The Minimum Wage Hike

California’s minimum wage went up to $20/hr. for fast food restaurants with at least 60 locations nationwide that do not make bread. This law is causing widespread unintended consequences. For example, Fosters Freeze in Lemoore closed suddenly after the wage hike. Mod 5 Pizza is closing five locations. There are widespread price increases including at In n Out, Burger King and more. Significant layoffs are also occurring at restaurants like Pizza Hut, Round Table Pizza, and Auntie Anne’s as companies determine how to deal with the wage hikes while maintaining profit levels. Some franchise owners are “on the move” to states with less regulation such as Nevada. It will also negatively impact manufacturing and supply chain as companies compete for resources and increase prices. The Skills Gap and misalignment of high-skilled and low-skilled jobs will worsen.

More Shortages & Sky High Prices…..NOT Chocolate!

The price of cocoa has doubled in the last year. After three years of poor cocoa harvests with a weak outlook, the supply of cocoa has been slashed. Thus, prices are escalating and shortages are becoming widespread. Processing plants are saying they cannot afford to purchase the beans. For example, 60% of the world’s coca is produced in Africa’s the Ivory Coast and Ghana, and these plants have stopped or cut processing. Unfortunately, there is a massive misalignment of demand and supply which is creating supply chain shortages and causing inflationary pressures. In addition, substitutes are starting to occur. To read more about persistent shortages, see our article, “Supply Chain Shortages Remain a Concern“.

Egg Inflation

The largest producer of fresh eggs, Cal-Maine Foods, Inc. temporarily shut down one of its facilities due to the bird flu. It also resulted in the depopulation of 1.6 million hens. These issues are bound to lead to further price increases. Egg prices increased over 8% in the last month, have more than doubled since before the pandemic, and are bound to go even higher as potential shortages loom. What is the bottom line? Supply and demand misalignment is creating havoc throughout the supply chain.

It Isn’t All About Food

Oil and gas prices are increasing again, which will have an impact on countless products from medical devices to electronics and industrial machinery. Since the supply chain has been thrust into chaos throughout the world (listen to our recent Supply Chain Chats on what’s going on in the global supply chain), container shipping rates are increasing. And after the recent bridge collapse in Baltimore, the automobile supply chains have been disrupted, and it is likely to lead to inflationary pressures. No matter the product, supply chain risks have been heightened.

How to Navigate

Unfortunately, there is no easy answer and magic wand to resolve the shortages and realign demand with supply. On the other hand, the focus of SIOP (Sales Inventory Operations Planning) is to align demand with supply and provide the visibility and insights to proactively navigate these rough waters. For example, clients are reallocating capacity among production facilities, making make vs buy decisions, offloading to supplement short-term spikes in demand, and maximizing customer and product profitability with a SIOP process. To learn more about these strategies, download our complimentary book, SIOP: Creating Predictable Revenue and EBITDA Growth.

In addition, there is no doubt the proactive clients are finding ways to leverage ERP systems and advanced technologies to automate, digitize and better navigate these trying circumstances. For example, a healthcare products manufacturer is using artificial intelligence and robotics to produce standard product with minimal resources so that they can dedicate their high-skilled talent to their complex product lines supporting aerospace and defense. Another client is pursuing additive manufacturing/ 3D printing to get a leg up on the competition and bring down lead times to support growth plans. There is plenty of opportunities if you look for them!

If you are interested in reading more on this topic:
How Do You Rate in Your Supply Chain?

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The Francis Scott Key Bridge Collapse

Horribly, a container ship collided with the Francis Scott Key Bridge, and much of the bridge collapsed. Cars went into the water, and it has become a deadly disaster. Our thoughts go out to the families impacted.

As we commented in Inc., from a supply chain point of view, it has caused significant near-term impacts and extended disruptions in the region. Transportation bottlenecks immediately emerged. Container ships, trucks, and rail were all impacted.

Port Impacts

It just so happens that the collapse of the bridge cut off the Baltimore port by in essence setting up a wall between the port and the Chesapeake Bay. The bridge’s collapse means that for the foreseeable future, it won’t be feasible to get to the container terminals. The port is likely to remain closed for several months and traffic diverted. This port is the 5th largest container port on the U.S. East Coast and the busiest port in the region for handling roll-on/ roll-off cargo such as cars, light trucks, construction and farm equipment, and more. The port also handled sugar, furniture, home appliances, coal, and other items.

