilizing the ERP system.

There were various levels of expertise at the production facilities, different processes at different facilities, and different use of the ERP system and different data integrity at different sites. This is not uncommon. In 80% of clients, the employees using the ERP system are NOT resistant to change once they understand how it works, how it will help, and how what they do fits into the big picture. Until they understand how to perform their daily tasks to successfully serve customers and accomplish their goals, they will do whatever it takes to do what’s needed including developing manual processes, updating spreadsheets, etc. That is exactly the situation as we entered this client.

We started by understanding the current business processes and use of the ERP system. By documenting the high-level processes, we could identify gaps and opportunities. We quickly addressed quick wins. There are typically a few quick wins at every client; however, to make sustainable progress, the key is to review how the business processes connect with and interface with each other. Once a full view of the business processes and interfaces emerges, the current use of ERP will also become apparent. Finally, the use of data, integrity of the data, and reliability of the data for decision-making will also emerge during the process review.

In this client situation, we started by sharing best practices among production facilities. One production site had a more advanced use of planning functionality, and so we worked with the second priority site to set up the appropriate system settings, update data, and roll out upgraded planning processes. This use of SAP in conjunction with upgraded planning processes and coordination with Sales and Operations propelled service levels to jump from low 60%’s into the 80%’s within a few months. Next, there was additional SAP functionality that could upgrade the planning process across both sites, and so we worked with SAP experts to test and roll out additional SAP functionality to further automate what made sense. This resulted in a solid production plan.

From a replenishment standpoint, it started with a solid production plan. Beyond a solid production plan, the replenishment process to supply the distribution centers with the appropriate product to satisfy customers required a directionally correct forecast. The forecast was the trigger to supply the distribution centers. Thus, we worked to better utilize the advanced planning module of SAP to whatever degree feasible on an accelerated timeline in addition to upgrading the business process for reviewing the demand plan with the Sales Team. This step was incorporated into the monthly SIOP (Sales Inventory Operations Planning) process to gain executive alignment and to ensure the forecasts passed the smell test.

In addition, we reviewed the current replenishment process including the MRP and replenishment or transfer order settings. We performed inventory analysis to determine optimal settings for safety stock, minimum orders, etc., and rolled out process improvements in conjunction with SAP functionality. These process and ERP utilization improvements allowed us to improve our service levels greatly and rectify relationships with customers. As the process smoothed out, we started to look at ways to optimize inventory levels while maintaining higher levels of service.

Results with Better Utilization of ERP

Results followed the rollout of improved utilization of SAP in combination with process upgrades and associated education. Most importantly, service levels improved from around 40% to the 90%’s. Lead times were also shortened in a critical site that produced a core product line. This made a dramatic impact on customers’ perception and and turned unhappy customers into customers looking for opportunities to expand business with our client.

In addition, the critical site increased output and capacity as manufacturing got in front of what was needed to support customer requirements. Manufacturing efficiencies improved as the production schedule transitioned from reactive to proactive.

From a replenishment standpoint, as upgraded replenishment planning was rolled out, service levels improved. And, as MRP settings were updated with optimized variables, inventory levels were reduced without impacting service levels negatively.

Finally, as the process and system upgrades were rolled out, the team was educated and gained confidence with their core tasks. Additionally, as processes were automated, the team could spend more time on exceptions and less time performing mundane tasks. This freed up time for additional improvements to grow revenue and profitability.

The Bottom Line

Pay attention to your business processes in conjunction with your use of ERP. The better you utilize ERP in a smart way to accomplish your goals, the more focus will go to exceptions, bottlenecks, and additional process and technological upgrades. If you are interested in talking about how to better utilize your ERP system to drive superior customer service, customer growth, profitability and cash flow, contact us.

Did you like this article?  Continue reading on this topic:
Better Utilize Your ERP System

The post Better Utilizing ERP for Sustainable Results appeared first on LMA-Consulting Group, a supply chain consulting firm.

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.

