Manufacturers wish they left supply chain shortages behind after the pandemic, but they remain top of mind. Concerns remain. According to KPMG, “71% of global companies highlight raw material costs as their number one supply chain threat for 2023.” And the trend isn’t ceasing. According to a survey by LeanDNA and Wakefield Research, supply chain shortages remain a leading concern for manufacturers as they look to the future.”

In fact, if you look at the pharmaceutical industry, shortages have been creating havoc. For example, there have been shortages of over-the-counter drugs and prescription medications for ADHD, cancer and diabetes have been widespread. There has been commentary about a spike in demand, but there are also comments about manufacturing delays. Of course, this is before we discuss the state of logistics disruption.

In addition to product, material and healthcare shortages, clients are experiencing a severe shortage of high-skilled talent and are struggling to upgrade ERP systems and related technologies. These issues are aggravating the shortage situation as multiple clients have the lack of system support creating further shortages and work stoppage in addition to frustrating their employees.

It is simply creating havoc as people jump into jobs they are not prepared to execute, and Executives are struggling to understand why their resources no longer seem to have the expertise they used to have. Worse yet, if they don’t realize this is occurring, the situation gets worse as employees make poor decisions and struggle to keep up. Refer to our article, Where the Talent Has Gone & Strategies for Success.

Strategies for Success

Customers will not suffer endlessly as shortages persist. They will find alternative sources of supply, source from different regions of the world, find backup sources, search for suppliers that can provide visibility and status of the end-to-end supply chain and invest in reshoring, nearshoring, and expanding regional manufacturing footprints.

Thus, proactive executives are getting ahead of these challenges. We have no doubt that the companies that can supply critical items in the next several years with uninterrupted supply will lead their industries for decades to come. What are some of the best practice strategies being deployed?

1. Go back to the basics: It is simply surprising how many clients are running into problems with the fundamentals. Who knew a best practice was to return to basics! According to a leading authority on the subject of generational diversity in the workplace, the younger generations is struggling with ambiguity and decision making. This has proven to be “on the mark” as clients have employees stuck and struggling as they don’t know why the computer is spitting out answers that are wrong and what to do about it. Thus, we are jumping in to define processes, educate on concepts and help clients over this unexpected bottleneck. Perform a supply chain assessment to quickly size up where to focus. Take our complimentary supply chain assessment quiz.
2. Planning best practices: There is no doubt that production planning, materials management, replenishment planning, and each planning expertise is in limited supply yet is cornerstone to mitigating shortages and getting in front of demand. Refer to recent examples of how this topic can make or break success in our recent article.
3. SIOP (Sales Inventory Operations Planning): One of the single best strategies to get in front of changing conditions and ensure profitable growth is to rollout a SIOP process. A SIOP process will align Sales with Operations, demand with supply, and, most importantly, it will provide a proactive view into changing circumstances with recommended solution options, impacts on product and customer profitability, heads up to capacity bottlenecks, and sales funnel changes. Read our book, SIOP: Creating Predictable Revenue and EBITDA Growth.
4. ERP, advanced technologies & automation: No client will succeed with manual spreadsheets long-term. The most successful clients are better utilizing their ERP systems to provide enhanced visibility, flexibility, and service while also pursuing advanced technologies (digital twins, artificial intelligence, IoT, robotics, meta) and automation to improve efficiencies, reduce errors, and increase scalability and profitability.
5. Innovation: Continuous improvement is no longer enough. Only those companies that innovate and turn 1+1 into 22 with collaborative partnerships will succeed.
6. Trends & Metrics: Although it is essential to review progress and results by tracking key performance indicators like OTIF (on-time-in-full), production output, and inventory turns, it is even more important to be focused on “where the puck is going” (not where it has been). Tracking trends, listening to diverse perspectives, researching and trialing new and potential trends is the focus of our most successful clients.
7. Regional manufacturing: Although this topic should arise through your SIOP process, our money is on regional manufacturing. Clients must take control over their ability to service customers. Reshoring, nearshoring, expanding manufacturing and collaborative partnerships are hot topics. For example, even industries such as medical device, pharmaceutical, and computer chips are joining aerospace, food & beverage, industrial equipment, and building products to produce close to customers.
8. Talent: We’d be remiss not to mention that talent will “win” in the end. Attract, hoard, develop, train, and mentor talent!

