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.

Originally posted in Adhesives and Sealants Industry in May of 2023

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

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

Current Status of Healthcare Supply Chains

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

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

Inflation, Workforce Issues & Labor Shortages Adding to the Volatility

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

The Successful Path forward

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

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

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

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

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

Lost Volume at the West Coast Ports

According to PMSA (Pacific Merchant Shipping Association), the five big West Coast ports have lost volume – 702,083 fewer loads and empties were handled in January and February 2023 than in the same period pre-pandemic in 2019. This equates to close to a 16% reduction. Specifically, the Port of Long Beach was off by 18.7% from January 2019 which was the lowest volume of inbound loads since January 2012 (except for 2015 when labor disputes created issues). The inbound volume is even worse at 20.6% at the San Pedro Bay port complex. These are significant differences, and successful clients are paying attention. Instead of responding, these clients are creating these changes.

Volume Is On the Move Eastward

PMSA reported that the East Coast ports grew business by 5.6% since 2019, surpassing the West Coast ports volume. The Gulf Coast ports started from a small base but grew by 49.1% since 2019. Clearly, volume is on the move eastward.

What Has Caused the Move?

The smart are reconfiguring their supply chain to succeed in the year’s to come. Specifically, we see smart executives moving volume for the following reasons:

• Threat of port strike / labor disputes: Executives are worried about the potential for a strike and/or other negative impacts from labor disputes. According to the Wall Street Journal, labor tensions are increasing in stalled talks at the West Coast ports. There are several issues being negotiated, and the two parties still seem to be far apart. For example, automation is a major issue in labor negotiations. On the other hand, US ports rate low for automation overall. According to APM Research Lab, the US ports are the lowest ranked ports in total port hours per ship call whereas Saudi Arabia and China are in the highest ranked group.
• Service failures during the pandemic: Executives remember the agonizing service issues and delays they experienced during the pandemic, and they are taking control of their customer experience. Some are re-routing goods through the Panama Canal to the East Coast ports, others are shipping via air, etc.
• Inventory gluts: Purchasing groups panicked when service failures, delays and shortages were commonplace, and overordered. On the other hand, it wasn’t “all their fault” because demand signals were showing ever increasing volumes as customers also thought JIC (just-in-case) was a much better strategy than JIT (just-in-time). Unfortunately, unless you follow proactive, intuitive SIOP (Sales Inventory Operations Planning), also known as S&OP and specifically demand planning processes, you will order the “wrong” products. Thus, there is an inventory glut of the “wrong” products in the “wrong” place at the ‘wrong” time.
• Reconfiguring manufacturing operations: As clients realize that they can no longer be dependent on China and other non-friendly nations to supply critical manufacturing goods, they are reconfiguring and reallocating production. Volume has been moving to Vietnam for many years, and India has been gaining steam in recent years. Thus, products have been moving across the Indian Ocean, through the Suez Canal, potentially stopping in the Mediterranean or Europe, and across the Atlantic to the East Coast. Others are taking matters into their own hands and reshoring production to the US and near-shoring production to Mexico / Latin America.

What are the Successful Doing?

The successful are taking control of their supply chain and proactively figuring out how to pivot and evolve to ensure growth and success. Thus, they are in essence creating this disruption; not responding to this disruption. On the other hand, moving volume isn’t always the best option. Review your situation, understand what your ideal customers will need, and CREATE a supply chain to serve your customers successfully, profitably and with the least amount of cash (inventory) tied up unnecessarily.

Our best clients are reallocating manufacturing, reconfiguring logistics, innovating and creating completely new solutions, leveraging technologies in new ways, and flipping the status quo on its head. What got you “here” (in the last few decades) will not “get you there” (to a successful future) anymore. The world is changing, and the resilient are pivoting, reconfiguring, and thinking differently to stand above the crowd.

Please keep us in the loop of your situation and how we can help your organization stack the deck to not only survive but also to be prepared to take advantage of the vast opportunities to come in the next several years. One great way to start your journey is to roll out a SIOP process to better navigate the volatility and uncertainty. Learn more about how to use SIOP to succeed during volatile times in our new eBook SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth. Download your complimentary copy.

The post West Coast Ports are Losing Volume: What Are the Successful Doing appeared first on LMA-Consulting Group, a supply chain consulting firm.

