Should you be rethinking your supply chain strategy? Absolutely! There is so much volatility going on in the world that you must reevaluate your supply chain.

• Should you expand your supplier base? Yes, think about diversifying geographically, ensuring backup sources of supply, reevaluate if you have enough support in friendly countries.
• Should you reshore, nearshore, friendly-shore, and produce “for the region in the region?” – Yes, in most situations, positioning close to customers in regional clusters is the name of the game to service customers and proactively position your company for success.
• Should you move suppliers? Yes, in many situations, you must reevaluate whether your suppliers will meet your needs and your customers’ needs.
• Should you advance your use of technology? Yes, there is no doubt that only those companies investing in the appropriate technology to better serve customers’ needs, improve efficiencies, and innovating will thrive.
• Should you utilize big data/ business intelligence? Yes, sifting through the overload of data to what is meaningful, incorporating it into your strategy and taking action is key.
• Should you reevaluate your inventory strategy? Yes, this should be a continual review process. Cash will be critical as we navigate inflation, recession, disruption and more.
• Should you build capacity? Yes, there will be vast opportunity to expand market share as owners retire, companies merge, firms struggle, and those that have built flexible capacity will be able to ramp up rapidly and grow.
• Should you focus on energy? Yes, energy powers the supply chain.
• Should you focus on talent? Yes, there is no doubt only the companies with talent will be thinking ahead and ready to take advantage of the opportunities.
• Should you evaluate site selection & network optimization? Yes, there are significant changes occurring and your supply chain needs to get in front of them. Why not be the disrupter? It is no longer sufficient to be resilient as changes occur.
• Should you utilize a SIOP process? Yes, assuming you’d like to stay ahead of the curve with changing conditions and leapfrog your competition, you must rollout a SIOP process to align supply and demand and constantly engage your team with an operational rhythm.

Who Should You Engage?

The supply chain is a system of systems. You are only as strong as your weakest link.

• Your core suppliers and the next few tiers of core suppliers:  Do you know who is in your end-to-end supply chain? Find out!
• Your go-forward customers: Don’t model your supply chain after a large volume customer you are losing money with on a consistent basis. Find your target customers.
• Your internal team: Involve key people in delivering a superior customer experience.
• Your colleagues: Collaborate with Finance, Sales and other key functions. Gain their input.
• Your technology partners: Utilizing the appropriate technologies will be critical, and so you need the “A” team to devise a path forward.
• Your trusted advisors: No client has the resources to accomplish objectives quickly enough. Leverage your trusted advisors (consultants, attorneys, CPAs, commercial bankers etc.). If you would like a referral, contact me.

What’s Next?

Perform a quick assessment so that you know which moves will drive the most value for your customers and your business, engage your teams and TAKE ACTION. The next few years will not be for the faint of heart. Take control of your future.

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.

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According to the Hackett Group, 77% of companies have strengthened their commitment to digital transformation due to the COVID crisis. In fact, they are not only strengthening their commitment, but the pace of adoption is increasing. A McKinsey survey found that the pandemic has significantly accelerated the pace of adoption of digital transformation technologies. Clients and colleagues are seeing the critical importance of utilizing technology for a win-win-win, creating a safe working environment that is efficient, cost effective, resilient, and responsive to customer needs.

Even before COVID-19, executives were gaining interest in the digital transformation and Industry 4.0. The Amazon Effect has been driving the need for quicker deliveries, 24/7 accessibility, customizable products, easy returns, and a superior customer experience. Achieving these increased standards while maintaining margins had manufacturers searching for solutions. Thus, automation, digitization and Industry 4.0 concepts gained in popularity. Large companies pursued these strategies, but small and medium-size companies were more challenged with the upfront investments required and whether they would yield a return on investment near-term so that they could justify moving forward. Yet not investing and being passed up by the competition was not attractive either.

The pandemic has proven that those companies that were better prepared and further down the digital transformation roadmap fared better. These companies had better visibility into their supply chain, were better able to respond to changing customer requirements and were able to accommodate for social distancing and could flex capacity more quickly than their counterparts. All is not lost. It is time to jump into the deep end of your smart manufacturing and end-to-end digital supply chain journey.