Shortages are persisting. Geopolitical tensions remain high. Critical supplies such as computer chips, medical supplies, and aerospace and defense products are providing evidence that it isn’t just a lack of “nice-to-have” items. Pursue strategies to ensure you are ahead of the curve, and your business will thrive.

If you are interested in reading more on this topic:
Why Manufacturing Matters and Will Thrive in the Next Decade

The post Supply Chain Shortages Remain a Concern: Strategies for Success appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group, says that the Chips Act “has spurred on certainly quite a bit of investment” in the US electric car sector. And Mexico is also booming through ‘friend shoring’.

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Read the full article at the BBC website. 

The post BBC: Why firms are bringing their manufacturing back home appeared first on LMA-Consulting Group, a supply chain consulting firm.

Companies should seize opportunities to increase packaging efficiencies, improving profitability and sustainability

Since packaging is typically 10-40% of the retail price of products, there is no doubt it adds up to a relevant factor in product cost and waste. Packaging encompasses product design, prototypes and trials, materials, production, labor, shipping, and recycling and/or disposal. The most proactive companies pay close attention to opportunities to increase packaging efficiencies throughout the end-to-end supply chain to improve their profitability and sustainability.

Product Design Collaboration

Product design is at the heart of improving packaging efficiency. Our best clients take a collaborative approach to R&D and packaging design encompassing the end-to-end supply chain. For example, in a healthcare products manufacturer, the packaging engineer worked with R&D, manufacturing technicians, procurement resources, and logistics resources with a specialty in warehousing and transportation. In addition, customers, packaging materials suppliers, equipment specialists, and other resources took part in the collaborative design.

By involving these cross-functional resources, the full life cycle could be incorporated into the product design. In this case, they wanted to ensure the design encompassed the optimal packaging design to meet the customer’s visual, strength, and storage specifications while minimizing the materials, labor, and logistics costs. For example, the objective was to minimize the packaging materials while meeting product specifications. However, the team had to review potentially conflicting factors. For example, doubling the number of units of product per package would make the way the package fit in the box less efficient, the box might not be best designed to optimize the pallet, the pallets might not be optimized to fit on the truck, or the customer might not like the visual design or be able to fit the product in the storage area.

In addition, the product’s performance had to remain intact. Reducing the quantity of materials must not negatively impact the way the product worked for the customer. Compressing the product into the package must not negatively impact the absorbency of the product. Using redesigned materials in the manufacturing process must not impact product quality. This healthcare manufacturer successfully redesigned the product and reduced the total cost by more than 20% inclusive of materials, packaging, warehousing, and transportation costs.

Packaging Efficiencies in Bottling

There are vast opportunities to improve packaging efficiencies in the bottling industry. For example, Niagara has accomplished several key objectives in eliminating waste through packaging and innovation. They designed new packaging that eliminates the need for a cardboard tray in their cases and reduced the amount of plastic in their bottles by 60%. Thus, this packaging requires less materials and uses up less pallet space, allowing the company to reduce carbon emissions and ship more water per order.

Since 2009, Niagara improved its carbon footprint by 59% through innovations in design, lightweighting, and packaging. It has also increased its recycled content usage, which reduced greenhouse gas impact by bottle by 12%. Gaining these results requires a full lifecycle view of supply chain from product design through recycling.

Packaging Efficiencies at Amazon

According to Amazon, it continually works to reinvent and simplify packaging options. The company combines lab testing, machine learning, materials science, and manufacturing partnerships to accomplish this goal. Amazon notes that it avoided more than 2 million tons of packaging materials and reduced per-shipment packaging weight by 41% since 2015. The bottom line is that a significant reduction in packaging will reduce costs and improve sustainability.