The “Solution” to Successfully Dealing with Shortages, Delays & Inflation

Supply Chains: There is No “Return to Normal”

There is no “return to normal”. Non-stop disruptions are the norm. Proactive clients are still struggling to hire the “right” talent in the “right” place at the “right” time. Material lead times are extended and shortages remain yet, in other situations, there is surplus supply. Unfortunately, the bullwhip effect ensured that companies went from scarcity to excess and experienced a whip saw effect.

There are countless examples. At the airport on the flight home from a client, the restaurant was out of several items. While at the client, we held several meetings about offload suppliers that were short on capacity for a variety of reasons related to labor, materials, changing requirements, and capabilities. In talking with another client on a Teams call, there were shortages of minor yet required items to keep customers orders flowing. In the interim, one of the parts for my car will take an extra week, delaying the entire job. And these were just in one week.

Inflation Is Real

In listening to the news, there is a lot of talk about how inflation is cooling. I guess it is all relative. My recent flights were less expensive than they were a year ago, but still higher than pre-pandemic. My car’s engine and surrounding parts are FAR higher than they were pre-pandemic. House maintenance and upgrades are steep. Building materials are cooling vs skyrocketing prices during the pandemic, yet they are MUCH higher than they were pre-pandemic. A few 10-20% price increases take a bite out of affordability! Even if the current prices are stagnant or 1-3% up, prices are a minimum of 30-50% higher than pre-pandemic.

When it comes to food items, 30-50% would be welcome. Eggs increased 70% in the last year. The media doesn’t even horrify us with the statistics in comparison to pre-pandemic. Milk is up over 40% since pre-pandemic. These prices will have a direct impact on hospitality, restaurants, etc.

Manufacturing clients are experiencing these same cost increases for materials, components, and outsourced products. It depends on the type of manufacturer; however, 100% of clients are experiencing these issues. The only question is whether the price increases have leveled off or continue at aggressive rate increases. For example, multiple clients had substantial material price increases that couldn’t be completely offset in customer price increases, thereby reducing margins. In one case, margins went down by 5-8%. That is not pocket change!

How Can SIOP / S&OP Help?

SIOP (Sales Inventory Operations Planning), also known as S&OP, is a process that starts by enabling clarity and predictability with the sales forecast (demand plan) and then determines the best way to fulfill that sales plan from an operations, supply chain, warehousing/ distribution, and transportation perspective. So what does that really mean?

How Does This Relate to Resolving Shortages & Delays?

In our first example, SIOP has proven effective in helping clients over the shortage and extended lead time scenario. Of course, SIOP is not a magical solution that solves “world peace”; however, as you improve the predictability of your revenue plan (sales forecast), the supply plan can be stabilized. For example, when we started working with a life sciences manufacturer, spikes in sales drove variability and volatility in manufacturing. This was especially challenging with the aggressive growth expected. Not only did they have issues in determining the appropriate number of people and skills required for specific timeframes, but they also had continual issues with long lead-time materials and equipment needs.

Once we built a collaborative forecast based on historical sales and growth rates, incorporated feedback from the Sales team, Product Managers, R&D, and customers (inventory agreements, etc.), we stabilized the demand plan. It was not perfect on an item by item or customer by customer basis; however, when looking at meaningful groups (such as a product line that required the same machinery, skills or materials), it was directionally correct, thereby stabilizing the supply plans.

From the opposite point-of-view, we had to get a better view of capacity in the base unit of measure so that we would know how many people are required for which work center. After converting the custom units of measure to a base unit of measure, we were able to visualize the required capacity. Similarly, we dug into available capacity. One would think that would be easy, but it is rarely easy. There are always many exceptions and nuances when it comes to skills, cross-training/ shared resource complications, etc.

As we gained clarity of capacity by work center and related to specific groups of products, we could see our gaps to the supply plan and address accordingly (hire, transfer, reallocate etc.). Now the supply plan was stabilized, which enabled stability in the demand plan. Similar to a teeter totter, it is never one-sided. Demand creates challenges for supply and vice-versa. SIOP helps to align the two sides on the same plan.

Once the two are aligned, shortages and delays are minimized. It will also help with supplier related shortages and delays because you can give your suppliers better notice and clarity about what is needed to support your sales plan. If they have issues, you can proactively address and build into your demand and supply plans. For example, you might be able to use a like-material or contact a backup supplier. On the other hand, you could also adjust your supply plans to account for issues or proactively prioritize customer orders, price changes, and take other actions to address until supply is rectified. The bottom line is that SIOP can create predictability in your revenue plan (and the fulfillment of that revenue plan).