According to Interos, almost 90% of companies experienced a negative impact to revenue due to supply chain disruption. That is a BIG number! From our point-of-view, every client is complaining about the lack of critical resources required to support the business and has experienced negative impacts to revenue (even if only in terms of a delay to revenue recognition).

For example, we have been working with a large manufacturer in the building product industry, and within a year, they have asked us to help them through four unexpected departures of key supply chain and planning resources. Without these key resources, they wouldn’t be able to plan to have the “right” products in the “right” place at the “right” time. In a life science manufacturing client, the reason they asked us to help them design and roll out a S&OP (also known as SIOP) process even though they had a key leader that had successfully implemented SIOP previously is because they were fully occupied in ramping up production to support business growth. They could NOT wait because they had to know which resources to hire, what equipment to procure, and what long-lead time materials to purchase to meet customer demand.

Which clients are attracting people (employees, supply chain partners, trusted advisors) and/or keeping people? What are they doing differently?

What Attracts People to Your Company?

The good news is that what attracts people to your company is clear. The bad news is that it isn’t a “no brainer” to make it happen. The bottom line is that people follow people; not companies.

Start by thinking about whether your people are engaged. In observing clients on a daily basis, it is clear what matters to employees:

• Listen: Does leadership listen to them? NOT just when they are saying something management wants to hear but also when they bring up potential issues….
• Request input: Does anyone ask for opinions, concerns, and feedback? Some employees will speak up regardless, but others will only respond only if asked AND if they think the requestor really wants to know and cares about the answer.
• Communicate the vision: Employees want to understand where they are going and to be excited about where they are going.
• Show how they fit in: Knowing where the company is going isn’t enough. It is important for each person to see how he/she will add value to that vision.
• Show you care: Who doesn’t prefer to spend time to help people who care?
• Have fun: Who wouldn’t prefer to work with someone who adds humor into the conversation or can make boring topics more interesting?
• Treat others as you’d like to be treated: Sounds apparent but doesn’t always occur even with solid leaders.
• Appreciate people: A simple thank you goes a long way. At times, it is also appropriate to recognize people with a bit more pomp and circumstance.
• Don’t overreact: People want to follow people who are confident and calmly resolve issues and overcome obstacles. If you overreact, people remember and will not bring up ideas or issues the next time around.
• Share credit; take the blame: It is surprising how many leaders get this backwards. People pick up on someone interested in his/her career as a #1 priority. They will not be fully engaged.

Even as a consultant, these points matter. Of course, we deliberately focus on results and “stay above the fray”; thus, we will do what’s required no matter the leadership styles. We will typically work with several leaders in a single client especially with cross-functional and cross-organizational projects such as S&OP (also known as SIOP), and so we work with people on both ends of the spectrum as well as in the middle. However, it is FAR more pleasant and engaging to work with clients who follow these guidelines than the ones who don’t. As the Great Resignation and Reshuffle has occurred, it certainly highlighted the difference.

Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, read our new eBook Thriving in 2022. Learning from Supply Chain Chaos. Download your complimentary copy.

The post Lost Revenue Due to Lack of Resources: How to Attract People to Your Company appeared first on LMA-Consulting Group, a supply chain consulting firm.

Starbucks is out of several items! Who would have thought? Unfortunately, they are not alone. Almost every client is experiencing shortages of materials, logistics services and more. For example, according to Freight Waves, FedEx Freight just announced they are immediately cutting service to 1400 less-than-truckload in an effort to reduce terminal bottlenecks and shipping delays. They are providing virtually no notice to customers. Only the most proactive and innovative are getting ahead of the problem and handling the situation. What are you doing about this issue?

One Tip to Implement This Week:

There is no doubt that the misalignment of demand and supply isn’t improving. The companies that can get on top of this situation will have more opportunities than any other. Take a few quick steps:

• Get on top of your situation: What shortages and extended lead times are you experiencing? What risks do you have? What risks do your key suppliers’ have?
• Put a SIOP process in place: Get a Sales, Inventory & Operations Planning (SIOP) process in place rapidly so that you can make meaningful, directionally correct decisions to monitor your situation and get in front of it.
• Find innovative solutions: Are you calling your backup suppliers? Are you trying similar materials, tweaking formulas and working with customers and suppliers to find alternatives to succeed during these times?
• Pay attention to your key people: Make sure you keep your key people. How will you solve these issues if you don’t have talent? Unfortunately, there is also a shortage of top talent, and so pay close attention to yours!

