Clients typically set goals; however, goals without an understanding of where you stand is non-value added. Although it is common to set goals and expect employees to achieve them, it is far less common for clients to understand how they will get from the current state to the desired future state. You must start by understanding where you stand in your supply chain. Unfortunately, although this sounds obvious (and Executives would agree), in reality, it is uncommon common sense!

How comfortable are you that you understand where you stand when it comes to your supply chain? We thought it would be of value to create a quick (2 minute) supply chain assessment quiz so that you can self-assess your supply chain. Learn more about the quiz here.

Client Example: Supply Chain Assessment for Service Turnaround

Our first step of any project is to perform a rapid supply chain assessment. For LMA to help a client, we must know the current situation. We do a review of people, processes, systems (ERP and peripheral systems such as CRM, CPQ, etc.), data, alignment with strategy, etc. Since we are focused on bottom line results, we must determine how to get from “here” to “there” on the quickest and smartest path while ensuring quick wins and value along the way.

For example, an aerospace manufacturer wanted to improve delivery performance to support key customer programs (Boeing, Gulfstream, etc.). In essence, they wanted to dramatically increase OTIF (on-time-in-full) from the mid 60%’s rapidly and reduce lead times to a more acceptable and attractive level for customers while maintaining or improving costs and working capital levels. The executives brought us in as supply chain consultants to upgrade their systems, processes, and talent to achieve these goals.

Our first priority was to perform a supply chain assessment. We reviewed their end-to-end order flow process, use of ERP, data, and skills/ talent. This provided us with a good understanding of their strengths, weaknesses, opportunities, and risks of execution so that we could put together a roadmap for success.

We stuck around and partnered with our client to roll out demand planning, master scheduling, capacity planning, and SIOP (Sales Inventory Operations Planning), also known as S&OP programs. Based on the assessment, we knew we could better utilize their ERP system and upgrade processes by entering forecasts, analyzing capacity plans and establishing supplier contracts with attractive pricing and stability. Additionally, we identified training and education opportunities and risks of execution so that we could mitigate potential bottlenecks. We brought service levels into the 90%’s, gained key customer confidence with improved scorecard performance, and improved margins by several points by rolling out materials forecasts, supplier contracts, and by gaining long-term visibility into operational capacity to minimize costs.

Client Example: Supply Chain Assessment to Turnaround an ERP Debacle

In an electrical equipment manufacturer, customers were upset due to lagging service levels and key employees were overwhelmed with an insurmountable workload following the launch of a new ERP system. After jumping into the details to work with their North American planners to unbury the schedule and to develop directional capacity information, we performed a supply chain assessment with an eye to use of ERP. There was no way to find a grain of sand in the ocean of details without assessing their supply chain and use of ERP.

Although we have a combined 99+ years of experience, 112+ successful client engagements with bottom line business results, 42+ ERP projects, and specialized manufacturing experience, jumping into the process and working with the key resources to turn around the execution didn’t provide enough information to put together a long-term path forward that would achieve the radical improvement required with the ERP system. Thus, an assessment was required with the full scope of ERP as it relates to supply chain and order creation and fulfillment.

We spent five weeks in an around-the-clock focused effort as the situation was urgent to gain a thorough perspective of the business processes, use of ERP and associated skills. After all, our team had to absorb what the ERP implementation team took a year to develop and roll out while understanding the impacts on the supply chain teams (demand planning, production planning, materials planning, capacity planning, etc.) and the correlation to the business bottlenecks. We reviewed business requirements, ERP functionality, offline spreadsheet processes, the status of data integrity, data availability, the status of training and development, availability of key resources, etc. Although it was a hair-raising process, we were successful in putting together an assessment, resource recommendations, quick wins and long-term solution to rectify the use of the ERP system to drive the business results.