Improving packaging efficiency can produce dramatic results. The healthcare products manufacturer, Niagara, and Amazon prove that by focusing on packaging design and innovation, tremendous savings in materials, labor, and freight will flow to the bottom line. In addition, carbon emissions are reduced and sustainability objectives are achieved.

Originally posted in Adhesives & Sealants, March 2024

The post Strategies for Gaining Packaging Efficiencies in Your Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

Status of the Medical / Healthcare Supply Chain

The supply chain has calmed down since the height of the pandemic; however, smart manufacturers are thinking ahead to changing conditions. Geopolitical risks are at an all-time high. The Russia-Ukraine war rages on and Israel and Hamas are at war which has spilled over to the Iran-backed Houthis rebels attacking container ships in the Suez Canal, disrupting a major shipping lane.

Additionally, China continues to threaten Taiwan which produces 90% of the advanced computer chips for the world and an important component in medical devices. China is also being very aggressive in the region which could impact shipping lanes through the South China Seas, manufacturing in China and manufacturing in countries in the region. Since China dominates the medical device supply chain, this is concerning. Thus, proactive manufacturers are moving towards regional manufacturing. This trend started following the pandemic (refer to our quote in a MPO Medical Products Outsourcing article) and has been picking up steam.

Reshoring & Expanding Manufacturing Capabilities

According to Xometry’s Medical Industry Survey, medical device manufacturers are rapidly reshoring operations to strengthen their domestic supply chains. In fact, 67% of medical device manufacturers are in the process of reshoring operations within the next 12 months. There is a focused effort in rethinking supply chain strategies.

Although many companies are reshoring, executives remain concerned about the cost impact of expanding production in the USA. The good news is that labor costs have decreased as a percentage of total cost dramatically since the offshoring craze while other costs have increased, making reshoring more attractive. For example, transportation costs were heightened during the pandemic and have been impacted by the Panama Canal drought, the diversions of the Suez Canal, and other supply chain disruptions. The cost of capital has increased significantly with the increase in interest rates which has made the cost of carrying inventory much higher. And there are many other costs to consider in the total cost to produce. In fact, the total cost of product can be equivalent or even less in the USA in some non-commodity situations.

Many advancements have been made in manufacturing and technology. Companies are automating and digitizing their manufacturing and supply chain. For example, they are using 3D printing/ additive manufacturing, robotics, artificial intelligence with IoT, and other advanced technologies to improve efficiencies and enhance visibility. As manufacturers expand their manufacturing footprint, source new regional suppliers and reshore production, these advanced technologies maximize operational performance and minimize cost while maintaining and improving customer service levels with lower inventory levels. Thus, margin concerns are mitigated depending on the upgrades and improvements to the manufacturing process.

In the medical device industry, companies are starting to expand regional manufacturing in the USA. For example, Ascential Medical & Life Sciences is reshoring to Minnesota. Their new state-of-the-art facility has highly innovative automation solutions, making reshoring financially viable. Certainly, they are not alone. Companies are expanding operations in the USA.

Manufacturers are also nearshoring to the region. Mexico has expertise in medical devices and the ability to scale. Since customer requirements are significant in North America, the ability to scale in the US and Mexico is a relevant factor. The availability of advanced manufacturing and technical skills is also an important factor. Medical grade material supply can be sourced nearby, and the USA is ramping up computer chip manufacturing capabilities. For high labor component products, Mexico provides an excellent option because their labor rates are lower than China, and they benefit from the USMCA agreement between the two countries.

Although the USA and Mexico are great options with scale, there are additional medical device manufacturing hubs in other nearby countries. For example, Costa Rica has advanced skills, computer chip manufacturing, and therefore a thriving medical device manufacturing concentration. The Dominican Republic has medical device manufacturing, and Puerto Rico is known for pharmaceutical manufacturing.

Manufacturing Resurgence

There is no doubt that the successful companies will mitigate risk and manufacture regionally. Thus, the USA, Mexico and business friendly countries will experience a resurgence in manufacturing in the next decade. It will require investments in manufacturing, tooling, and other resources although there are opportunities to keep costs intact or even reduce total product cost.