How Does This Relate to Dealing with Inflation?

In our second example, SIOP can also help clients proactively address inflationary pressures. By better aligning demand and supply, you can provide forecasts to material and component suppliers. Many clients use those forecasts and better view into changing demand patterns to set up supplier agreements which can help offset inflationary price pressures. For example, an aerospace and defense manufacturer improved margins by 5% largely through material price reductions with supplier agreements after stabilizing demand.

A key part of SIOP is also to analyze customer and product profitability. This information will provide key insights into how to manage inflationary pressures. Every client has passed on price increases to customers. Some were quickly on top of changing conditions and were able to pass on price increases immediately. Others responded quickly although the price increases didn’t take effect immediately due to lead times.

Additional clients absorbed a portion of the price increases but not the full price increase depending on market conditions, margin impacts or other factors. In addition to price increases, clients re-evaluated low profitability products, deprioritized unprofitable customers (extended lead times or increased prices), added service level tiers, prioritized customers and/or suppliers to partner with to redesign, repackage, and streamline, and utilized other strategies to proactively address inflationary pressures. SIOP will support margins, profitability, and EBITDA growth.

Path Forward

SIOP can be an important process in aligning people (within your organization and with your supply chain partners) and processes (demand and supply) to address several issues such as supply chain disruptions and inflationary pressures. It also supports capital spending requirements, cash flow management, and several supporting items. The bottom line is to take control of your manufacturing and supply chain to support growth and profitability.

Refer to our SIOP webpage for more information, our blog for hundreds of articles and learn more about SIOP and what’s important for a successful implementation in our new release eBook, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue and EBITDA Growth. If you are interested in talking about how to reshape your supply chain, get in front of it with a SIOP process, and successfully navigate these waters, contact us.

Did you like this article?  Continue reading on this topic:
Getting Ahead of Inflationary and Deflationary Pressures Using S&OP

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

(Source: Bloomberg)

Click here to watch the video.

The post Bloomberg: Supply Chain Confusion Remains appeared first on LMA-Consulting Group, a supply chain consulting firm.

Lisa Anderson was quoted in USA Today about the current state of the supply chain and how it could impact the holiday season.

“Despite some easing of backlogs at the nation’s ports and retailers reporting they were flush with inventory this summer, supply chain woes are expected to persist as the holiday shopping season gears up earlier than ever. 

‘Supply chain issues are here to stay,’ said Angeli Gianchandani, professor of marketing at the University of New Haven’s Pompea College of Business. ‘Everything is fragile now, our supply chain is fragile, our crops are fragile … Labor is fragile,” she said. “Everything is colliding now. It’s the perfect storm.’

That storm includes global events like the war in Ukraine and China’s zero-COVID-19 policies causing manufacturing shutdowns, as well as an actual storm. 

The Category 4 Hurricane Ian has led to increased demand for some products needed for recovery efforts, as well as stranded or destroyed equipment and materials, putting a strain on other parts of the supply chain, said Lisa Anderson, a supply chain expert and president of LMA Consulting Group.  

It’s not all bad news though, consumers may be able to take advantage of deals from retailers who need to move excess product that came in late last year.”

To read the full article, click here.

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The Popularity of Sustainability

Sustainability has become popular with consumers, employees and an imperative of large companies. After all, who wouldn’t want to participate in saving the planet? In fact, I was interviewed for an Earth Day special “Our Changing Climate” (you’ll see me featured in a few segments around 20 minutes in). From a corporate perspective, according to IBM Institute for Business Value, 51% of CEOs now rank sustainability as their greatest organizational challenge.

If Only It Were Easy

A BIG first step is to understand reality and start thinking about your carbon footprint. That is far trickier than it might seem. Think about these examples:

As a consumer…

We think about recycling, driving electric cars, and participating in environmentally-friendly initiatives. But, do we think about our contributions to pollution? For example, we might love the inexpensive products we can purchase from Amazon, largely produced in China (which uses mainly coal in production which emits twice the amount of greenhouse gas than natural gas), transported across the world in trucks, container ships, airplanes, and more.

To make matters worse, who doesn’t want the order to be delivered to your doorstep? Unfortunately, shipping truckloads of products to one location (store) to pick up when you are already out is far more energy efficient than packaging 1 product (like a toy) in a box (definitely not green) and then shipping that box direct to your front door. That truck will go door to door all day long.

