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2016

I interviewed Olivier Levy who discussed What is Unique About China's Sourcing.

 

 

 

 

What is unique about China sourcing?

 

China sourcing was unique about 10 or 15 years ago. But actually today there are more countries trying to challenge China. What is unique about China is that most of sourcing can be done in China. None of the other countries can be the next China. We have good sourcing opportunities in Malaysia, Vietnam, Brazil, Turkey, Indonesia, etc. but it will be for niche categories. Actually, China remains a huge potential for sourcing for existing suppliers and it also covers new sources. Of all the activity over the last five years of countries challenging China we have found out that the gap is becoming more narrow but China still has kept the lead because there are more and more new sources with a high level of efficiency that are able to compete with existing sources in China. What is unique about China is that after about 10 or 20 years of sourcing all the suppliers are able to understand foreign country's requirements and adapt. But other countries are still on the learning curve of how to do things.

 


How can China sourcing be carried out effectively?

 

At Dragon Sourcing we run a very strict analytical program identifying a long list of potential suppliers. This is quite easy because the Internet is well developed in China. But then we clear the list and narrow it down to be very specific requirements we are working on with our clients in terms of 5 or 6 questions to ask suppliers. We prepare a comprehensive RFI (Request for Information) to measure the maturity of the suppliers. We assess things like their equipment, the age, the brand, etc. so we can create a scorecard to measure the maturity of the suppliers. We also analyze the price quotations. We deploy this same model in any country where we have facilities. We are able to compare China to Indonesia, China to Thailand, and China to Turkey, and especially the type of answers we received.

 

Where have you seen success?

 

We have been quite successful over the past 11 years sourcing in China. We have sourced chemicals, bio-chemicals, pharmaceuticals, etc. We have found blood suppliers for the pharmaceutical business in China. The question is where we don't have success. It happens with low level suppliers where China suppliers don't have an interest in the low value commodities. Then we have to source outside of China and import into China. Chinese suppliers are more expensive for these types of products. Suppliers in China want to get involved in more value added products.

 

Please provide a brief background of yourself?

 

I am a French engineer. I graduated from Ecole polytechnique and MINES ParisTech. I was a production manager for a French company. Then I was a consultant with Booz Allen Hamilton. I worked for a French company Bachy Soletanche and then started Dragon Sourcing with my French partner 11 years ago.

 

 

About Olivier Levy

 

 

olivier levy.jpg

Olivier Levy

Owner, Dragon Sourcing

LinkedIn Profile

I interviewed Phil Uglow who discussed Employee Engagement and Reducing Costs.

 

 

 

 

What is employee engagement?

 

To me employee engagement is when employees care enough about the company that they put forward new ideas. They really care about the company's success and wanting it to improve. How you realize that they're caring is they're coming up with new ideas. "Hey boss, I've got an idea to do this." "I think we can lower cost by doing this." "I think we can sell more by doing this." That type of thing. Then the next thing about it though, is that--and often the hardest part is actually implementing those ideas. So employees that are really engaged look forward to implementing, getting the job done as well. Finally, employee engagement is employees being interested enough to track how their ideas are affecting the business. So if I came up with a new idea and it reduced cost, then if I'm an engaged employee it interests the heck out of me, how much cost it saves, how it's helping the company and my peers around me and that just feels good. And when it feels good, we want to do that again and again so that is on my definition of engagement.

 

How can it reduce costs?

 

When employees are engaged, they drive cost down in unimaginable ways. It always just amazes me that the ideas and creativity that comes out of the people that I and our other firm members, see when we work with clients. For example, just using a shorter or longer screw driver can save hundreds of hours on assembling a piece of equipment. Similarly, they can be much larger. We've had clients that, just by altering the way they make something--so they're altering their process for making something. They end up saving millions of dollars per year. There's one firm that saved 20 million dollars per year just by changing saw blades at a steel pipe--cutting steel pipe manufacturing mill. Saw blades that actually cut the pipe into different lengths. Just by replacing those in a different way and a different frequency, reduce down time and save 20 million dollars and these are costs that don't have any capital cost or expenses attached to them.