The most successful companies will upgrade their processes, ERP systems, utilize advanced technologies, maximize customer and product profitability and proactively manage these opportunities with a SIOP (Sales Inventory Operations Planning) process. Assess your supply chain to learn how you stack up. Take our complimentary supply chain assessment. Upgrade, innovative, get ahead of the competition, and thrive.

If you are interested in reading more on this topic:
Why Manufacturing Matters and Will Thrive in the Next Decade

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CLAREMONT, CALIFORNIA – February 26, 2024 –  Lisa Anderson, Lisa Anderson, MBA, CSCP, CLTD, President of LMA Consulting Group Inc., a leader in supply chain optimization and transformation, has recently launched the innovative Supply Chain Profitability Assessment. This cutting-edge tool prompts supply chain professionals, operations executives and senior leaders to introspect and critically assess various facets of their supply chains that affect customer performance, with a focus on flexibility and efficiency.

Participants respond to targeted yes/no questions, encouraging them to reflect on their current practices and identify potential areas for enhancement. The assessment covers critical factors such as order fulfillment tracking, production data accuracy, on-time delivery rates and inventory level forecasting,

“In today’s volatile supply chain environment, it’s crucial for professionals to focus on agility and thinking ahead strategically. Customers have high expectations. Keeping the supply chain optimized and agile can meet and even exceed expectations, resulting in continued profitability,” commented Ms. Anderson. “Even high-performing supply chains have room for improvement. The key is planning, communication and establishing contingencies to mitigate long-term effects of disruptions.”

The Supply Chain Profitability Assessment is built on LMA Consulting’s extensive experience in helping businesses navigate and thrive amidst supply chain disruptions and growth. It is an invitation for professionals to critically evaluate their supply chain operations and identify opportunities for strategic improvement.

LMA Consulting invites supply chain professionals to take the Supply Chain Profitability Assessment and embark on a journey toward optimized supply chain excellence. To take the Assessment, click this link. The tool serves as a gateway to transforming supply chain operations, ensuring they are maximized for efficiency and profitability.

LMA Consulting specializes in guiding businesses through turbulent times with strategic formulation, comprehensive supply chain transformation and resilience-building solutions. For more insights, download Ms. Anderson’s eBook, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., specializing in manufacturing strategy and end-to-end supply chain transformation.  A recognized supply chain thought leader, Ms. Anderson has been named a Top 40 B2B Tech Influencer by arketi group, a Top 16 ERP Expert to Follow by Washington-Frank, among the Top 10 Women in Supply Chain by Warner PR, in the top 55 Supply Chain & Logistics Experts by flexport, and a woman leader in Supply Chain by RateLinx.  Her primer, “I’ve Been Thinking.” offers strategies for creating bold customer promises and profits. An expert on the SIOP process, advancing innovation and enhancing supply chain resilience, Ms. Anderson is regularly interviewed and quoted by leading publications. For information, sign up for her Profit Through People® Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.                 
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Media Contact Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com

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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

The post How Do You Rate in Supply Chain? appeared first on LMA-Consulting Group, a supply chain consulting firm.

Disruptions have not stopped. China has been flying balloons over Taiwan. North Korea is threatening South Korea. Russia continues its war with Ukraine. Israel is at war with Hamas which has spread throughout the region, diverting container ships from the Suez Canal in addition to causing a bunch of other negative consequences. The Panama Canal is experiencing a drought and has reduced the number of container ships that can pass. It got so bad that tankers are now avoiding it altogether which has improved pricing to jump to the head of the line for container ships.

And this is before we bring up one of the hottest topics for companies – the skills gap. In essence, although the high level numbers have improved a bit, if you talk with executives, they are challenged to find resources with the appropriate skill sets. Only the companies advancing technology will thrive; however, it requires additional resources with technical skills to pursue these avenues. It is a complete jumble. If a client thinks they have the resources, it turns out they don’t know what the executives expect them to know. Or, as conditions change (new ERP system, new company ownership, changing economic conditions), they fall short. To read more about where the talent has gone and strategies for success, read our blog article.