If you are an electric car fan, you should be concerned about world events because lithium batteries are mainly manufactured in China. Also, mining raw materials like lithium, cobalt, and nickel is labor-intensive, requires chemicals and enormous amounts of water—frequently from areas where water is scarce—and can leave contaminants and toxic waste behind. There is much to consider if you are thinking about the end-to-end supply chain. And that is before considering that we have electricity shortages in many US states.

As a manufacturer….

We think about saving costs, meeting Board expectations and customer pricing targets. That might lead us to source from places like China. The pollution is so bad in China that the government shuts down sections of the country prior to big events so that visitors aren’t engulfed in deadly air. China also has shortages of electricity and water, and so will turn to more to coal than they already are (with the majority of manufacturing dependent on coal). On the other hand, the US has advanced manufacturing practices, frequently producing with the lowest emissions in the world.

However, if manufacturers are producing in the US, energy costs can be significant. For example, California is has one of the highest energy costs in the US, and in some cases, it is double the price. Of course, customers do not care about manufacturers problems; instead, they care about the cost, quality and service. Thus, manufacturers will migrate to where they can survive, and the best companies innovate to thrive.

As a supply chain organization….

We think about serving customers on-time to customers’ expectations with quality products in the most environmentally efficient manner. Of course, customer expectations have evolved to immediate delivery with the ability to change our mind as conditions change. Of course, to serve customers with immediate delivery, we attempt to navigate inventory stockpiles, expediting requirements, more frequent deliveries, last minute changes across extended distances with a far greater proportion of last mile deliveries to support e-commerce needs.

As part of a food supply chain….

The world needs to eat. On the other hand, the food supply chain navigates the complexities of sourcing to production, and transportation to packaging and accounts for 26% of global greenhouse gas emissions according to the United Nations Food and Agriculture Organization. The global packaging emissions is hard to imagine at 1.34 billion tonnes by 2030.

All Is Not Lost: Manufacturers are On Top of It

Several segments of the end-to-end supply chain have been working hard to improve sustainability. For example, US manufacturers have implemented factory floor improvements, lean principles and technological advancements that allow them to reduce energy loads, material and water waste. They have also transitioned to using more natural gas and renewable sources of energy. Smart factories of the future are already here, and the strong will keep getting stronger. Inventories are being managed tightly to minimize waste while ensuring appropriate supply of key materials and products with best practice planning processes.

The Global Logistics Network Has Invested Heavily

There are lofty goals from decarbonizing marine operations to hydrogen rail to autonomous trucks to electric vehicles to wind powered container ships. Vast progress is being made although not necessarily quick enough to keep up with California laws, leaving heaps of frustration among logistics professionals. IoT, artificial intelligence, blockchain, and a host of other technologies are supporting the quick pace of change in the logistics industry. Renewable technologies are coming along and progress is being made. And, distributors already focus keenly on optimizing transportation routes, minimizing shipping costs and efficient warehousing and keep searching for opportunities for improvement.

Standouts Exist In Every Sector

Progressive companies are taking bold stands. For example, Tetra-Pak’s ambition is to deliver the world’s most sustainable food package.They have already reduced greenhouse gas emissions by 36% from 2019 to 2021 largely due to their quest to find the world’s most sustainable food package. What is impressive is that they are setting a global standard for aluminum packaging and paying attention to the end-to-end supply chain. That isn’t easy if you have to worry about what’s happening with everyone before you in your supply chain.

Innovation to the Rescue

Alaska has been promoting a potential new renewable energy source largely unique to a geographic section of Alaska. The Alaska governor is encouraging investment in harnessing Cook Inlet tides to produce a reliable energy source, particularly “green hydrogen. This is one of the most energy rich places on the planet – onshore wind, offshore wind, coalfields, oil, gas, tidal, geothermal.

Let’s Not Get Ahead of Ourselves

As much progress as is occurring, we have to remember a few critical factors:

• If we want to have a net positive impact, we cannot ignore the full equation. We should consider the end-to-end supply chain carbon footprint and not get stuck in a narrow vision of what helps 1 aspect of the supply chain but causes a worse situation for the total supply chain. Think end-to-end supply chain footprint.
• If we harness energy sources, we must have a way and place to store energy.
• If we want to succeed, we cannot throw out the old sources (which might be far greener than the current alternatives) before we have new sources that will support our needs at scale and reliably. Remember the Texas storms causing issues for the power grid because wind turbines freeze? Or California’s brownouts and blackouts?