Near-term, container ships will be diverted to nearby ports such as New Jersey, Pennsylvania, and Virginia ports. There will be delays, congestion, and diversions. Most likely, these delays will be relatively short-term as they are absorbed to nearby ports; however, it is another disruption in the global supply chain with short-term and long-term implications. As we communicated in a recent article on the impacts of the drought conditions in the Panama Canal and container ship attacks in the Suez Canal (both impacting shipments from Northeast Asia to the East Coast), this is an additional disruption at the East Coast ports. Thus, some shippers are likely to divert to the West Coast ports and rail or truck product to the East Coast.

Regional Logistics Impacts

There are 3,200 sites involved in logistics, distribution and warehousing nearby the port and bridge. Thus, there will be severe near-term disruption in the region. The timing will be heavily dependent on how quickly the debris can be cleared to restore safe passage in the area. Some experts believe this task could be accomplished in the next 1-2 weeks whereas others say it could take months. With that said, with the ports closed and diversions underway, it will take time for the supply chain to level out.

Trucking Impacts

According to the American Trucking Associations (AMA), almost 4,900 trucks travel the bridge each day, with $28 billion in goods crossing each year. There are alternate routes; however, there are issues associated with several of the options. For example, the two tunnel options to cross Baltimore harbor cannot carry hazardous materials, and there are height and width restrictions on the tunnels. Thus, trucks will be diverted on I-695 on the western side of the city. These diversions will cause additional delays, diversions, and cost.

Industry Impacts

The auto industry will experience the most significant impacts because the Baltimore port is the top American port for the import and export of cars. BMW, Volkswagen and Mercedes-Benz have facilities close to the port to handle vehicle shipments, and Mazda is had the highest dollar value of imports. The auto industry supply chain will be resilient but it will be another disruption after finally returning inventory to pre-pandemic levels.

The energy industry might experience disruption as well. There could be a disruption in coal supplies, gasoline and ethanol. The oil industry will have to find alternate routes for barge deliveries and/or pursue alternate modes of transportation (trucking). CSX transports imported coal and is communicating expected delays.

SIOP & Backups

It is quite clear that a single backup is no longer sufficient. You must proactively plan for likely risks and think 3 steps ahead of your competition to succeed in today’s global supply chain. SIOP (Sales Inventory Operations Planning) is a process to align demand with supply. It provides visibility across the supply chain so that companies can take proactive actions to mitigate risks, source backup sources of supply, and pivot with changing circumstances. For example, there is significant regional manufacturing, reshoring, and nearshoring occurring. To learn more about these strategies, download our complimentary book, SIOP: Creating Predictable Revenue and EBITDA Growth.

If you are interested in reading more on this topic:
How Do You Rate in Your Supply Chain?

The post The Francis Scott Key Bridge Collapse & Impacts in the Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

The Baltimore disaster is expected to further compound the stress already placed on the global freight system. “Container shipping traffic has already been quite disrupted, because of the drought going on in the Panama Canal–ships from there [are] going through the Suez Canal to come to the east coast of the U.S. from Northeast Asia,” says Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group.

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Baltimore’s Business Community Grapples With Impact of Francis Scott Key Bridge Collapse

For founders in the city, the loss of a Baltimore landmark is about more than missed income.

Early Tuesday morning, a cargo ship collided with Francis Scott Key Bridge in Baltimore, immediately collapsing the structure and sending cars plunging into the Patapsco River.

The incident sparked waves of alarm throughout the country. In speeches, Transportation Secretary Pete Buttigieg and President Joe Biden pledged federal assistance in rebuilding efforts. There is no indication that foul play was the cause of the accident, according to the Baltimore’s FBI field office.

Rescue crews continued to search the area for six construction workers who were on the bridge when the Dali, a 948-foot cargo ship bound for Colombo, Sri Lanka, collided with a bridge pylon around 1:30am, according to multiple reports. Two additional construction workers had been rescued from the water, and one was taken to the hospital. No fatalities had been confirmed by Tuesday afternoon, officials said. The Dali, a Singapore-registered vessel, dropped anchor prior to impact after the ship lost propulsion, CNN reported. The Maritime Port Authority of Singapore, which confirmed the loss of propulsion to CNN, says it is in contact with the US Coast Guard and cooperating with investigations.