Why The Issues All Fall to Planning

At multiple clients, the issues are stockpiling in Planning. We consider Planning to include the following areas:

• Demand planning
• Production planning & scheduling
• Replenishment planning (transfers, distribution)
• Materials planning
• Logistics planning (warehouse, transportation, international)

Here are the common causes that are flowing into the Planning Teams. Executives are frustrated and often think the people are the issue when it is the process, the system, the way the organization is set up etc.

• Customer Service: If Customer Service doesn’t proactively manage customer requests, push back when appropriate, handle customer concerns proactively, enter sales orders with the appropriate fields filled in correctly, every issue will fall in Planning’s lap. As Planning plans and schedules, these issues will arise, and they will have to reschedule, expedite, etc. Additionally, as customers change their mind or orders are pushed out or in, if Customer Service isn’t on top of these issues and proactively communicating cross-functionally, the issues flow to Planning’s desk.
• Engineering: In CTO (configure-to-order) and ETO (engineer-to-order) companies, the product is not finalized until it goes through Engineering. If delays or mistakes occur during this process, the issues flow into Planning’s lap. Also, typically if customer approvals are required, the follow up falls to Engineering. If the customer is delayed in providing approval, they typically still want it on the original request date, even if the company has a policy against this occurring. It happens anyway and falls to Planning to resolve.
• Transactions: If the warehouse doesn’t ship, receive, and transfer on a timely and accurate basis, if production doesn’t enter production and issue materials on a timely and accurate basis, if whoever is responsible for scrap and usage adjustments don’t handle them on a timely and accurate basis, if the inventory team doesn’t cycle count, research and resolve root causes on a timely and accurate basis, the issues pile up in Planning. To determine what to plan, inventory must be accurate and performed on a timely basis. Another issue that arises related to transactions are design decisions made on the basis of minimizing transactions in one department that pushes the workload to Planning. Unfortunately, the fact that the workload will end up in Planning isn’t typically known, but it is what happens as someone needs to figure out what to do. If you don’t track at a detailed level yet you need to plan at a detailed level, Planning will have to figure it out manually.
• Suppliers: If suppliers struggle or transportation is delayed (such as the Suez and Panama Canal or via strikes), production must be rescheduled. Again, the issues wind up in Planning to resolve before moving on.
• ERP setup and use challenges: There are millions of setups and processes tied to how an ERP system is rolled out or upgraded. Thus, there are many ways the system can drive incorrect actions. For example, if an item is set up to flow through MRP when it should flow through a min-max planning process or vice-versa, the planner will not receive the appropriate signals. If your branches are not set up properly and in conjunction with your sales forecast, you can send the wrong product to the wrong place at the wrong time. If lead times and safety stocks are not monitored, you can run the plant out of materials or create an overage quite easily. If there are ECNs (engineering change notices) but the ERP system cannot handle them, the Planners might be left updating countless work orders to know what to produce and order.

In the last six months, we’ve seen Planning get bombarded with these types of issues across multiple clients in multiple industries and multiple geographies. It is a common situation.

Path Forward: Reactive to Proactive

Unfortunately, there are no easy solutions. In fact, that is how “we” have got into this situation. Someone has to figure out the path forward. If no one else does it and the ERP system hasn’t been designed to handle it yet, Planning will be your last resort. Thus, ensure you have the appropriate skills on your Planning teams. If they are supposed to catch whatever goes wrong throughout the lifecycle of an order, make sure your planners are ready to do that for an interim period of time. Have you provided ongoing training and education? Have you hired consultants to help your team upgrade the process? Have you invested in additional technology to support your team?

Look around you. Have you had several retirements of long-term employees? Are you sure someone has absorbed ALL of the relevant tasks? How sure are you that the tasks will be automated? How sure are you that they are no longer required if you’ve implemented a process change? How sure are you that your new resources understand the big picture? In several situations, smart executives wondered why these tasks couldn’t be automated. Of course, the answer is that they can be automated, but ONLY with a high-skilled resource(s) with practical experience that can ensure items don’t fall through the cracks. Don’t wait for retirements to occur to go backwards and think about the process. Plan ahead, develop career paths, and transition plans.

