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.

###

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.

The post Inc.: Baltimore’s Business Community Grapples With Impact of Francis Scott Key Bridge Collapse appeared first on LMA-Consulting Group, a supply chain consulting firm.

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’.

###

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.

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

The post Regional Manufacturing in the Medical Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.

With sustainability increasing in popularity and the carbon footprints of end-to-end supply chains evaluated, innovation and manufacturing will skyrocket.

Top manufacturers are prioritizing common-sense sustainability solutions to drive triple-bottom-line results. In fact, there is a significant opportunity for U.S. manufacturers to expand capacity and gain business with a significant advantage in sustainability over China and other manufacturing options. As sustainability continues to increase in popularity and end-to-end supply chain carbon footprints are evaluated, U.S. manufacturing will skyrocket. Technological advances and innovation drive sustainable manufacturing, and, according to the WIPO Index, the United States is one of the top countries in innovation.

Manufacturers are making significant strides in sustainability. There is a focus on sustainability in materials, manufacturing, product life cycle, and logistics. There are countless ideas for improving performance. For example, manufacturers are building sustainability into product design and partnering with suppliers to reduce materials, minimize waste, design for low-impact materials, and transport with a sustainable supply chain. In manufacturing, they can optimize processes to consume less materials and conserve energy and natural resources. There are a host of logistics programs rolling out across the board as well. For example, as regional manufacturing occurs, the distances travelled will be reduced, and as cleaner, energy-efficient modes and options are pursued, sustainability improves.

Pertinent Examples

According to GE, it launched the CFM RISE (Revolutionary Innovation for Sustainable Engines) Program as a part of its commitment to achieve aggressive goals for a sustainable future, including reducing fuel consumption and CO2 emissions by more than 20%. P&G is focused on water usage. Its goal is to increase water efficiency by 35% per unit of production and to recycle five billion liters in its facilities worldwide. Tesla is continually focused on sustainable manufacturing. For example, Tesla recently announced its goal to reduce the use of silicon carbide by 75%, significantly reducing its use of rare earth metals. Instead, the use of a permanent magnet motor will allow the company to scale production more efficiently.

Similarly, a healthcare products manufacturer put together a program to partner with suppliers to redesign materials to decrease usage without impacting product quality and manufacturability. Additionally, the manufacturer brought in the equipment supplier and raw-material supplier to assess how to best utilize its machine to minimize usage and waste, and installed visual inspection equipment to minimize waste due to quality defects. And finally, the manufacturer also brought its customers into the process to assess packaging to minimize plastic and packaging materials while ensuring that the product met the customer requirements, which positively impacted the sustainability of transportation as well.

Regional Manufacturing and Logistics Examples

For a multitude of reasons stemming from the pandemic, including supply chain risk and political risk, the transition to regional manufacturing clusters and reshoring/nearshoring of manufacturing is rapidly increasing in the United States and Europe. China is far less sustainable. For example, China is using the least efficient energy source that emits twice the amount of greenhouse gas than natural gas. According to NPR, China permitted two coal plants a week in the last year, which is six times more than the rest of the world combined. On the other hand, the United States uses mainly natural gas and has advanced manufacturing practices, frequently producing with the lowest emissions in the world.

The logistics arena has also made vast improvements. For example, according to PMSA, the San Pedro Bay Ports together saw steep and dramatic emissions reductions in 2022. The combined numbers reveal drops of 90% for diesel particulate matter (DPM), 97% for sulfur oxides (SOx), 63% for nitrogen oxides (NOx), and equally remarkable declines for other emission categories, compared to the baseline year of 2005. Cleaner, smarter transportation is also a high priority with a multitude of sustainability initiatives being pursued across all modes of transportation including rail, truck, pipeline, and air.

Innovative organizations are partnering with their end-to-end supply chain to create sustainable supply chains. The best-in-class companies are driving the triple bottom line with benefits to people, profit, and the planet. As sustainability gains momentum and end-to-end supply chain visibility is achieved, a manufacturing resurgence will follow.