 

This is just people behaving in a different manner to reduce cost and that 20 million dollar cost saving is forever and it just gets better after that. People add on cost reduction ideas to that so your 20 million dollars just doesn’t come and then goes away. It's a permanent sustainable cost reduction. That's one way that employees can reduce cost. The other thing is, when that happens, when a team comes up with a 20 million dollar a year cost saving, that's huge. They actually feel proud. They have a slight cockiness to themselves at that point and in a good way.In other words, "hey, we're the man, we're the woman, we were able to sit down and think about this and we saved the company a lot of money." The more I give that an outcome like that the more infectious it becomes, because greater savings create greater engagement and excitement which creates more ideas and it becomes a circular pattern. It just feels so darn good that you want to command the next and do it again. That's employee engagement and involvement.

 

In our work, that's an important thing. Engagement is also about people wanting to come to work, enjoying their job and their doing it not just because they're getting more salary. For example in the case of the team that came up with the 20 million dollar cost savings, they didn’t get any more money, they were actually a unionized organization, so their salaries and wages were already calculated. You know, that's nice. It's nice to get a wage and everything like that but it can become less than boring over time. So when you're actively involved in helping the company get ahead, and you can put your hat on some of these ideas again, that just feels good. So that's how its reduces cost in the company and it can happen in many many different ways but the primary thing is that the ideas create the cost savings which makes people feel good, which makes you go and get more ideas.

 

How is it done effectively?

 

We talked about how to reduce it and you know it actually sounds like an easy problem. It's simple to do but it's not easy to accomplish. It's not easy to carry out. I think the reason for that is a number of leaders, when they rise up the ranks, they often think that they are the ones that need to come up with the ideas, they are the ones that need to tell all folks below them how to do their job. When actually, what happens is they get further away from the process. Their scope of work changes. A broadness perhaps to other things and they get away from the production line. They get away from the front line where the actual work is being done.

 

When leaders start doing that, their employees will shut down. They will become disengaged. Their employees will become disengaged and the way around that, how you make sure that doesn’t happen, is you do just the opposite.

 

Actually, all leaders need to do is frame the goals or the tasks or the criteria that the employees need to work within. So "Mr and Mrs. Employee, the company needs this to happen, you have these resources and you have this much time. Tell me some ideas on how you can accomplish that and I'll provide you the resources and the backup to get it done." Once leaders start doing that, then they're really allowing front line people to take ownership of that process.

 

Now, when front line people start to come up with ideas, the next most important thing that leaders need to learn and to do is to make sure their employees are safe. What I mean by that is that they always have to recognize an idea. No idea is a bad idea. No idea is a stupid idea. Employees must feel that they aren’t going to be put down or made to look stupid by their leader because they come up with some type of idea. As they get more and more used to putting forward these ideas and articulating them in a way that talks about how it benefits a company then there can be a more healthy push back between ideas between leaders and the managers because there's a trust level that's built up about these things. By articulating it, I mean employees just can't say, "I feel like--I think that this is good so we should do it." They should say something very specific. "I believe that if we spend 10 dollars on a shorter screw driver. That it will allow me to do this task 5% quicker which will result in a 20 dollar saving which will pay back the screw driver in one day." So that makes total sense. Who wouldn’t want to do it?

 

Leaders have to coach their front line folks to speak in that manner to put cost in it. So you get away from "I feel" "you feel" arguments. There is just a factual base to it and there might be some risks as you get into--well, there's always risks as you get into bigger projects but you can talk about how to mitigate those risks. What are the advantages and disadvantages? Having those conversations are great. So once, an employee feels safe and there's building their--building up that relationship. The ultimate goal for the leader to make sure all of this happens effectively, is really to build confidence in their team and their--people that are reporting to them. Because when people are confident and they know that they can articulate their idea in a safe manner, in a safe climate, that they won't get hurt, that brings huge results to organizations.