Have you implemented a new ERP system or new ERP functionality? Most likely, the ERP team said we will start with base information and add your requests to future phases. How sure are you that those requests will be covered in the interim period? Have you planned to bring on board the appropriate resources for the workload in the interim? Do your employees know what should be done? They might just know what doesn’t seem right, but not know what to do to make it better. Are there a few of those items that should be fought for instead of postponing to a future phase? If you don’t want your business waiting on the Planning Team, re-review if you hear any of these watch-outs. Supplement your team, provide support, and tie rewards with the outcomes you want to achieve for not just the ERP team, but also for those required to ensure success.

Pivot from reactive to proactive is the message. Think forward, invest wisely, provide training and education to your people, communicate clearly, hire leaders with the experience to “jump in” and take on tasks to “see” what their team members are experiencing and help their team climb out of holes. We are in a business environment that is not for the faint of heart. Strong leaders that are willing to take on smart risks, work hard, and pivot with changing conditions will deliver strong results.

SIOP: Reactive to Proactive

Smart leaders are rolling out a SIOP (Sales Inventory Operations Planning) process to proactively plan demand and supply. SIOP will alert you to bottlenecks, issues, the need to pivot etc. Forward-thinking companies are gaining an advantage as they have planned ahead to be agile, pivot quickly, and most importantly, are ahead of the curve in securing capacity, materials, and key resources.

Think ahead and pay close attention to what’s going on in your Planning Team. If the ball is rolling downhill, put stopgaps in place to catch it while proactively addressing the topic.

If you are interested in reading more on this topic:
Master Planning & Production Scheduling Case Study: Gaining Visibility for Results

The post Why Planning Is Impacted As Disruptions Abound appeared first on LMA-Consulting Group, a supply chain consulting firm.

Supply chain optimization must remain a priority as disruptions continue. For example, although the Panama Canal started experiencing issues in the summer (refer to our article for details), it has been worsening lately. 40% of the goods movement from Northeast Asia to the U.S. East Coast go through the Panama Canal, and so the Panama Canal issues are driving shortages, late deliveries, and re-routing of goods.

Panama Canal Issues Worsen

Drought conditions are creating a new round of disruptions:

• Reduced container ships: by > 50% (from 40 to 32 earlier in 2023 to 25 Nov, 20 Jan & 18 Feb). 
• Restrictions on ship draft: to a maximum ship draft to 44 feet (vs. 50 feet) – requiring larger ships to sail light or unload, rail across & reload 
• Capacity restrictions: Neopanamax locks (handling larger ships) restricting to capacity by 50% (from 10 to 5 per day)
• Gas container ship impacts: LNG and VLGCs (very large gas carrier) will experience the greatest impact since deprioritized 

Inflation impacts: Creating inflationary pressures, shortages and delays. Some ships paying up to $4M to go to the head of the line

The China Risk

In addition to the disruptions to the Panama Canal, there are other risks associated with the Panama Canal. Hutchison controls the terminals at both ends of the Panama Canal. Thus, if China wants to “control” the flow through the Panama Canal, they can do so via Hutchison. It is an important risk to consider.

Responses to the Panama Canal Issues

Proactive executives are not waiting to see how this turns out. They are pivoting. Several of the actions include the following:

• Alternate routes: Depending on the start and end point, companies are pursuing different routes. These include the Suez Canal and sailing around the southern tip of Africa or South America.  
• Alternate modes of transportation: Depending on urgency, and start/ end points, companies are using air freight, rail etc.
• Alternate routes & modes of transportation: Companies are also going to an alternate U.S. port and sending product via rail or truck to its destination.
• Moving and/or reallocating manufacturing: Companies are certainly pursuing reshoring, nearshoring, and expanding manufacturing to minimize risks and shorten lead times. In addition, if they have multiple facilities and/or contract manufacturers, they are proactively moving manufacturing to support customer needs and mitigate risks.
• Forward position inventory: Depending on the manufacturing and distribution network, clients are also positioning inventory close to customers so that they can absorb additional disruptions without impacting customers.
• Change distribution network: Clients are also moving and expanding their distribution networks to better support customers. They are doing this in creative ways, sometimes partnering with customers, suppliers, and competitors.