The Bottom Line

Take a step back and assess what is needed to achieve your objectives. Don’t “stay in your lane” if you require a broader scope to ensure results even if you must have uncomfortable conversations and take risks in pushing back on standard assumptions. On the other hand, don’t fall into analysis paralysis. When you have a directional view that is assured to get you moving in the “right” direction (even if not 100% optimal), start moving. Avoid circular discussions and pivot back to the key points.

Also consider the people, the process, the system, the data, metrics and strategy in conjunction with each other. Focusing on technical without the process and people will not work, but focusing on the people without a good understanding of the technical and process aspects will not work either. In fact, you will come to inaccurate conclusions in your assessment that will make the situation worse, not better. Instead, use uncommon common sense, and you success rate will skyrocket.

If you are interested in reading more on this topic:
Why Planning is Impacted as Disruptions Abound

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Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group, says that in the past, shippers, vessel operators and manufacturers may have waited too long to properly evaluate an emerging threat such as COVID-19 or the Houthis, when taking action sooner would have been prudent.

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As Houthi attacks on ships escalate, experts look to COVID supply chain lessons

An upsurge in attacks on commercial ships by Iranian-backed Houthi rebels in the Red Sea threatens to disrupt the global supply chain as vessels are forced to reroute around Africa to avoid the conflict zone. Normally, about 15% of the world’s trade passes through the Red Sea, and delays and escalating insurance costs are hitting industries such as petroleum, food and electronics.

Manufacturers have already experienced some problems in getting parts to assembly floors, and both Tesla and Volvo last week blamed the Red Sea troubles for delays at plants in Europe.

But shipping industry experts hope lessons learned during the COVID-19 pandemic, the Suez Canal disruption in 2021 and Somali pirate attacks more than a decade ago will help mitigate widespread problems this time, should the conflict widen in the Red Sea.

Since October, the Houthis have targeted several ships on the Red Sea with ballistic missiles and drones and have hijacked others near the entrance to the vital corridor at the Bab-el-Mandeb strait. The Houthis have said their attacks are in response to Israel’s air and ground assault on Gaza, which has killed nearly 25,000 Palestinians, according to Gaza’s Health Ministry. The military campaign in Gaza followed the Oct. 7 attack by Hamas that Israel says killed 1,200 people.

The U.S., leading a maritime coalition involving more than 20 countries, according to the Defense Department, has launched airstrikes against the Houthis to secure the waterway.

Supply chain disruptions are nothing new for the shipping industry. The COVID-19 pandemic presented an unprecedented challenge for the industry — with vessels stuck at ports waiting to load goods even as freight rates skyrocketed from a lack of capacity and quarantined consumers ordered everything online. Also in the Red Sea, the giant Ever Given container vessel became lodged in the Suez Canal in 2021, halting all traffic through that vital area for nearly a week. And more than a decade ago, Somali piracy was a major concern for shippers as well.

Read more at NPR here.

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Medtech companies’ focus on supply chain resiliency and mitigating supply chain risk has increased over the last few years as the pandemic triggered extended lead times, delays, and rising costs. Executives must now be able to pivot quickly to changing conditions, and they want to be in control of their ability to successfully serve customers. In reviewing options to meet these objectives, the critical importance of enterprise resource planning (ERP) and related manufacturing and supply chain technologies has risen to the top.

Taking Control of the Customer Experience

One way to take control of manufacturing and the supply chain as well as build resiliency into the customer experience is by focusing on expanding manufacturing and reshoring manufacturing closer to customers. Reshoring Initiative data show the combination of reshoring and foreign direct investment (FDI)-related job announcements last year reached record high levels—a trend that is expected to continue. As companies reshore, there is a significant emphasis on automation, robotics, 3D printing/additive manufacturing, and other supply chain technologies to reduce costs, minimize hard-to-find talent, increase quality, and keep abreast of customer requirements.