Should we immediately purchase robots and 3D printers? Not necessarily. Start by understanding your new business environment. What will the next normal look like for your industry? Adapt your strategy for how you will thrive with changing customers, buying behaviors, an evolving competitive landscape and with your end-to-end supply chain. Think through how these changing conditions will impact your talent needs and adapt your talent strategies to accommodate. These will drive changing digital and technology needs, and so you will need to adapt your technology strategies to align.

Although you will need to reevaluate your technology roadmap to determine what will best support your business objectives, there is no doubt you will minimally need a modern base infrastructure to support scalable, profitable growth. Look at your enterprise resource planning (ERP) system. How does is support your changing customer requirements and ability to grow the business rapidly and profitably without hiring an army of people? Start with a modern base like starting with a solid foundation when building a house. Add customer differentiators and profit drivers by thinking about the broader digital customer journey in addition to how to increase operational effectiveness with concepts such as robotics, automation, IoT and predictive maintenance, augmented reality, and the like. Big data and predictive analytics will tie it together with an advanced business intelligence solution to not simply analyze data but to predict areas for future focus to increase business value.

The most successful executives will focus on those technologies that best support the successful execution of their strategy. Instead of jumping on the latest fad bandwagon, take a brief step back to realign your strategies and evaluate what will provide the greatest return on investment. On the other hand, do not delay for lengthy studies. Those companies that succeed post COVID will be those geared for speed, agility, and responsiveness simultaneously. Align your technology roadmap and take tangible steps forward with your digital transformation.

Published in Brushware Magazine, December 31, 2020

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Client Question

Should I really invest time and resources into technologies I don’t know will pay back? For example, there is a lot of conversation about the value (or lack thereof) with blockchain, IoT, AI and more. This concern continues to arise and is on every executive’s mind. They do not want to be left in the dust “holding the bag” (old and slow) while their competitors race by. On the other hand, they do not want to dump all sorts of money down the drain on technology that might not prove effective in their industry. And, in some cases, what they could invest would be a drop in the bucket. It would be like trying to refill the Pacific Ocean with a pail. Remember that fabulous song by Harry Belafonte “There’s a Hole in the Bucket“?

My colleague Diane Garcia and I set out to find the latest answer to this question at the Association for Supply Chain Management International Conference. There were several panels and presentations on each of these topics, and there were several exhibitors talking about the latest and greatest technology integrations.

The Answer

Undoubtedly, there is a lot of noise about these technologies. According to Gartner, AI augmentation will generate $2.9 trillion in business value and recover $6.2 billion hours of work productivity. Thus, it is easy to see why AI is gaining investment with the large companies and with leaders of large organizations. I love this quote from Harvard Business Review, “Over the next decade, AI won’t replace managers, but managers who use AI will replace those who don’t.” That about sums it up! We need to at least be aware so that we can make good decisions when it comes to these technologies.

As it relates to AI, according to McKinsey Quarterly, across all functions, respondents report that the most significant benefits come from adopting AI in manufacturing! Coming in second is risk with supply chain management just behind in third place. Thus, if you are in manufacturing you cannot afford not to at least consider the opportunities. Do you need to do this on your own? NO! We are seeing small companies come together to share resources and invest jointly to drive scale with results (and so they can compete with the large companies). There are also groups that facilitate this type of collaboration. At the most digitized companies, the adoption of AI capabilities is greater including machine learning, virtual agents, robotic process automation, computer vision and more.

According to Forrester, 90% plan greater investments in data and according to MIT Sloan, 85% view AI as a strategic priority. These two technologies cross over and seem to have the upper hand with the most immediately applicable technology. With that said, there were even more sessions about blockchain and whether it was hype or hope. The bottom line on blockchain is that it is a real opportunity for certain industries such as the food industry (related to food safety); however, it is still in early stages and will require a consortium of companies to come together to bring to reality. According to a leader from FedEx, whether big or small, no one company will be successful on its own. Yet all the “big guys” are interested and participating. Stay tuned to see where it goes. Last but not least, IoT is integrated into many conversations about big data, AI, autonomous vehicles and more because it connects technologies. In manufacturing, IoT is connecting machines and data for predictive maintenance and the possibilities abound.

Thus the bottom line is to pay attention but resist exploring technology in isolation. Learn to collaborate.

Food For Thought

As much as these technologies should be on your radar, don’t get carried away and forget your fundamentals. Do you have a scalable ERP system to support your business growth and profitability? If not, start there! Do you have reporting and business intelligence systems so that you can slice and dice information to make instantaneous, informed decisions as key customer questions or business opportunities arise? If not, start there! How about a simple CRM solution? Certainly in the Amazon Effect era, we must pay attention to customers.