I’ll be leading a panel discussion with Pac Rim and North American experts to discuss Supply Chain, Materials, & Logistics Disruptions and what you can do about it. Join us to hear about strategies from top consultants from around the world.

Please keep us in the loop of your situation and how we can help your organization’s scale with SIOP to emerge above and beyond. Several of these types of ideas are included in our new eBook Emerging Above and Beyond: 21 Insights for 2021 from Manufacturing, Supply Chain & Technology Executives. Download your complimentary copy.

The post Shortages & Extended Lead Times – Starbucks, Building Materials & Much More appeared first on LMA-Consulting Group, a supply chain consulting firm.

The post Evan Cohen, President & CEO, Quality Marble & Granite appeared first on LMA-Consulting Group, a supply chain consulting firm.

3D printing is becoming mainstream and addresses MANY of the challenges in today’s Amazon-impacted marketplace. In this case, a non-profit, New Story, teamed up with a construction tech company, Icon, to create the Vulcan – a 3D printer that prints single-story homes. These homes are printed in 24 hours (WOW!), for under $4000 (again, WOW) and it’s being used to fight homelessness. Check out their video:

Are you thinking about how 3D printing might transform your industry?  

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

Although we should consider potential impacts of 3D printing in our industry, the more important consideration is to let our minds think about the future.  What technological innovations are likely to impact your industry?  Unfortunately, it is not enough to just think about direct correlations.  Which industries relate to your extended supply chain and what might occur down-the-line?  And/or what is likely to impact your customers?  

Stay on the leading edge about what is trending and potential impacts to your company and your career.  You’ll be FAR more successful navigating the waters ahead – as the only constant is change in today’s Amazon-impacted marketplace.  We are in the era of the customer.  What might that mean?

One way to stay on top of the latest trends and predictions is to attend industry events.  Our APICS Inland Empire Chapter is hosting an executive panel and networking symposium on “Managing Rapid Growth when Manufacturing and Supply Chain are Hot” on May 5th @ Harvey Mudd.  Join us!

April 25, 2018

The post 3D Printed Houses – Fast, Inexpensive and Fights Homelessness appeared first on LMA-Consulting Group, a supply chain consulting firm.

The post Dan Vest, Co-owner, Midpoint Bearing appeared first on LMA-Consulting Group, a supply chain consulting firm.

One of our favorite clients related to our service line of “Eagle Eye” which is just as described – like an eagle, can you pick out your priorities (prey) rapidly and accurately – and “make it happen”.  What else is there to say?  There are lot of strategy experts but FEW who can execute – make it happen!

Our client was in the building products industry at the height of the recession with real estate prices in the toilet and construction on a dramatic slowdown.  Of course, our client was not the only company in the industry to struggle.  The key is how to reduce costs while being able to service customers slightly better than the competition.  In this case, 5% improvement was enough to drive sales and stand out in the crowd – quite important in the middle of a nasty recession!

In this case, we completed an organization-wide assessment of people/ culture, processes and systems while evaluating distribution center size, margins, items, and innovative alternatives.  Could we reduce our overhead base while finding a way to edge out the competition with service? 

Although systems are always a part of our projects as they tend to be one aspect of the total equation, they rarely, if ever, are “the” solution.  However, in this case, we uncovered an opportunity to leverage functionality unique to this configure-to-order industry that would provide an advantage in speed and service while minimizing the cost – and utilizing an already-existing asset (and one that was cost prohibitive for the competition to purchase during the recession) – a great yet unexpected “no-brainer” emerged.

However, this seemingly obvious strategic advantage wasn’t clear to anyone prior to the organization-wide review.  Often-times, our best ideas and solutions are sitting right in front of us but we miss them.  Take a step back and make sure you are seeing the trees in the forest.  Do any look like unique opportunities?  Undoubtedly, there will be one if you look hard enough! 