The key is to proactively address these issues to mitigate the impacts to the customer and cost, and longer term, to revise your manufacturing and supply chain footprint and network to best support profitable growth and mitigate risk.

If you are interested in reading more on this topic:
Supply Chains are on the Move

The post Supply Chain Optimization Remains a Priority as the Panama Canal Worsens appeared first on LMA-Consulting Group, a supply chain consulting firm.

CLAREMONT, CALIFORNIA – December 20, 2023 –  Manufacturing and Supply Chain Consultant Lisa Anderson, MBA, CSCP, CLTD and President of LMA Consulting Group Inc., emphasizes the critical necessity of prioritizing supply chain optimization as global disruptions continue. Key issues, such as the worsening conditions at the Panama Canal, have been highlighted as significant contributors to the ongoing supply chain crisis. LMA Consulting Group specializes in supporting manufacturers and distributors in strategic planning and comprehensive supply chain transformation, focusing on enhancing the customer experience and robust business growth.

The Panama Canal, a critical passage for 40% of the goods moving from Northeast Asia to the U.S. East Coast, is experiencing severe disruptions that are intensifying supply chain challenges globally:

• Drastic Reduction in Container Ship Capacity: A decrease in container ships by more than 50%.
• Draft Restrictions: Limitation of the maximum ship draft to 44 feet, necessitating larger vessels to sail light or undergo complex reloading processes.
• Capacity Cuts at Neopanamax Locks: A halving of the daily capacity, now limited to 45 ships per day.
• Impact on Gas Container Ships: LNG and VNLCs face significant operational challenges and delays.
• Inflationary Pressures: These disruptions are contributing to inflation and causing delays, with some ships incurring costs of up to $4MM for expedited transit.

In addition, the control of the Panama Canal terminals by Hutchison, a company with connections to China, presents a potential geopolitical risk. This, coupled with the most recent challenges for ships going through the Suez Canal, will impact the flow of goods, posing additional layers of risk for global supply chains.

“There are proactive measures that companies can take,” noted Ms. Anderson. “Alternate routes, diverse transportation modes, manufacturing and distribution adjustments and inventory strategies can proactively address challenges and minimize impacts on customers and costs.  In the long term, revising the manufacturing and supply chain footprint is essential for sustainable growth and risk mitigation,” she said.

For deeper insights into navigating the complex landscape of global supply chains, download Ms. Anderson’s special report The Road Ahead: Business, Supply Chain & The World Order and her eBook SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth.

About LMA Consulting Group – Lisa Anderson, MBA, CSCP, CLTD

Lisa Anderson is the founder and president of LMA Consulting Group, Inc., specializing in manufacturing strategy and end-to-end supply chain transformation.  Ms. Anderson is a recognized Supply Chain thought leader by SelectHub, named a Top 40 B2B Tech Influencer by arketi group, a Top 16 ERP Expert to Follow by Washington-Frank, in the Top 10 Women in Supply Chain by Warner PR, in the top 55 Supply Chain & Logistics Experts by flexport, and a woman leader in Supply Chain by RateLinx.  Her primer, I’ve Been Thinking, provides strategies for creating bold customer promises and profits. An expert on the SIOP process (Sales, Inventory Operations Planning), advancing innovation, and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, Bloomberg, Fox News and The Wall Street Journal. For information, sign up for her Profit Through People® Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.

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Media Contact Kathleen McEntee | Kathleen McEntee & Associates, Ltd. | p. (760) 262 – 4080 | KMcEntee@KMcEnteeAssoc.com

The post Lisa Anderson, Manufacturing & Supply Chain Expert Emphasizes Urgent Need for Supply Chain Optimization Amidst Ongoing Global Disruptions appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in Food Logistics’ Top 10 Trends to Shape Cold Food Chain in 2024 recently. With the help of some supply chain visibility, sustainable measures, more focus on people and the ability to pivot at a moment’s notice, 2024 is anyone’s and everyone’s game to succeed.