If you are interested in reading more on this topic:
Sustainability Gains but the Technology Isn’t Always Ready

Originally published in Adhesives & Sealants Industry, November 2023

The post Sustainability Driving Triple Bottom Line in Manufacturing and Logistics appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in an article on the American Express website discussing why local sourcing can help benefit your business in a big way!

###

As risks multiply on the world stage and with increasing economic and logistical disruptions, a local supply chain will prove critical for most businesses, according to Lisa Anderson, an expert in manufacturing and supply chain management and president of LMA Consulting Group, Inc. 

Local supply chain sourcing, she says, improves efficiency and quality control by enabling quicker responses to customer needs, optimizing production processes, reducing waste, and increasing operational efficiencies between manufacturers and distributors. Below are more advantages, with insights from owners of two growing businesses, and ways that sourcing local can help benefit your business in a big way. 

1. It Gives You Greater Control Over Your Materials

Through simple local sourcing and networking, Kim Talebi sought out local farms and foragers for ingredients. The Minneapolis-based CEO and owner of Kaskaid Hospitality – which owns and operates The Butcher’s Tale and other restaurants and catering businesses across the U.S. – loves having access to farm-fresh tomatoes and other produce all year long through working with a local greenhouse. “This makes a huge difference versus using mass-produced, under-ripe tomatoes shipped from South America in the wintertime,” she says. 

2. It Reduces Minimum Buys

When you have a local supplier, you can reduce minimum buys because you eliminate the need to fill a container ship, train, or truck. Shipping can be less expensive when your product is being delivered from a local source, so you can offer better prices to customers due to minimized transportation costs and optimized production runs.

3. It Allows for More Flexibility 

“For my handbags and jewelry, I work with suppliers and manufacturers based in New York City, which is only a two-hour drive from my studio in upstate New York. I can travel to the city as needed to meet with my factory contacts in person, as well as source materials,” says Emily Li Mandri, founder-designer of MLE. The company’s statement accessories have been sold by high-end U.S. retailers and are carried in more than 200 stores worldwide. “I can make the decision to go the same day if I need to; it’s really nice to have that kind of flexibility.”  

4. It Reduces the Pressure to Offer Discounts 

Since local suppliers can respond to changing conditions more quickly, less inventory may be needed in the end-to-end supply chain. The inventory required to cover for volatility will likely be less if the supplier and manufacturer can work together on win-win solutions to increase agility and flexibility, according to Anderson. 

5. It Means a Win-Win for Supplier and Customer 

“Local suppliers provide a distinct advantage in getting products to market faster. Product development designs and trials can be done collaboratively for rapid prototyping, testing, and trialing. Additionally, the feedback loop can be direct, speeding up the entire process,” says Anderson. “As problems arise, the appropriate resources can be brought together rapidly to collaborate and overcome bottlenecks. Thus, the new product lifecycle can be dramatically shortened, incorporating additional customer feedback and generating greater growth and a smoother product launch.”

…

To read more, click here.

Originally published on the American Express website, September 12, 2023

The post Local Sourcing Has Big Benefits for Business appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted on Bloomberg Law about risk to China-linked supply chains, especially geopolitical risk, prompting some companies to rethink where they source their materials or manufacture their products.

###

Companies including General Electric Co., Boeing Co., and Nike Inc. are wading through a mounting pile of concerns about their China-linked supply chains as geopolitical troubles brew and pressure to cut ties ramps up from the US government and investors.

Geopolitical risk is rising as recent tensions between China and Taiwan add to companies’ long lists of supply chain worries. There’s a hangover from the Covid pandemic and shutdowns in China, tariffs on Chinese imports, sanctions on Chinese businesses, and a new US human rights law targeting forced labor in China, lawyers and supply chain experts say. And it’s all happening as the Biden administration and Congress—continually hawkish on China as an economic and national security threat—hope to incentivize manufacturing closer to home.

GE, Boeing, and automakers General Motors Co, and Ford Motor Co. are among the companies disclosing in financial filings how US-China frictions pose business risks. There’s also pressure from investors. Walt Disney Co., Apple Inc, Starbucks Corp. and Boeing faced China-related shareholder proposals in recent weeks, asking the companies to weigh the reputational risk of doing business in the country.