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“Data, data data” seems to be the hot topic for manufacturers and distributors, similarly to “location, location, location” in real estate success.  What is going on?

As technologies have come a long way from the “old” days, we have massive amounts of data.  I heard this statistic last week – 1 gigabyte cost $1 million in 1980 whereas it costs 1 cent today. Clearly, data is affordable and accessible.  Now what do we do with it?

Here are some options my best clients have been researching:

1. Dashboards: Get the “right” ERP system for your needs and display key metrics on a dashboard.  We want to be able to slice and dice data to rapidly get to what we want when we want it – in a nice, visually pleasing format. Business intelligence (BI) systems support dashboards.
2. Demand data is gold:  Undoubtedly, my best clients use demand data from their supply chain to outperform their competitors – and sometimes to collaborate with competitors for win-win outcomes.  A forecast is better than guesswork but actual consumption or demand data from your customer trumps all.
3. Big data: There is more hype over big data than anything else; however, since there is a ton of data available these days, those executives who figure out how to make good use of this data will succeed.
4. Connections with data:  The internet of things is spurring new uses of data.  How do we connect data from our fit monitors, alarm systems, appliances etc. in a meaningful and useful way?
5. RFID & Barcoding:  Although these can be considered “old school”, they are also solid tools that can provide tangible benefits in the right situation.

Don’t just collect data to collect data.  It might be similar to being a hoarder.  Although data can be stored on tiny devices, the key is not to collect it but to USE it to achieve business results.  If you’d like to talk further about how to do that for your company, contact us.

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March 15, 2016

In today’s Amazon-impacted world, if you cannot make rapid yet effective decisions, you’ll be left in the dust. It is no longer acceptable to wait for IT to write a report in order to make a decision. Executives must have the “right” information at their fingertips to guide their companies to success. Does your company have this capability?

I find that it is often called BI (business intelligence). Sometimes it is called dashboard reporting. Certainly those executives who have access to a dashboard with graphics and capabilities to slice and dice information in order to make decisions have an edge. Less often, it can be referred to as navigating “big data”. It can also be plain vanilla reporting – so long as the information needed is available, it doesn’t matter what technology or manual process is going on in the background! With that said, every ERP selection project participant requests information at their fingertips literally – on a iPhone, Samsung or iPad.

One tip to implement this week:
You might think implementing BI is the way to go. Although it can be part of your solution, it is extremely unlikely to occur in a week. So, how could we make progress this week? Identify your requirements.

Start simply by looking at your business, your function or your day-to-day job. What information do you need to make effective decisions? Start to think about what is needed to make those decisions and document your requirements. I guarantee it will be more than half the battle to know what you need! You’ll then have a far easier time translating those into BI reports rapidly.

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As I’ve been putting together a SIOP (Sales, Inventory and Operations Planning) executive meeting presentation, it made me think about data mining. In this case, there is very little information available – in comparison to other clients, the ability to retrieve information is in the bottom 20% yet I was still able to put it together. Thus, it made me think about a few tips:

1. Base reports: So long as the company uses a system, there will be some data you can access. Even the worst case scenarios which make the ERP experts shudder have untapped information. Find it.
2. Manual information: I’ve yet to go into a client who didn’t track some sort of information. True, it is often too much of the wrong information; however, they are tracking something. Find those people and understand what they track.
3. Accounting: Again, every company has to have financials. Thus, worst case, start with the Accounting team. They might be leery to provide it but if you involve them in the process, you’ll likely be successful.
4. Track it yourself: To get ballpark estimates for some metrics, you can take a sampling approach and go out and track it yourself.
5. Report writer: Every system (even the most fundamental and surprisingly inexpensive ones I’ve seen for smaller companies) have some sort of report writer or the capability to integrate with a report writer such as Crystal Reports. Pursue this path!
6. Hire IT experts: I’ve seen countless times where folks who are good to retrieving data can gleem information even from the worst systems. At one client, they called him the “Data Ninja”. I loved that term as I’ve run into data ninjas at many clients (although I have to agree, he was the best!), and those who don’t have one can bring on a temporary Access expert or SQL expert etc.