How Can SIOP Help?

SIOP (Sales, Inventory and Operations Planning, also known as S&OP) is a process that aligns demand with supply and all stakeholders on a single vision and path forward on a monthly cadence to incorporate changing conditions, customer needs, and improvements in the end-to-end supply chain. SIOP starts with customer demand and translates that demand into products, materials, engineering and manufacturing requirements, logistics needs, and much more. Similar to calculating high level manufacturing and labor requirements and comparing to available capacity so that you can reallocate and expand capacity, offload and/or insource products, and find alternative suppliers and partners, you can do the same for sustainability requirements. Would it be interesting to “see” your carbon footprint across your end-to-end supply chain?

Start with what you know, build on your information until it is directionally correct, and sustainability becomes simply another potential element of your SIOP process. Incorporating this segment into your process, you will have another data point to incorporate into your strategic decisions and tactical action plans. At a minimum, you are participating in understanding your current state in terms of sustainability and further engage your stakeholders in the SIOP process.

Refer to our blog for volumes of articles on these topics and read more about how to implement SIOP in our book, SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue & EBITDA Growth. If you are interested in talking about how to roll out a meaningful SIOP process to support profitable growth while starting and/or upgrading your sustainability journey, contact us.

Did you like this article? Continue reading on this topic:
Getting Ahead of Inflationary and Deflationary Pressures Using S&OP

The post Using SIOP to Make Better Informed Sustainability Decisions appeared first on LMA-Consulting Group, a supply chain consulting firm.

In this episode of Interlinks, we’re going to check in on some of the major global regions, namely Europe, North America and Asia Pacific, to see what is going on and what is topical in supply chain in summer 2022.

We’re also going to touch on what companies are doing more generally to overcome the challenges posed by inflation and the shortages of human resources that are generalized across the major regions at the moment.

To discuss these topics, I’m joined by two of my supply chain consultant colleagues from the supply chain special interest group from the Society for the Advancement of Consulting (SAC), Lisa Anderson, president of LMA Consulting Group from the Los Angeles Metro area and David Ogilvie, principal at David Ogilvie Consulting in Brisbane, Australia.

Originally published on Interlinks, August 15, 2022 .

Click here to download.

Click here for the transcript.

The post Supply Chain Update for Summer 2022 from Europe, America and Australia appeared first on LMA-Consulting Group, a supply chain consulting firm.

Made in the USA! Instead of fiddling around dipping our toes in the water, we should put a full court press on expanding manufacturing in the USA.

Why? Let’s just consider a few questions:

• Should we put our eggs in the China basket? Only if you enjoy substantial risk…
• Are shortages, delays, and extended lead times OK?
• Should we get control over manufacturing in industries related to national security?
• Should we get control over the production of healthcare products and pharmaceuticals?
• Are you OK with countries that use child labor?
• Are you interested in contributing to the economy? According to the National Association of Manufacturers, for every dollar manufactured, another $2.74 is added to the economy.
• Are you interested in cleaner energy? If you add the total carbon footprint of what is manufactured in China, transported, etc., you are likely to be horrified when you compare to the US with significant advances in cleaner energy.

Pick up the Pace of Reshoring

Progress is happening, but it is not enough. Let’s pick up the pace!

• According to Dodge Construction Network, construction of new manufacturing facilities soared 116% last year. (Bloomberg)
• According to the Reshoring Institute, reshoring and foreign direct investment (FDI) job announcements reached a record 261,000 in 2021.
• According to McKinsey, manufacturing contributes 30% of productivity growth.
• Several microchip factories are ramping up in Arizona, Texas, and other locations.
• According to an EY Industrial Supply Chain Survey, 53% of firms have already nearshored or reshored some of their supply chains since the beginning of the pandemic. 44% are planning more during the next 24 months.

Support US Manufacturers

In addition to reshoring, we should support US manufacturers with expansion. It is typically easier, quicker, and more effective to find a US manufacturer and expand operations instead of building new and starting from scratch. It leverages already existing resources and builds upon success. Expansion is possible without increasing headcount if you automate and digitize as you expand. Consider an ERP upgrade or use of technology to support your expansion plans. Upgrade your processes such as SIOP to support efficient expansion with superior service.