Nearshoring also remains popular for companies that want to improve customer performance by moving manufacturing closer to customers. Mexican exports, for example, rose 5.8% to $52.9 billion in May 2023, the second highest reading on record, according to Bloomberg. Mexico is also automating, digitizing, and employing advanced manufacturing methods. Case in point: Global automotive technology firm Luminar announced in April the build-out and ramp up of a new highly automated, high-volume manufacturing facility in Monterrey, Mexico. Moreover, Nuevo León Gov. Samuel García, said at the World Economic Forum in January that an “advanced manufacturing platform” would soon be launched in the state to focus on process digitization and automation.

Besides supporting reshoring and nearshoring initiatives, medtech firms also are interested in deploying advanced manufacturing techniques to augment their competitiveness. With skyrocketing inflation, manufacturers are paying more for materials, components, labor, and freight. In addition, the cost of capital has increased significantly, further decreasing margins, and limiting cash flow. Thus, manufacturers are searching for opportunities to increase efficiencies, automate repetitive processes, utilize robots, and embrace digitization as much as possible to decrease costs, increase margins, and better control customer pricing.

To grow their business, manufacturers are focusing on providing customers with a superior experience. In the current Amazon-impacted business environment, customers expect rapid deliveries, 24/7 service, and quick responsiveness—elements that once were considered forward-thinking and innovative but have now become essential. To stand out from the crowd, companies must go beyond these fundamentals and offer a differentiated or personalized customer experience. Thus, using a modern ERP system is essential to success because it will support these basic needs and augment them with such related technologies as customer relationship management, order fulfillment visibility, warehouse management system, transportation management system (TMS), e-commerce, advanced forecasting and planning, artificial intelligence, and predictive analytics.

A healthcare products manufacturer that distributed products throughout the United States wanted to improve their service levels, lead times, and inventory levels across its various facilities for customers. The manufacturer accomplished this goal by rolling out a vendor managed inventory system with suppliers and set aggressive scorecard metrics. The manufacturer used an ERP system to connect to its key customer’s demand and inventory data, and developed a forecasting and replenishment planning system. Hence, the manufacturer was able to establish an efficient system to maximize service levels for its customer while minimizing inventory levels and costs by utilizing business intelligence reporting to identify forecast exceptions and advanced planning functionality to proactively manage service levels. The software provided visibility into key customers’ distribution centers so the manufacturer could decide how to reallocate inventory to improve service while reducing inventory. Additionally, by integrating the replenishment orders to its customers’ locations with ERP and TMS systems, the manufacturer maximized multiple-stop truckloads and route in an optimal sequence to minimize freight costs.

Manufacturing and Supply Chain Technologies

There are numerous manufacturing and supply chain technologies that yield a substantial return on investment. 3D printing is providing a distinct advantage to manufacturers interested in providing quick prototypes to customers, and it is being used in several medical and industrial applications. According to G2 and Oxford Performance Materials, more than 75% of American patients with damaged skulls from disease or trauma received implants made by Oxford Performance Materials’ 3D printer. GlobalData predicts that customization, lower production costs, and quick turnarounds will drive the medical 3D printing market’s growth. Such benefits, along with the sector’s 23% compound annual growth rate (IndustryArc data), is prompting smart manufacturers to increasingly pursue clinical trials for 3D-printed products.

Augmented reality (AR), virtual reality (VR), and digital twins (a digital representation of an intended or real-world physical product, system or process) are some of the promising technologies in manufacturing and supply chain circles. They are particularly valuable in the current business environment as companies grapple with limited high-skilled resources, cost management concerns, and delivering a superior customer experience. AR/VR is used to train employees on ways to use and maintain equipment, about trials and simulations responsibilities, in collaborative product design, and in remote monitoring and factory audits. Digital twins can be used to evaluate “what if” scenarios to optimize the plant floor or data sets. An engineer-to-order manufacturer, for example, can utilize a digital twin to evaluate capacity with various configuration forecast models to stay ahead of customer requirements and result in a more efficient and responsive supply chain.  