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Those who make a concerted effort to identify and leverage emerging trends outperform their counterparts. As I want to make sure my clients are at the forefront of this path, I pay attention to emerging trends among my best clients. Anytime I’ve seen a common thread among the best, it has signaled a noteworthy change.

I’ve noticed that although executives are not completely comfortable with the current new normal business environment (as who knows what taxes, health care impacts or other items will be thrown into the mix tomorrow), they are starting to think about investing in select projects again – ones with a substantial return on investment and/or required to support their long-term strategy.

Thus, ERP system upgrades and new implementations are on the rise. Therefore, why not get ahead of the curve and think about the hot ERP trends. The top ones that pop to mind include: 1) The Amazon effect. 2) ERP in the Cloud. 3) Big data. 4) CRM 5) Flexibility 6) Mobility 7) ERP for small business

1. The Amazon effect: Amazon has been making a splash everywhere you turn. There are distribution centers within a short proximity to key markets. Sunday deliveries. Reinvented publishing. The bottom line is that customers expect 24/7 access and quicker delivery with exceptional service, and you must figure out how to make it happen! Thus, e-commerce is no longer a “nice-to-have”; instead, it is a “must-have” in your ERP system. Your customers will want to order, understand their order status and provide feedback at any time, any day of the week.
2. ERP in the Cloud: People are becoming more comfortable with the idea of ERP in the cloud. There is less complexity, less work, less skills and often times less cost required while accessibility is increased and your ability to recover from a disaster is improved. The “big guys” like SAP and Oracle are going down this path and so they are seeing enough advantage to invest.
3. Big data: Although big data is “old news”, it remains “new news” in terms of implementation and utilization. We are living in an information overloaded society, and so concepts like big data will be essential in making sense of it all. Business intelligence can be utilized to better understand customer trends and how to optimize inventory and margins – who wouldn’t consider this approach?
4. CRM: Since I’ve always focused part of my practice on ERP as it’s an essential tool for manufacturers and distributors, and I have a unique skill of zeroing in on connection points (which is cornerstone in selecting, designing and implementing systems), I’ve noticed that a particular connection point has arisen as a key contributor to bottom line business results – CRM (customer relationship management) functionality. You must start with the customer to succeed; thus, better understanding your customer relationships is a great place to start (CRM).
5. Flexibility: Old (often called legacy) systems are rarely flexible. To succeed in the fast pace of the new normal business environment, you must be flexible. Those who can introduce new products rapidly, adjust capacity rapidly, change items on the fly etc. will thrive. Your ERP system is the backbone.
6. Mobility: Do you know anyone who doesn’t have a cell phone? Even my parents cannot remember how they survived without a cell phone. They don’t keep track of appointments, look up directions and utilize advanced functionality but they understand that it exists – and so they utilize their resources in those situations (call their kids). Being connected 24/7 requires mobility. It should be fundamental to your ERP system.
7. ERP for Small Business: ERP is no longer just for medium to large size companies. In my recent experience with ERP selection projects, the cost is minimal vs. the automation and speed advantages it will provide to even a small business. Do customers care if you are small or big when they want an order status at 8pm on a Sunday?

Of course, understanding these trends is a great first step; however, it is useless unless you put together a plan of action on what is noteworthy for your company and your situation. What will you do differently tomorrow? Many of the best inventions were invented by someone else long before the known inventor; however, they did not act upon the goldmine.

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As much as I rarely jump on the latest buzzword bandwagons (as I find them to be a waste of time), big data is an important emerging topic in supply chain.

The amount of data continues to grow – we are definitely in an information overload society! In addition, complexity and unstructured data (which doesn’t fit into traditional databases such as email and photos) are increasing at a fast pace. Big data is a powerful tool in navigating these waters.

The supply chain is also gaining complexity at an alarming rate and so managers and executives need improved tools for effective decision-making. There are countless uses of big data in supply chain – some of the most prevalent include: supply chain management, demand planning, supplier information, customer marketplace trends, etc.

For example, Sales & Operations planning, also known as SIOP (Sales Inventory Operations Planning) is one of the best uses of big data. Aligning demand with supply requires excellence in information sharing. As the data and supply chain become more complex, big data is more critical in uncovering relevant and useful data quicker so that the S&OP participants have access to relevant data to identify areas for focus and to make more objective, data-driven decisions.

S&OP has the potential to significant impact margins, cash flow and revenues – how can you ignore it?

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