The post Organizational Review Can Yield Strategic Weapons appeared first on LMA-Consulting Group, a supply chain consulting firm.

Published in “Project Times” website, May, 2012
Click here for original article.

When I spoke at the Project Managers SIG in Silicon Valley recently, we spent the majority of the time talking about overcoming obstacles.  Upon returning, I faced several new obstacles in a construction project I’ve been coordinating, and so I’ve been thinking of the critical importance of overcoming obstacles.  Obstacles are common in any project.  Thus, how effective a project manager is at overcoming obstacles will largely determine success vs. failure.

One of the keys to overcoming obstacles is to think about potential issues that might come up down-the-road……NOT to become a negative complainer (so let’s not go down that road!) but to be better equipped to surmount them.  In order to best address this topic, I’ve compiled obstacles from my clients, personal projects, speech participants etc. and have identified the top three: 1) Lack of clarity.  2) No Time to Rally.  3) Priority conflicts.

1. Lack of clarity:  It is amazing how often the project teams I work with can quickly achieve success by stepping back and thinking about the basics.  What is the goal?  Why are we focusing on this task?  What will really matter to the end results we intend to achieve.  It is hard to succeed when you don’t have a full understanding of the project.In the last 15 years, there’s been a tendency to add complexity to projects.  For example, we typically want to implement the latest and greatest functionality in our ERP systems; however, I often find we haven’t fully thought through the effort involved vs. the benefit or the timing of implementing these types of changes.  Often times, we can achieve the same benefit through a simpler approach and save the extensive resource needs for when the functionality warrants the investment.  The same theory holds true in countless situations.
2. No Time to Rally Support:  Do you need the support of your team?  How about project sponsors and top leadership?  Of course!  Yet it is not always easy to find the time or simple to ensure your project stands out in the crowd.With your project team members, consider the following tips:  Make your project an object of interest.  Create a buzz.  Why would people want to be on your team?  Be the type of leader where everyone fights to be on your project.  Don’t be fooled.  You have competition even if your project is a “required” part of your team members’ responsibilities.  How will you stand out in the crowd?  Let your personality show. 

   For project sponsors and top leadership, you must relate your project to VALUE.  How will it help achieve company objectives?  How will it help individual leaders succeed in the organization?  Be visible and promote your project.  Relate it to improving customer service levels, speeding up results, increasing profitability etc.  Soon you’ll have an overwhelming number of offers for support.

3. Priority Conflicts:  Let’s assume we follow the advice to clarify project objectives.  Everyone is on board.  And we’re sailing along until we hit the wall full force with a priority conflict.  Happens every day.For example, in an on-time delivery project, a conflict arises between the Customer Service Department and the Planning Department related to expedited orders.  Customer Service is doing its best to satisfy customer needs and wants to change the schedule/ priority for the urgent order.  On the other hand, Planning wants to make sure the current orders are assured to get out the door on time and doesn’t have the bandwidth to review additional requests.  Both are focused on the objective of on-time delivery yet a conflict arises. 

   I’ve found the best way to overcome these types of obstacles is to re-clarify the objectives.  Is the company’s priority on oldest orders, customer feedback, or dollars shipped?  If it isn’t clear, get the two department heads together to discuss the topic.  Many times, talking through issues can lead to a solution.  If objectives are clear, perhaps you have a conflict in how to get to the objective.  Again, bring the appropriate resources together to debate and determine the best path forward.  You must set it up so that no one person succeeds if the team fails.  Ensure “win-win” is the philosophy.  Then, I guarantee the team will come to a conclusion.

Overcoming obstacles is a part of our everyday routine.  Those who can jump over hurdles quicker and better than their competition will not only ensure project success but will also thrive in their careers.

The post What are the Top 3 Obstacles in Projects appeared first on LMA-Consulting Group, a supply chain consulting firm.

The post Jim Cenname, President, US Aluminum appeared first on LMA-Consulting Group, a supply chain consulting firm.