The Metaverse can bring together customers’ wants and needs. In essence, it can accelerate the SIOP (Sales Inventory Operations Planning) process. In a metaverse collaborative room, retailers and their suppliers (or any set of customers, consumers, and suppliers) can meet virtually to review sales forecasts, projected production plans, and possible supplier limitations that could affect manufacturing volume. They can also visualize an immersive supply chain network map, see where inventory is, identify issues, and model possible alternatives.

The internet of things (IoT) and artificial intelligence (AI) are transforming the supply chain as well. As ERP systems, machines, and vehicles capture data with IoT, AI will learn how to predict breakdowns and recommend predictive maintenance plans, making preventative plans obsolete. Forklifts and autonomous vehicles will capture many signals and provide alerts to prevent impending safety incidents, and advanced planning systems will utilize machine and operational performance data to predict run rates and provide insights on how to minimize usage.  

Robots are bringing a new level of efficiency and repetitiveness to manufacturing. Industrial manufacturers are using welding robots to produce parts around the clock to minimize labor costs, quality issues, and injuries. Similarly, an aerospace manufacturer developed a robot that could produce on second and third shift with lights-out manufacturing a complex process to address a critical shop bottleneck. The aerospace firm quickly alleviated past due orders and got in front of its customer’s needs.

Manufacturers are also pursuing visibility across the supply chain so that customers can check status around-the-clock and supply chain partners can gain visibility and respond to changing conditions. Thus, digitizing information in the supply chain is a priority. This can range from simple concepts of barcoding/ RFID, lot tracing, and electronic data interchange to complex and collaborative topics such as customer portals, supply chain control towers, and port optimizers. Taken a step further, companies are investing heavily in blockchain to gain an immutable ledger of product and financial transactions across the supply chain.

The Bottom Line

Smart executives will leverage ERP systems as well as manufacturing and supply chain technologies to create a customer service edge. Equally important, they will automate, digitize, and turn data into insights to help their organizations become forward-thinking, resilient, efficient, cost effective, and predictable. Since only these uniquely positioned, innovative manufacturers that can scale up or down rapidly will be prepared for the change and volatility in the global supply chain, they will have the unique opportunity to leapfrog the competition, capture market share profitably, and be in the position to thrive for decades to come.

Lisa Anderson is founder and president of LMA Consulting Group Inc., a consulting firm specializing in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She is president of the Inland Empire Chapter of APICS, the leading trade organization of supply chain management. Anderson recently released Future-Proofing Manufacturing and the Supply Chain Post COVID-19 as an e-book. 

Originally published in MPO November/December issue.

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Originally posted in Adhesives and Sealants Industry in May of 2023

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

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

Current Status of Healthcare Supply Chains

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

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

Inflation, Workforce Issues & Labor Shortages Adding to the Volatility

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

The Successful Path forward

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

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

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

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

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

Originally published on Interlinks, March 15, 2023.

In this episode, and the next, of Interlinks we talk to Lisa Anderson and Diane Garcia of LMA Consulting Group in Los Angeles, California who are co-authors of a new book titled SIOP: Creating Predictable Revenue and EBITDA Growth.

SIOP or Sales Inventory and Operations Planning is a management approach in which Lisa and Diane are expert and I look forward to finding out from them what it is, how it works, what its benefits are and what the pitfalls are to avoid in its implementation.

Between them Lisa and Diane have many years experience helping their clients to develop, set up and implement SIOP across multiple sectors. 

Listen to part 1

Listen to part 2

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Lisa Anderson, LMA Consulting President and Founder, feels there is still a great deal of confusion global supply chains. Anderson joined “Bloomberg Markets” with Caroline Hyde and Paul Sweeney on Friday morning.

(Source: Bloomberg)

Click here to watch the video.

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Lisa Anderson provides industry expertise to the Bloomberg Chief Future Officer Interview with Deutsche Post DHL Group Interview Melanie Kreis.