The National Transportation Safety Administration announced an investigation into the incident on Tuesday afternoon, noting it would probe whether the ship did in fact drop anchor prior to impact.

In addition to the psychological toll inflicted by a disaster, the bridge’s collapse has massive economic ramifications: Submerged in the river, the remnants of the bridge now block access to the Port of Baltimore, the ninth largest port in the United States. The detritus will cause a massive re-routing of all traffic heading to the Port of Baltimore to nearby ports on the northeastern seaboard, Lisa Anderson, a supply chain expert and founder of the LMA consulting group, explains to Inc.

Read the full article at Inc.

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The Economy: Big Picture

In the last month, we’ve participated in at least six economic forecast presentations or discussions with experts (economic, banking, investment, manufacturing). Although they each had nuances, common themes emerged. Adding our expertise into the mix, we see volatility on the horizon. 

The bottom line is that inflation is likely to continue, interest rates are unlikely to decline near-term without creating additional down-the-line inflation, unemployment will have fits and starts and trend up slightly yet the labor participation rate will remain lower than pre-pandemic. From a jobs standpoint, low skilled jobs are being automated, yet high-skilled jobs are experiencing a severe skills gap. Overall, the economy will be slower than it has been. Last but not least, geopolitical risks are concerning every expert, leaving volatility the name of the game in the foreseeable future.

The Economy & The Data

A summary of findings from recent research on the state of the economy includes the following:

• Stimulus (COVID money flooded the economy): Inflation would need to rise by 30% to absorb the stimulus. So far, inflation has gone up around 20%. Thus, there is around 10% left to absorb to get supply and demand in alignment. If interest rates stay put, the COVID funds will run out in about a year. Otherwise, we will have spurts & starts.
• Government spending: Government spending has continued at historic levels. For example, in 2023, nominal GDP was up $1.5 trillion yet federal debt increased $2.5 trillion, leaving a gap. Debt is increasing at what some see as an alarming rate.
• Inflation rate: It has gone up by 20%, but to absorb the stimulus, there is still 10% to go. It is likely interest rates will remain flat to work through the COVID money. If not, there will be bursts of inflation and recession (volatility). Inflation is likely to stay higher than the goal around 3-3.5%.
• Unemployment rates & labor participation rates: Layoffs surged 136% in January to the second-highest level on record with financial companies, the technology sector, food production companies, and retail with the highest levels (in order of sequence). On the other hand, these findings led the experts to think employers would show the latest hiring at 180,000 workers yet the number came in double that amount (353,000). The unemployment rate stayed about the same at 3.7% with the labor force participation rate at 62.5% (which close to 1% lower than pre-pandemic, 63.4%). There is 1.3 jobs for every person looking for a job. From a client point-of-view, they simply do not have the high-skilled resources required although they are automating low-skilled jobs, and depending on the industry, they have put a pause on hiring.
• Wages: Workers’ wages are improving but they still have not caught up with inflation. In the last three years, real average hourly earnings are still down 2.4%. Thus, people are not feeling better.
• GDP (gross domestic product): Real gross domestic product has largely recovered. It increased 3.3% in the 4th quarter and consumer spending has remained relatively strong. It shifted from goods to services, but has held up overall even with the interest rate hikes thus far.
• Banking: There is concern about the regional banks. They hold most of the commercial real estate loans that will need to be refinanced at higher rates over the next few years. Also, bank’s liquidity requirements are driving concerns with the changing of bonds prices with the quick increase in interest rates.
• Geopolitical risk: Every expert mentioned concern around geopolitical risk. It will lead to inflationary pressures with reshoring, increased prices (for example, the Red Sea rates, diversion costs, and/or expedite costs), impact on energy prices, etc.

The bottom line can be summed up in with the misalignment of demand and supply, the shrinking workforce (with Baby Boomer retirements – by 2030, the youngest of the largest generation in history will be older than 65) combined with the divergent needs for high-skills vs low skills, and the emergence of high geopolitical risk. Thus, volatility and uncertainty will remain.