“There’s a mountain of risk that continues to get larger,” said Lisa Anderson, a supply chain expert at LMA Consulting.

On Capitol Hill, the newly-formed Select Committee on China sent warning shots to companies including Nike and Adidas AG earlier in May, pressing them on how they avoid using goods made with forced labor in China. The new bipartisan committee has promised to “restore supply chains and end critical economic dependencies on China.”

To read the full article, click here.

Originally published on Bloomberg Law, May 16, 2023

The post China-Linked Supply Chain Risks: Boeing, Nike Wrestle With Pressures appeared first on LMA-Consulting Group, a supply chain consulting firm.

What is clear is that VUCA (volatility, uncertainty, complexity, ambiguity) is continuing in the forefront and will continue to be our “new normal”. As I recently debated with the Wall Street Journal, we are in an era of non-stop disruptions. Look no further than the escalating war of Russia and Ukraine (with Russia making even more money to fund the war with the higher prices of oil and their increased sales to China and India), China sending spy balloons over US critical infrastructure while Zero-COVID policies disrupted supply during 2022, weather events, strikes, bloated inventories, and much more. The bottom is that if you don’t take control of your manufacturing, you will be at the mercy of these non-stop disruptions.

Ways to Take Control of Your Manufacturing

The good news is that there are many ways to take control of your manufacturing. The key is to stop leaving your ability to fulfill customer demands to chance. If you do, you will continue to be deterred, delayed, and derailed in servicing your customers and have no hope in taking advantage of opportunities as they arise.

Let’s look at a few good options:

• Domestic manufacturing/ reshoring: Expand domestic operations and/or move your operations back to where they came from (assuming your customers are there as well). This is the ultimate in taking control by fully taking control of your manufacturing process. There are several U.S. companies’ reshoring. For example, I was recently quoted in Sports Business Journal about Daktronics on their domestic sourcing strategy. Several big companies like Tesla, Intel, and others are investing in domestic manufacturing whereas mid-market companies are as well but are less likely to promote these moves until complete.
• Nearshoring/ Friendly shoring: Expand your sourcing to nearby countries (to your customer base), and, most importantly, ensure you expand and/or move to countries with friendly relations to the U.S., Europe, and other allies. If you move supply and get turned off at the next disruption, you have wasted an enormous amount of money and given intellectual property and capabilities to unfriendly nations.
• Backup sources of supply: If you cannot quickly reallocate your manufacturing capabilities, it must be a critical priority to develop backup sources of supply. Even if you have control of your manufacturing, you should develop backup sources of supply. The next decade will not be for the faint of heart, but it will be full of opportunities for those who are proactive and forward-looking.
• Build partnerships with regional/ local suppliers: Instead of taking full control of your manufacturing operations, you can source regional/ local supply partners. For example, a client has greater sales opportunities than their existing facilities can supply, and so they are proactively qualifying suppliers and offloading volume to regional manufacturers.
• Outsource a portion of your manufacturing process: Instead of fully outsourcing a product or group of products, you might have an opportunity to outsource a manufacturing operation. For example, a client is outsourcing machine shop work and completing the remaining operations steps in-house. Similarly, they outsource the weld process to a different group of suppliers for certain products. These actions allow them to fulfill their sales volume with high service levels while maintaining control of service and quality to the customer.
• Leveraging technology like 3D printing: For certain types of products, companies are using 3D printing/ additive manufacturing to rapidly produce close to customers and/or next step manufacturing operations.