Support policies that will aid manufacturers. Encourage manufacturing professionals and engage students in opportunities in the manufacturing field. Support organizations that provide training, education, and mentoring for the manufacturing industry. For example, our Association for Supply Chain Management chapter is providing tailored classes on the fundamentals of production and inventory management and the end-to-end supply chain. Contact us to learn more.

Please keep us in the loop of your situation and how we can help your organization thrive during these times of volatility and disruption. There will be more winners created than at any other time than since emerging from the Great Depression. To gain additional ideas and insights on how to best navigate these volatile times and thrive, read our new eBook Thriving in 2022. Learning from Supply Chain Chaos. Download your complimentary copy.

The post The Case for US Manufacturing appeared first on LMA-Consulting Group, a supply chain consulting firm.

As originally published in ASI Adhesives & Sealants Industry on July 21, 2022

What is S&OP, and how can it help companies in the adhesives and sealants industry align their end-to-end supply chain?

By Lisa Anderson, Founder and President, LMA Consulting Group

The statistics have been staggering. Supply chain disruptions have cost companies an average of $182 million in lost revenue, according to an Interos Supply Chain report. Additionally, there are many unhappy customers in the wake of these disruptions. The bottom line is that the global supply chain has gotten completely out of alignment, and it isn’t a simple or quick fix to rebalance and right-size the supply chain.

During COVID, the wild swings, shutdowns, and impacts of the global supply chain caused links in the end-to-end supply chain to bring the system to a halt. For example, when the U.S. shut down at the beginning of the pandemic, demand quickly dried up for apparel goods and skyrocketed for computers, electronics, and safety gear. However, the items purchased 13 weeks prior were already on the ocean, at the ports, and on the way to distribution centers.

The supply chain could not pivot rapidly with changing circumstances, even though demand dried up for the items in transit. Thus, the wrong products ended up at the wrong place at the wrong time. More importantly, the increased demand for electronics could not be fulfilled because the right products, materials, and components were not in the right place at the right time. The global supply chain has been on a whipsaw ever since.

Although plenty of supply chain leaders continue to chase shortages throughout the supply chain in a frenzy, they are running in circles on a hamster wheel and not making meaningful, directionally correct progress. Unfortunately, the situation continues to deteriorate, with weather events creating further shortages in the adhesive industry, new China lockdowns creating waves of panic, labor shortages exacerbating the issues, and the Russia-Ukraine war further disrupting the global supply chain.

There are simply too many variables and partners to take control of the global supply chain to rebalance and realign. Thus, the most successful companies are focusing on taking control of their end-to-end supply chain with cross-functional, cross-organizational, collaborative programs such as sales and operations planning (S&OP), which is also known as sales, inventory, and operations planning (SIOP).

What Is SIOP, also known as S&OP?

S&OP aligns customer demand with product supply, including manufacturing, materials, resources, inventory, and distribution capacities. It helps ensure the appropriate strategic decisions are made to align the end-to-end supply chain so that the right products are in the right place at the right time at the right price.

For example, a manufacturer that designs and manufactures electrical control panels for the power industry wanted to get ahead of the volatility in demand and supply, so it quickly pivoted during COVID to focus on S&OP and supporting enterprise resource planning (ERP) and related technologies. The manufacturer used an S&OP process to: evaluate customer demand and growth potential; analyze manufacturing capacity, supply, and technology constraints; and assess alternatives to support growth and EBITDA goals.

The company decided to expand manufacturing capabilities and upgrade its ERP system and related technologies inclusive of customer relationship management (CRM), configure-to-order (CTO) with an upgraded customer experience, and business intelligence (BI) with predictive analytics. By instituting a monthly S&OP process supported with exception messages and alerts to changing conditions, the company is now prepared to increase volume quickly as competitors run into obstacles and opportunities arise, and they can quickly reassess and readjust their end-to-end supply chain to get in front of key strategic decisions and changing circumstances.

Creating Resiliency

S&OP creates cross-department, cross-organizational, and cross-supply chain partner resiliency, thereby increasing your responsiveness to changing customer conditions and your ability to take control of your success during volatile and uncertain times. While the world navigates inflation and deflation simultaneously, it will be critical to be prepared to quickly pivot while remaining nimble to evolving business conditions.

The strong will continue to get stronger, creating more opportunities in the next few years than at any time in history except for during the Great Depression, while the weak get weaker. The time is now to take control and thrive during these turbulent conditions.

The post Regaining Control of Your Supply Chain appeared first on LMA-Consulting Group, a supply chain consulting firm.