Chief Financial Officers now play a critical role in shaping corporate strategy and positioning organizations to meet future challenges. Bloomberg’s monthly program, Chief Future Officer, profiles these leaders and explores the impact they’re making on their companies and industries. In this episode, Deutsche Post DHL Group CFO Melanie Kreis tells Tom Mackenzie how the the logistics giant has built capital and diversified its portfolio while accelerating growth during the Covid pandemic. (Source: Bloomberg)

Click here to watch

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Manufacturers utilize less than 20% of the full functionality of their ERP systems. But the key question is, why does it matter? In today’s inflationary and supply chain disrupted business environment, manufacturers need to automate and digitize to ‘do more with less’ and thrive during these volatile times. One important way to achieve this goal is to further leverage your ERP system where it will make a difference.

No matter which ERP system you use or how archaic, there will be opportunities to use additional functionality. In 30 years of working with manufacturers, there hasn’t been one example of a client that couldn’t benefit by expanding the use of ERP. Beyond customer, profit, and cash flow benefits, ERP systems can help you automate the repetitive and mundane. The people benefit. Turning jobs from repetitive and injury-prone to exception-based with opportunities for learning and development can engage people’s interest. With the shortage of talent as the number one issue to top executives, it is worth investing in the expanded use of ERP.

Start by exploring and assessing which functionality would provide the most value to your organization. ERP systems support your order to delivery cycle, which is essential to successfully fulfilling your sales order demand, improving delivery performance, and reducing lead times. ERP functionality also supports the procure to pay cycle, which is key to purchasing the right materials to arrive at the right place at the right time to support manufacturing and most efficiently manage inventory levels. Almost every client can improve upon the plan to produce cycle, which can achieve three objectives simultaneously – improved customer service, increased efficiencies, and accelerated working capital.

Beyond base ERP, there are many technologies that support the customer such as customer relationship management (CRM), sales forecasting, and e-commerce. Additionally, there are software options to automate and digitize for increased efficiencies and improved quality standards such as the use of barcoding, RFID (radio frequency identification), robotics, autonomous vehicles, digital twins, and automated storage and retrieval systems. Critically important are software options to aid in analyzing and predicting data such as business intelligence (BI), artificial intelligence (AI), and predictive analytics.

As easy as it might be to get caught up in fads and trends, take a step back when assessing where to focus efforts. Understand your customer requirements and business requirements. Which functionality will provide the greatest benefit to your business? Which software functionality will best position you for growth?

For example, in a building products manufacturer, an assessment was completed of their use of their ERP system. Although they might benefit from advanced functionality such as available to promise (ATP) and advanced replenishment planning methods, they discovered they could benefit greatly by simply further leveraging their planning systems to increase OTIF (on-time-in-full) and add value to their service. By focusing on this simple objective, the sales team was able to grow the business during times of significant volatility and uncertainty.

As manufacturers focus on the expanded use of ERP and related technologies, they can create unique value for customers and in their supply chain. Taking it a step further, to thrive during these inflationary times, it is important to automate, digitize, reduce repetitive labor requirements, increase efficiencies, and standardize so that more can be achieved with less. Create value by better utilizing your already-existing ERP asset and engaging your people in solutions and progress.

As originally published in Brushware Magazine on September-October, 2022

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Supply chain experts and logistics professionals have the critical task of managing supply and demand while bolstering the bottom line. In fact, past research from Deloitte shows that 79% of companies with high-performing supply chains achieve revenue growth that’s significantly above their industry’s average.

Yes, you and your team are great integrators and business drivers. And in order to drive continuous improvement and innovation for your organization, personal growth is key.

Of course, this is true in any industry, but especially so in the tech-driven, fast-moving supply chain management and logistics. And some of us have some catching up to do: Research recently found that only 22% of companies take an active approach to designing a supply chain network strategy.

Thankfully, there are dozens of supply chain experts who are eager to share their insight and advice. From latest news to refresher courses on the basics, follow these experts to keep learning and eyeing that next promotion.

Here are 15 supply chain and logistics experts to follow according to RateLinx.

Lisa Anderson is the 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.