 

Again, it becomes infectious. When there's confidence it builds people up. They can push back effectively, present their arguments better and--that just explodes. Ideas explode. There's cost savings. The number of cost savings increase dramatically, reducing total overall cost and ultimately, profitability. That's the main thing but that's still not enough. So what you also need to do is record those ideas and they can be down simply in an action--that I call an 'item action list' which is a three-column spread sheet or three columns on a piece of paper that says who does what by when. So if I fill the "I'm going to buy the shorter screw driver" this--and the when and it's this week, and then we review it at the end of the week and I've done it, then that's great. If I haven't done it then there you see is a reason why and so we would discuss that. Nobody gets beat up if they don't do it. But our experience when we work with clients to help them track ideas, it's rare that somebody doesn’t come up with an action item and--or it doesn’t complete their action during this tracking phase because no one likes to come in front of a meeting and go "Oh, I didn’t do it." It's letting down your peers. T

 

Though even if you do it at the last minute, you're up till midnight shortening that screw driver, it usually gets done. So just having it on paper and having a regular tracking system, it's definitely a must. And then of course you have to have weekly reviews of that tracking system like I stated and that can be anywhere from daily on a drilling rate where there's 24-hour work going on and stuff needs to be done in the next 12-hour shift to weekly, to monthly and to quarterly, whatever works for the company.

 

Finally, you need to be able to track how these ideas and the actions around these ideas are affecting the company. Employees need to know that if they come up with an idea, how much cost it really did save because when it saves cost again, it goes back to feeling good and it creates this cycle where people want to do more of it. But also, it helps us learn that maybe what we're doing isn’t getting a result that we want. That's okay too because at least we know that there are ideas we can cross that off our list and if we know that, and our competitors don't, then we have an advantage over them.  Doing those three things continuously will increase engagement and lower cost ultimately increasing profits and it's going to be applied anywhere in a business. For example, it can be used in a manufacturing environment, it can be used in an engineering environment where people are coming up with you know, engineering drawings and also, it can be used throughout the whole supply chain as well. So when people are coming up with ideas, big and small, through all those different supply chains, that's-- and they're track

 

They're tracking or capturing them in action item list, and then tracking their effect on the whole supply chain process and the cost, then that can dramatically drive down cost again and it's a continuous thing. As they implement one thing, they'll drive down--for example, supply chain management cost as well.

 

So that's about it. Again, it's not rocket science; it's a simple concept but not easy carry out. There's number of factors and leadership techniques that has to be learned to do that. That's why I do this type of thing. I'll tell you a little bit about my background and as I see companies and clients struggling with these concepts to bring down cost and it can get frustrating and to why I started Renshi Consulting Group was because--three things. One, we as a company, believe and as seen through all our clients that people just want to get things done.It's like I said earlier, when people get things done, they come up with an idea and it helps the company, it feels good and they want to do it again. The second thing we believe in is that we work with tools, not models. What I mean by that is, we hate models where people say that "Thou shall do something the Renshi Way" and once you learn the Renshi Way, you will be the best leader, operator, worker in the world. For us, that's simplistic and non-sensical so what we do is take hundreds and hundreds of tools that we have learned over a couple of decades of work and to our careers before that and put them together in a matrix and then these tools can be picked out and used when employees and leaders require them. So it's a much more fluid way of improving performance and is more sustainable because--and here's the third thing we believe in, that we pool relevant push ideas. So again, we don't come in and say "thou shall do this" we say "what's going on?" "what are you seeing?" what's stopping you from doing things?" and then we would suggest something like, "would you like to look at this tool that might give you a support or an answer to the problem that you're dealing with."

 

That's why we got into the business because when we deal with those three things, then people become more productive, they become safer and there's less stress and they're happy in their jobs which is another great by product. So Renshi just started a little over 8 years ago to do that. That's our philosophy. We've grown to over twenty. We have performance management coaches that go in and work full-time clients. Pretty much about 80% of their time is in the frontlines. Again, working with those people that are holding the tools, holding the drawing, holding CAD programs that type of thing.

 

Please provide a brief background of yourself?