What Should We Take Away

Smart executives will take bold actions to ensure they can supply their key / ideal customers while pruning low margin/ non-value added customers. They are adding customer/ product profitability, pricing, and costing trends into their SIOP (Sales Inventory Operations Planning) processes to evaluate options, set strategy and make decisions.

They will invest in the best high-skilled resources, supplement with additional options (refer to our article, Where the Talent Has Gone, and create a high-performance culture. Strong leaders will be pivotal to ensuring success. People follow leaders; not companies.

Proactive clients are upgrading ERP systems to ensure the basic processes (blocking and tackling) are in place. Additionally, they are rolling out advanced technologies including artificial intelligence (AI) to automate, digitize and thrive. To read more about these strategies, refer to our article, Automate, Digitize and Thrive in Supply Chain. It will be cornerstone to success in the next decade.

Additionally, smart clients are upgrading business processes, cleaning up their data to better utilize their ERP and peripheral systems, and building flexibility and scalability into their future thinking. The core processes include demand planning, production planning, engineering (for engineer-to-order ETO and configure-to-order CTO companies), production and inventory control, and replenishment/ distribution planning processes. From a data perspective, it is important to review bills of materials, routings, work centers, item masters, customer and supplier masters, and MRP parameters. Proactive clients are ensuring the basics are intact and they are focusing on the roadmap to stay at least a few steps ahead of changing conditions.

If you are interested in reading more on this topic:
Supply Chain Volatility, Risk & Capacity Remain Critical Priorities

The post The Economy, Outlook & Strategies for Success appeared first on LMA-Consulting Group, a supply chain consulting firm.

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

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

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

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

To read the full article, click here.

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

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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Outstanding Consultants Honored at 20th Annual Meeting this week

SAN DIEGO, CA — The Society for the Advancement of Consulting® (SAC), the leading global association of independent consulting professionals, today announced the winners of the Corrie Shanahan Memorial Award for Advancing Consulting. The awards were presented at the 20^th annual meeting of the organization, held in San Diego this year with a virtual option to allow global participation. other solutions will be required. Four-day workweeks are more attractive, so that employees can achieve work-life balance. Leaders will have to step up to figure out how to position their companies for the future instead of dictating the past.”

The Consultant of the Year was awarded to Christian Milaster of Annapolis, Maryland. There are two recipients of this year’s award for Creativity & Innovation, Mark Cioni of New Hartford, NY and Heather Lenz of Cleveland, Ohio.

“Consultants continue to play a critical role in helping clients navigate the everchanging economic environment,” said Linda Popky, co-executive director of SAC. “We’re excited to be able to again honor the best-of-the-best with these awards.

“This year, in addition to honoring the outstanding consultant of the year, we are also recognizing two SAC members who each displayed outstanding creativity and innovation—both in their own practice, as well as in how they work with their clients,” she added.

About Christian Milaster

Christian Milaster is passionate about enabling the sustainable delivery of extraordinary care. He is driven to increase the personal satisfaction medical professionals by applying systems thinking principles and implementing systems solutions..

Rooted in German engineering and systems thinking, Christian and his team optimize care delivery by designing and implementing pragmatic improvement and optimization solutions, drawing from a wide range of disciplines, including agile, lean, Baldrige, design thinking, requirements engineering, servant project management, change management, and many more.

He is the founder and CEO of Ingenium Digital Health Advisors, a boutique consulting firm focused on accelerating the adoption of digital health innovation, and of Ingenium Healthcare Advisors, focused on guiding healthcare leaders to get the results they want. Ingenium Advisors now comprises a 16-person team and a consortium of over a dozen expert advisors.

Born, raised, and educated as an Engineer in Germany, Christian started his career at IBM Global Services in Germany before joining the Mayo Clinic in Minnesota, where he worked in various roles for 12 years before launching Ingenium in 2012. His team is spread across seven countries as well as throughout the United States.

About Mark Cioni

Mark Cioni has consulted globally for over 35 years to a wide variety of clients in private industry and government. His deep expertise in domains, including information technology, cyber security, enterprise architecture & organizational change management, helps to maximize client value derived from decisions, operations & performance.

Mark has worked recently to improve the security, resiliency, and reliability of critical infrastructure and helped clients to exploit customer experience & improvement opportunities at the convergence of artificial intelligence, analytics & machine learning & enterprise automation.