Click here for the full story.

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CLAREMONT, CA—The COVID-19 pandemic has proven the critical nature of the strategic supply chain, according to expert supply chain thought leaders within the Society for the Advancement of Consulting® (SAC). Companies realize they can no longer ignore this crucial business function, which belongs firmly in the C-Suite. This includes the thinking, actions, and initiatives that put the supply chain in a strategic context.

Inventory Accommodation or Optimization?

“As a manufacturer, do you have an inventory accommodation strategy or an inventory optimization strategy?” asks Patrick Daly, Managing Director of Alba Consulting, based in Dublin, Ireland. “In my work with manufacturing clients, I often find that they do not have any explicitly articulated strategy at all.”

“Frequently, there is no feedback loop between infrastructure provision to accommodate inventory, and setting the policies that determine how much inventory the company holds to support manufacturing operations,” explains Daly. “Consequently, companies end up engaging in contradictory and counterproductive initiatives in different silos within the business.

“Under pressure from excess inventories, operational managers will lobby for increased capital expenditure approvals or the expansion of spending on warehousing with third party logistics service providers,” he says. “Meanwhile, policies related to materials on hand, dual supply, supplier location and lead time, and minimum order quantities, are set or agreed upon without reference to the inventory accommodation consequences. The best results are achieved by explicitly tying these two strands together systemically with a coherent strategy.”

Boardroom Involvement Gaining Ground

“Executives are quickly realizing that the end-to-end supply chain must be elevated to a strategic topic in the boardroom,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and a manufacturing expert known for creating supply chain resiliency. “Many companies were caught off guard during the pandemic with limited resiliency, highlighting this issue.”

“Reshoring is on the rise. Collaboration with United States-Mexico-Canada Agreement (USMCA) partners is increasing,” notes Anderson. “Executives are no longer just considering their options, they’re taking actions to take control. As options are evaluated, it’s becoming clear that the supply chain is larger than any single topic such as sourcing, logistics, or planning.

“Taking a strategic view of how to grow the business in a profitable and scalable way, while navigating changing customer conditions, dictates a new level of respect for the strategic supply chain in the boardroom.”

New Supply Chain Strategies – Blink and You’ll Miss It

“In what seemed like the blink of an eye, our marketplace changed.” according to Diane L. Garcia of Lorraine Consulting, LLC, an expert in helping clients improve their unique supply chain processes.

“Our supply chains and technological capabilities shifted in new directions,” says Garcia. “We now live in a world where goods and services arrive the same day after only a few clicks on a phone. Amazon is not the only name in the game. More and more companies are offering direct delivery through easy-to-use ecommerce interfaces.”

“No longer can supply chain execution take a backseat,” she adds. “The organizations who understand what their strategic supply chain is up against will advance in an ever-changing marketplace.”

Investors Thrusting Climate Risks onto Supply Chain Agenda

“Investors are now asking for companies to provide assessments of environmental risk to the business. A firm’s supply chain is a critical piece of the TCFD (Task-Force on Climate Related Financial Decisions) puzzle,” points out Mark D. Wolf, president of US-based LavaFish Advisors, and a sustainability expert known for creating scenario analyses using internal expertise.

“Executives who understand, assess, and plan for climate related risks in their supply chain can play a strategic part in driving revenue, growing profitability, and maintaining the social license to operate,” says Wolf.

“At a minimum, companies must know the carbon emissions from their supply chain. Accountability for carbon is required by investors. The regenerative economy is becoming key for many,” he adds.

Four in Five Executives Now Rethinking Supply Chain Strategy

The COVID pandemic has illustrated just how extensive and overly complicated many supply chains became says Art Koch, President of Arthur Koch Management Consulting, LLC. “Depending on the survey, 76% to 84% of executives and board members are rethinking their manufacturing footprint and supply chain strategies to emphasize the importance of flexibility and responsiveness. They identified the necessity to compress lead-times by reshoring and insourcing operation-critical parts to regain control of their supply chains.”