Priorities to Keep in Mind

As you reevaluate your manufacturing footprint, you should be keeping several priorities in mind:

• Raw material supply: It might be obvious, but as you move or reallocate manufacturing operations, it is important to consider your raw material, component, and ingredients supply base.
• Transportation infrastructure: If anything has become clear since the pandemic, it is that container shipping, trucking, rail, air and last mile delivery must be in sync with the end-to-end supply chain. Otherwise, nothing else will matter as your customer will not receive their product.
• Distribution network: Similarly, to transportation infrastructure, as you reallocate manufacturing capacity, consider impacts and requirements for your distribution network. Is your distribution network flexible?
• Technology: There is no way to succeed if your technology infrastructure is not supporting your end-to-end supply chain visibility and performance. Is your ERP system agile? Do you have business intelligence, dashboards, and reporting? Are you connected to supply chain partners with EDI, Blockchain, etc.? Are you automating as you expand domestic capacity?
• Talent: Certainly, there is no chance for success without the manufacturing and supply chain talent to execute these changes. Have you reallocated responsibilities? Expanded capabilities? Provided training? Supported in-house resources with supply chain consultants, trusted advisors, etc.?
• Capital & cash: Do you have access to capex (capital expenditures) and the working capital to fund whatever actions you need to take? It isn’t free to take control of manufacturing. There will be investments and cash required to support long-term success.
• SIOP / S&OP: Smart executives are rolling out Sales, Inventory & Operations Planning programs to get in front of customer demand, how they will fulfill that demand (reallocating manufacturing capacity, make vs. buy), and whether they should make changes to their pricing, supply chain footprint, cost reduction programs and other execution plans.

Please contact us with stories, issues, and opportunities on what you’re doing to take control of your manufacturing. And please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Learn more about these topics in our blog and download your complimentary copy of our eBooks including our new release, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Success.

The post Take Control of Your Manufacturing to Wrestle Volatility to the Ground appeared first on LMA-Consulting Group, a supply chain consulting firm.

Since I was preparing for a meeting related to healthcare supply chains, I dug deep into the topic and thought it would be valuable to share the findings. In reviewing baby Tylenol /Motrin to adult diapers to medtech and pharmaceticals, supply chain disruptions have eased in some areas but continue in many others. As is typical in supply chains, the disruptions and issues move, but they have not disappeared.

Healthcare Supply Chain Examples

Several key points emerged from a review of of the the healthcare supply chain.

• Baby Tylenol & Motrin shortages: It has been blamed on a spike in fevers: however, uneven demand (for when illness will occur) is quite normal and will not ease. Inventory was simply not available in the “right” place at the “right” time, stemming from supply chains reliant on China which were negatively impacted with Zero-COVID policies with insufficient inventory and/or capabilities to compensate for these disruptions.
• Doctor’s offices & hospital systems: Although shortages have eased, sporadic shortages of critical items remain. From crutches to surgical supplies, items are not available in the “right” place at the “right” time. Again, manufacturing and inventory policies should be reviewed.
• Labor shortages abound: No matter which area of healthcare, everyone mentioned labor shortages. There simply aren’t the appropriate skills and resources in the “right” place at the “right” time to keep healthcare systems running smoothly. I have experienced this frustration as well!
• Taking control of manufacturing: It came up in medtech, but also in several other sectors. There is interest in reshoring, nearshoring, friendly shoring, expanding capacity, and sourcing new suppliers. In essence, there is a mantra of producing in “Asia for Asia”, “America for America”, etc. The bottom line: Reduce the risk in supplying customers.
• Regional/ local supply chain: In the same vein of taking control, companies are also focused on sourcing closer to supply hubs. For example, in a healthcare manufacturer, they have found a local supplier to fabricate and procure most parts needed for upgrades to machines. That has made a significant difference in mitigating long lead times and successfully serving customers.
• Pharmaceutical: There are definite concerns about the active pharmaceutical ingredients (APIs) risks concentrated in China and India. Beyond that issue, there are significant price increases in certain raw materials such as chemicals. Also, even though there is a high cost and long lead time to qualify new suppliers, companies are biting the bullet and pursuing alternatives. Additionally, to manage risk, supply chain professionals are looking further into their supply chain to mitigate risk. Otherwise, disruptions will continue.
• Reliability remains key: No matter the sector, there are concerns with reliability. Reliability is trumping cost. If air is more reliable than ocean containers, companies are sticking to air. If trucking is more reliable than rail, they will stick to trucking. If reliability cannot be attained, the source of supply is being evaluated.
• Capital equipment sector: is loosening up a bit.