About Heather Lenz

Heather Lenz is pioneering the field of social impact consulting with innovative, data-driven strategies that provide real-time insights about social change for clients. Her approach combines the fields of organizational development, design thinking, and data and evaluation with the field of social work. This has led to measurable reductions in some of the most pressing issues of our time, like structural racism, workplace psychological safety, and more—redefining the way organizations approach their missions and drive change for the betterment of people and communities.

With a vision to revolutionize the trillion-dollar social impact industry in the U.S., Heather emphasizes accountability and effectiveness by helping organizations build outcomes-oriented intelligence systems. She is at the forefront of integrating AI and open-source tools into consulting practices, working toward a future where technology seamlessly enhances the nonprofit and government consulting fields, ultimately creating a more impactful and dynamic approach to social change. Her firm, Sangfroid Strategy, has invented new ways to conduct market research on the nonprofit sector, spearheaded innovative solutions for the field of philanthropy to put the commitment to racial and gender equity into practice, and created organizational operating systems to improve the effectiveness of the nonprofit sector.

The Advancing Consulting Awards

The awards are given to independent consultants who have done the most to advance the profession in the previous year. They’re named in memory of Corrie Shanahan, a SAC member who passed away in 2019. Corrie Shanahan was an expert in rapidly strengthening organizational performance, productivity, and corporate culture, and the author of Do it, Mean it, Be it: The Keys to Achieve Success, Happiness and Everything You Deserve at Work and in Life.

“We are excited to recognize consultants that symbolize the “best of the best” in the consulting profession,” said Lisa Anderson co-executive director of SAC. “Just as Corrie exemplified a zest for continuous improvement and achieving outstanding client outcomes, our nominees stood out above the crowd.

“This year’s pool of nominees again was highly qualified,” she added. “In a year of volatility and business change, we were pleased to see so many consultants innovate and thrive. We greatly appreciate the award committee, led by chair Vanessa Khan, for all their hard work to review submissions and evaluate applicants based on a set of pre-defined criteria.”

“Our commitment to create superb value for our clients is a core value for SAC’s consultants. In a world where technological advances, societal evolution, and political shifts result in uncertainty and rapid change, we cannot stand still—we must advance, we must evolve, we must innovate,” stated Christian Milaster.

“To be recognized this year by my peers for having contributed to the advancement of the consulting profession is a true honor—and equally a strong encouragement to continue to do so,” he added. “I’m grateful for the continuous inspiration and support by my fellow SAC members and past award winners that motivated me to reach new heights. I’m thankful for the volunteers who created and coordinated this recognition in honor of an outstanding consultant, Corrie, and I’m humbled by the testimonials of my clients and references that confirm my approach to consulting demonstrates my deep commitment to creating superb value for clients.”

Mark Cioni noted, “I’ve been able to engage more actively with SAC since 2019 and want to thank the entire membership for welcoming me into their community. I’m grateful to receive their guidance and for the opportunity to contribute. This journey was entirely unexpected and I’m humbled to know that the community recognizes my Creativity & Innovation.

“Although I never got to meet or know Corrie Shanahan, I am well aware of her legacy. I can only hope to face my own adversity with a fraction of the courage, tenacity, and joy that Corrie embodied and, if I do, I will count myself a success!” he added.

Heather Lenz adds, “Innovative thinking is at the cornerstone of reimagining the social impact sector. As consultants in this sector, we must help our clients leverage new technology and ways of thinking to transcend conventional boundaries. As a society, we have waited long enough for the ecosystem of organizations set up to improve the lives of people to work well.

“At this moment in time, we have the resources and the technology to transform our social services landscape into one that creates lasting, meaningful, and measurable impact on the lives they serve—and it is our duty to do just that,” she noted.

About SAC

The Society for the Advancement of Consulting (SAC) is the premier association for independent consulting professionals who subscribe to an industry code of ethics and provide significant consulting results among their clients. Founded by Million Dollar Consulting guru Alan Weiss in 2003, SAC offers a series of in-person and online programs to help consultants share best practices and learn from industry experts and thought leaders in the business world. SAC today has members in 14 countries around the world.

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Lisa Anderson was quoted in Manufacturing Dive about how manufacturers can navigate a slowing economy.