“As we exited 2020, the Institute of Supply Management’s Purchasing Managers Index increased for the sixth straight month,” Koch notes. “Those figures indicate confidence. Our economic cycle has shifted toward growth and it’s at the highest level since August 2018.”

“The buoyant Purchasing Managers Index brings hope for ongoing expansion in the North American Industrial sector,” he adds. “Astute executives are preparing for the next wave of expansion. They’re transforming ‘problem chains’ into profit chains by investing in supply chain professionals, compressing lead-time, and reducing the total cost of ownership.”

Future-Proof Companies Use an Old Strategic Weapon

“An efficient and effective Supply Chain has always been a strategic weapon. It can provide a significant competitive advantage over the competition,” explains David Ogilvie of David Ogilvie Consulting, a business transformation consulting firm based in Brisbane, Australia. “Recent events have simply highlighted its importance to those who had lost sight of its strategic value.”

Sound strategy sets the tone of the organization of the future says Ogilvie. “It sets up what the company will look, smell, and taste like in the future. There’s nothing more strategic than profitable growth and nothing more important than creating and keeping customers happy. And there’s nothing more crucial to keeping customers happy than an effective and resilient supply chain. Boards and senior executives need to rediscover the strategic importance of their supply chain if they want to successfully manage in turbulent times.”

Intelligent Design Avoids Fatal Trap of Evolution

“Two theories prevail about the origin of man: the theory of evolution and the concept of intelligent design. The same parallel exists for supply chains,” explains Antonio Zrilić, managing director of LOGIKO CONSULTING, based in Zagreb, Croatia. “A characteristic feature of the theory of evolution is that it takes billions of years for everything to work out well. That’s without events that wipe out life. Those events include cataclysms (crises and recessions) and predators (competition). Companies don’t have billions of years to evolve. They have months or, at best, years.”

“My preferred theory is intelligent design,” advises Zrilić. “This includes experience, knowledge, and predictions. It also includes the smart design of the facilities, organization, and processes.”

“Giving in to evolution or limiting themselves to the way things have been down for years, many companies end up with the equivalent of an evolutionary appendix,” he says. “It exists because it was there, but has no known use now. At best, they don’t use their full potential. At worst, they don’t live a long and successful life.”

Supply Chain Flexibility Facing Unparalleled Challenges

“The number one thing that business and industry has learned over the past year, from the C-suite to front line workers, is the importance of flexibility in the supply chain,” says Elizabeth Warren, Global Logistics Specialist and president & CEO of Dialed-In Partners, a consulting firm based in Los Angeles that focuses on public policy issues in the goods movement industry.

“Flexibility has long been a topic of discussion,” notes Warren, “And most businesses believed they had an adequate contingency plan for unforeseen emergencies.

“The impacts of the pandemic have created a need for flexibility that is unparalleled in duration and scope,” she says. “This is affecting every segment of the supply chain on an absolute global basis. Companies have realized that to be truly resilient with the ability to pivot their business during any disruption, their supply chain strategy must be a core principle in their overall strategic plan.”

The Big Switch in Spending has Big Consequences

“If you need any reminder as to why your supply chain is key to your strategy, just completely disrupt it and see what happens,” according to Evan Bulmer, Director of EBAA, a consulting firm based in Adelaide, Australia. “Nothing like a good pandemic to demonstrate this.”

“As the world economy is restricted from buying services—think travel, restaurants, entertainment—we are spending our money on goods, including luxury goods,” Bulmer explains. “With such a stark change in market conditions, understanding both the supply chain and your customer demand is critical. This will allow you to be in the best position to take advantage of these market conditions. There is, of course, a lot of money to be made by those who get their supply and demand priced correctly.”

Originally posted on SAC website: March 1, 2021

The post SAC: Strategic Supply chain Comes of Age Post-Pandemic appeared first on LMA-Consulting Group, a supply chain consulting firm.