Disruptions continue. Unfortunately, they simply continue to move. It seems a bit like that Whac-A-Mole game. What are the successful doing to resolve this issue?

Common Theme Emerges: Taking Control

The common theme is that those executives and companies taking control with proactive strategies are overcoming most of these challenges and are thriving in comparison with the competition. There isn’t just one way to take control. You could source additional suppliers, add capabilities, insource production, supplement internal resources, and there are many more options to pursue. Of course, the successful are not just taking control. They continue to prioritize service, manage margins and profitability (ie. pursuing cost reduction programs especially those that can achieve a win-win, adjusting pricing, etc.), and right-size inventory to manage cash flow. The “trick” is to achieve all three simultaneously.

Please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Several of these types of topics are included in our eBooks. Download your complimentary copy.

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

Manufacturing and Supply Chain Expert Lisa Anderson, MBA, CSCP, CLTD, known as the Strongest Link in Your Supply Chain® and President of LMA Consulting Group Inc., sees inventory tightening as supply chains grapple with demand fluctuation, supplier challenges, stagflation and volatility in the economy. 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.

“The supply chain has been front and center since the beginning of the pandemic when toilet paper highlighted the importance of a reliable supply chain. Volatility in supply chains has caused chaos in every industry. Now, the emphasis is on inventory. Building inventory was important when supply chains were trying to regain a semblance of order. Yet, in haste to build inventory, sometimes the wrong inventory was increased, the right inventory was in the wrong place, profitability was sacrificed, or all of the above. Whatever the situation, inventory is now a key focus,” Ms. Anderson said.

Organizations are taking a hard look at existing inventory, customer demand and profitability to remedy and balance inventory. “Companies need to reshape their operations and supply chains by right-sizing inventory levels. The trick is to cut inventory without impacting customer service or cutting performance or profitability. Volatility in the economy will be the reality for the foreseeable future. Those who have processes in place to evaluate customer demand, create accurate forecasts, position capacity and plan production to capitalize on opportunities that exist will have a huge advantage,” she said.

Ms. Anderson and her firm use the SIOP process to capitalize on opportunities while maintaining organizational alignment. “Pencils and erasers, excel spreadsheets, and gut instincts no longer work. Manufacturing today is complex. Customers are sophisticated. Their needs and wants change depending on the end user. It is up to manufacturers to anticipate change, plan for it, and be able to change at a moment’s notice. Processes can provide data, consistency and order to the many moving parts in the supply chain,” she concluded. Supply chains are sophisticated and ever-evolving. Ms. Anderson provides supply chain updates through Supply Chain Chats, a series of short videos that address current topics, issues and challenges related to supply chains. 

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. She focuses on maximizing the customer experience and enabling profitable, scalable, dramatic business growth. Ms. Anderson is a recognized Supply Chain thought leader by SelectHub, named a Top 40 B2B Tech Influencer by arketi group, a Top 50 ERP Influencer by Washington-Frank, one of the most influential in Supply Chain by SAP and a woman leader in Supply Chain by RateLinx. She was recently interviewed on Fox News, in early 2021published a Special Report, Emerging Above & Beyond: 21 Insights from Manufacturing, Supply Chain & Technology Executives, the ebook, Future-Proofing Manufacturing & the Supply Chain Post COVID-19, and her primer, I’ve Been Thinking, strategies for creating bold customer promises and profits. A contributor on topics including a superior customer experience with SIOP, advancing innovation, and making the supply chain resilient, Ms. Anderson is regularly interviewed and quoted by publications such as Industry Week, Bloomberg, and the Wall Street Journal. For information, to sign up for her Profit Through People^TM Newsletter or for a copy of her book, visit LMA-ConsultingGroup.com.

Originally published on ExpertClick: November 11, 2022

The post Lisa Anderson, Manufacturing & SIOP Expert Sees Supply Chains Reshaping to Balance Inventories appeared first on LMA-Consulting Group, a supply chain consulting firm.