Top trends to watch in 2024

Nearshoring, risk mitigation and building resiliency. The top supply chain trends to watch in 2024 include a keen focus on mitigating supply chain risk, reshoring and nearshoring to source reliable production closer to customers, finding backup sources of supply, creating resiliency in the end-to-end supply chain, digitizing the supply chain, and keeping an eye on cybersecurity threats, according to Lisa Anderson, president, LMA Consulting Group, Inc.

“Since there is heightened risk in the global supply chain due to geopolitics, conflicts over natural resources, ongoing concerns related to the Russia-Ukraine war, South China Seas, new threats in the Suez Canal related to the Israel-Hamas conflict, Panama Canal issues related to drought, and concerns about natural disasters, labor negotiations/labor shortages, and cyber threats, smart executives are taking control,” she adds.

Sustainability. Despite all of the challenges and disruptions the supply chain industry faces, sustainability still remains a key trend for 2024, especially as companies race to deliver on their net-zero commitments by 2030.

“In many sectors, Scope 3 emissions can account for up to 80% of a company’s total emissions. Lowering Scope 3 presents one of the most significant opportunities for decarbonization, and the industry will look for opportunities to gain operational efficiencies,” Gerdeman says. “For example, our clients are using our analytics to optimize the mode, route, and equipment selection for temperature-sensitive goods, saving money by protecting products from freezing or spoilage, reducing refrigeration costs when cold blankets do the trick, reducing fuel costs, and lowering their carbon emissions.”

In fact, global food and beverage production accounts for roughly 34% of global greenhouse gas emissions (GHG), and according to the Food and Agricultural Organization, the food and beverage supply chain is on track to become the industry’s largest polluter. OXFAM found that the emissions of 10 of the largest food and beverage fleets equaled the total emissions of all Scandinavian countries combined.

State of transportation

The driver shortage still exists, diesel fuel costs are still on the rise and U.S. container imports continue to experience an uptick month-over-month.

The Yellow Freight bankruptcy also created a ripple effect on the industry, one that is still somewhat being felt.

“Customers had to scramble, opportunities arose for competitors, and the supply chain evolved,” Anderson says. “Similarly, the threat of a potential rail strike and West Coast port strike caused customers to transition to alternate modes of transportation and pursue alternate routes. The same is occurring with the UPS strike and the UAW strike as supply chains are moving to account for these types of issues.”

State of e-commerce

E-commerce in grocery didn’t really become a thing until COVID-19 forced several supermarkets and grocery retailers to create a B2C arm of their business almost overnight.

Fast forward to what will be 4 years later, and the rise of e-commerce in grocery is here to stay.

Similarly, B2B channels are also growing.

“For example, cold chain needs will explode as computer chip capacity comes online with the expansion of manufacturing with the CHIPS Act,” says Anderson. “Thus, cold chains are expanding at a rapid rate and will continue to thrive in 2024. Cold storage is limited, and even though there are inflationary pressures escalating the cost to build cold storage facilities, growth will be robust. Innovation will be essential to meeting these needs in a way that will provide customer value in a sustainable and profitable manner in 2024.”

What’s to come in 2024?

While 2023 may have been the Year of Bottlenecks, 2024 opens the door to longevity, peace and prosperity.

Yet to achieve those elements, companies must be more proactive, more agile and more forward-thinking.

“Instead of being reactive, forward-thinking executives are making the shift to being proactive. Thus, they are setting up a resilient supply chain with the ability to scale up/ down quickly, utilize backup sources of supply, alternate logistics and transportation providers and routes, and educating a cross-functional workforce. They are also rolling out proactive and predictive demand and supply planning programs such as SIOP (Sales Inventory Operations Planning), forward positioning of inventory and capacity, and predictive analytics. As no client has enough high-skilled talent, the best organizations are automating, digitizing, and using robotics, autonomous vehicles, artificial intelligence, IoT and the metaverse (AR/VR) to best utilize limited resources while supplying customer needs,” says Anderson.

Read the full article here

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