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Big brands are laying off workers amid lagging demand. But experts say there are more strategies that can help keep teams nimble for an economic turnaround.

As the economy stagnates and global factory activity remains slow, some manufacturers have taken drastic steps to quickly cut down on costs by laying off workers and closing facilities.  

Stationary bike maker Peloton’s manufacturing subsidiary Precor announced in March that it would close its factory in North Carolina and lay off more than 100 employees.

U.S. EV manufacturer Lucid said it would lay off about 18% of its overall workforce last month, and Solo Cup manufacturer Dart Container Corp. laid off 84 workers. The tools-maker Stanley Black & Decker said it would close two facilities in Texas and South Carolina, too.

Manufacturers are making these decisions as consumer spending — which surged during the pandemic — returns to past norms and demand slows.

Still, headlines about layoffs and factory closures may not fully reflect the current state of U.S. manufacturers, said Chad Moutray, the chief economist at the National Association of Manufacturers. Despite concerns about a potential recession, Moutray argued that manufacturers are coming off a remarkably successful few years and that the current surge in layoffs isn’t particularly centralized in the manufacturing sector.

the shortage of skilled workers may be a reason to avoid layoffs and hold on to as many permanent employees as possible, said Lisa Anderson, founder and president of the supply chain and manufacturing consulting firm LMA Consulting Group. While manufacturers are understandably nervous about the impact of declining orders on their bottom line, there are also other strategies to prepare for a slower economy, she explained.

Originally published in Manufacturing Dive, April 18, 2023

The post Navigating a Slow Economy: Strategies for Manufacturers appeared first on LMA-Consulting Group, a supply chain consulting firm.

Inflation and disruption are increasing again. Wholesale inflation as measured by the producer price index increased by .5% since last month which was more than expected. Core inflation (excluding food and energy) went up by .3% which was also more than expected.

These figures coincide with what we are seeing across a broad spectrum of clients. Raw materials, components, and other inputs continue to increase and are challenging to cover with increased pricing. Thus, margins decline, additional improvements and cost reductions are pursued, and clients prioritize customers and/or increase prices to cover costs.

Disruption is also increasing as the UAW strike persists, the Israel war started, and the China risk continues to escalate. Unfortunately, potential strikes and labor union negotiations / disputes seem to be contagious and are exploding across the supply chain. At the minimum, it causes supply chain partners to make preemptive moves and creates disruptions along the supply chain. Global risk continues to expand and appears contagious as well.

Inflation: Pivoting From Reactive to Proactive

If clients are not proactive in addressing rising input costs, margins decline. Unfortunately, during the height of the pandemic, they were racing to keep up to simply survive and didn’t always keep with inflationary pressures quickly enough. Your options become limited as time goes by. For example, a potential consumer products manufacturing client had significant price increases on purchased components. Fast-forward a year later, and the executive team wanted to address these issues. However, by then, customers were less accepting of price increases and too much time had gone by that cost reduction efforts were lagging.

We were brought on to provide business consulting assistance. Although time has passed, we helped them put together a customer and profitability model so that they could decide which products to discontinue, which customers to request price increases from (and how much), which customers and products to focus on and where to focus operational improvement efforts. We provided a roadmap for improvement; however, the benefits were muted from what could have been achieved if proactive earlier.

On the other hand, a building products manufacturing client also experienced rapid and frequent price increases with their raw materials. They quickly pivoted and pursued two paths forward. First, they assessed the impact on product groupings and key customers and passed on price increases for what seemed fair. As most clients did, they absorbed some of the price increases while passing on what made sense. We also proactively addressed service policies with the Sales and Operations teams. And they pursued backup suppliers, material changes, waste/ scrap reduction activities, and several other operational improvement strategies to maintain and improve margins. For additional ideas strategies for proactively navigating inflationary pressures, read our Brushware article “Case Study: Strategies to Successfully Navigate Inflation“.

Disruption: Pivoting From Reactive to Proactive

Similarly, if clients are not proactive in addressing disruption, it can lead to lost and unhappy customers and decreased profitability. Depending on each client’s end-to-end supply chain, the situation is different. For example, if the client is supplied from Russia or Ukraine, disruptions have already occurred, and there doesn’t appear to be an end in sight. If transported through the Suez Canal, they were likely disrupted by the stuck ship. Certainly, during the pandemic, if supplied by Asia, they experienced delays as ships mounted outside the L.A. and Long Beach harbors. Recently, if they went through the Panama Canal, they experienced delays and/or increased costs. If related to one of the potential striking entities, they could have experienced preemptive disruption, and if they related to striking entities, they will experience delays. And these are only the ones that popped to mind. We cannot wrap up a paragraph on risk without mentioning the heightened risk of producing in China.

Proactive clients were far more successful during the pandemic and post pandemic as sales pipelines were robust for those that are proactive and ready to pivot. For example, an industrial manufacturer was quickly able to move crews that were cross-trained to the most critical jobs. They also offloaded a portion of their volume to regional and local suppliers that could start up rapidly to supplement their volume. They also pursued creative strategies to hire additional resources and retain talent. They purchased ahead for high risk items and pursued backup sources of supply. Additionally, they also rolled out a SIOP (Sales Inventory Operations Planning) process so that they could get ahead of their demand plan and pursue proactive strategies to ensure Operations could execute the plan while continuing to focus on operational performance and profitability. For additional ideas in pivoting from reactive to proactive with disruption, read our article “SIOP / S&OP: Creating Predictability & EBITDA Growth“.

The Bottom Line

The business pundits do not see an end for inflation anytime soon. As interest rates rise, the rate of inflation has declined; however, it remains sticky. The same story holds true with disruptions. Although supply chains have leveled out, supply chain risk remains at an all-time high and disruptions continue to occur. Successful clients are pivoting from reactive to proactive to satisfy customers, establish priorities and grow profitably.

If you are interested in reading more on this topic:
How Smart Manufacturers are Navigating Interest Rate Hikes

The post Inflation & Disruption Increasing Again appeared first on LMA-Consulting Group, a supply chain consulting firm.

As originally published in ExpertClick on August 31, 2023

CLAREMONT, Calif., August 31, 2023/ExpertClick/– Manufacturing and Supply Chain Consultant Lisa Anderson, MBA, CSCP, CLTD, known as the Strongest Link in Your Supply Chain® and President of LMA Consulting Group Inc., emphasizes the critical importance for owners and business leaders to understand how current events can significantly impact their supply chains. LMA Consulting Group works with manufacturers and distributors on strategy and end-to-end supply chain transformation to maximize the customer experience and enable profitable, scalable, dramatic business growth.

As the Panama Canal grapples with drought conditions causing serious delays in goods transportation, the ripple effect is being felt worldwide. “The Panama Canal’s crisis underscores just how vulnerable global supply chains are to current events,” commented Ms. Anderson. “With a 40% market share in containers moving goods from Northeast Asia to the U.S. East Coast, these disruptions reverberate worldwide.”

Due to inadequate rainfall, the Panama Canal authorities have reduced daily container ship passage by 20%, from 40 to 32 ships. The maximum allowable ship draft has also been restricted to 44 feet, compared to around 50 feet before the drought conditions. This situation has led to a backlog of 130-160 ships, creating substantial supply chain delays. An alternate route would add 8,000 miles to the journey.

While many companies have diversified their supply chain strategies in light of the pandemic, switching from just-in-time (JIT) to just-in-case inventory models, this latest disruption has far-reaching consequences. Costs are surging with $300 – $500 per container becoming increasingly common. “The shift from JIT to just-in-case inventory has buffered the impact to some extent, but we’re still facing an escalating issue that is driving up costs. A comprehensive understanding of the factors impacting the supply chain can equip companies to respond more effectively to disruptions, minimizing risks and costs. As the Panama Canal issue shows, a lack of awareness is not an option. In today’s connected world, staying informed is not just good practice – it’s a business necessity,” she concluded.

For more insights on how to navigate the complex landscape of global supply chains, download Ms. Anderson’s special report The Road Ahead: Business, Supply Chain & The World Order. She has also released: SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth to help organizations implement a proven process. Download it at: Amazon and Apple. 

The post Lisa Anderson, Manufacturing & Supply Chain Expert Advises Business Leaders to Keep a Pulse on Current Events appeared first on LMA-Consulting Group, a supply chain consulting firm.