 

I come from a construction and a manufacturing background, had a lot of a QA and QC training. Then, I started and sold a bunch of different companies and metal manufacturing, plastic manufacturing and cleaning products that serve the plumbing and working industries.Just over 8 years ago I got into consulting. I started a bunch of consultant groups. I have a MBA in global business and BA around the graduate degree in economics. I spent some time in China and know a little bit about Mandarin. I live in Calgary, Alberta that’s where our company is headquartered. We have another office in United States in Toledo, Ohio. So that’s it.

 

If you need anything else just ping me on Skype or email and I'll be happy to provide some more commentary. Talk to you soon. Bye.

 

About Phil Uglow

 

 

Philip Uglow.jpg

Phil Uglow

President at Renshi Consulting Group

LinkedIn Profile

I interviewed William Osgood who discussed Regulations; Effects on Small Business.

 

 

 

 

Can you first provide a brief background of yourself?

 

First of all it’s a pleasure to be with you and I've been looking forward to this. In the area of regulations, I think the part of the background that makes it very appropriate is for the last nine years we have focused exclusively on this small business community. We’re a small business veteran advocacy. So we deal with all of the things that can affect the small business. And we know the stats, they’re really bad. On the percentage of small businesses that go out of business in less than five years. And that ranges depending on, I guess how optimistic you are about it. But the number we actually quote is about 95% of all small businesses don’t make it those five years. One of the things that helps to take them down is their lack of ability and being able to comply with regulations. So we’ve seen that firsthand and I believe this should be in cycle interview for your guest.

 

Can you talk about the regulations, the good and the not so good for small businesses?

 

I would put regulations into two categories. I would put those with really good intentions that don’t work and ones with really bad intentions that are really designed for other purposes. Most of the regulations by their very nature are designed to protect, either an organization or the employees, or the beneficiaries of some kind of product goods or service. So I would say that regulations by their very nature are designed to be good. Sometimes though what happens is in the enforcement of the regulation or the lack of clarity in how to understand this specific regulation can be very detrimental to a small business particularly.

 

Larger businesses can comply. They also have the resources to fight it. You know, to actually say, this is not good for business or this is not even good for the environment, or this is not even good for the employees. They have the where with alll to fight, whereas the small business doesn’t. A small business has no choice other than to learn compliance.We’re going to talk about that probably in the next segment. But that is the only way that a small business can actually survive. Then there are so many regulations sometimes that they can be overwhelming for the small business. I think from this perspective right away, I would learn the industry that you're in and learn the kind of regulations that are going to affect your business. Then ask questions like you would with a contract. Can we actually win this contract, or is this going to take more time, effort, energy and money then we could spend to win it?

 

I think you need to have those--that same kind of conversation for your particular business as to whether the regulations are going to overwhelm you, particularly if you're small business. One final thought on that when you actually look at those--look at the ones that can have a positive impact on your business, I would go so far as to say most OSHA requirements for example are actually good for our companies as long as we protect our employees and we teach them safety, and we focus on safety. Our employees are going to be safer, and we’re going to be protected from the Department of Labor or any other agency that’s being implementing their OSHA requirements, same thing with Workers Comp, or whatever it might be. So when we’re in compliance then that actually is good for business.  For example in construction we’ll get a safety rating and our EMR rating goes up to safer, we are on jobs, meaning that more agencies, more government--pardon me, not government contracts but a government contracting agencies will want to do business with you because we have a good safety rating. So that’s kind of how I would put an overall perspective on regulations. We just have to be aware of the regulations that affect our business before we decide how deeply we’re going to go into that business.

 

How can business owners effectively implement these regulations?

 

Yes, that’s another good question. Thank you. So one of the things that is--just segwaying completing on our last statement of how a business can successfully--become successful by executing the specific regulations is number one. This is probably most important of all. As I said earlier being aware of what they are and knowing the type of agency, and the type of regulation that’s going to affect your business.

 

For example, if you're in trucking, you know that you're going to have Department of Transportation, you're going to have Department of Motor vehicles in your state, you're going to have the Environmental Protection Agency, and you're going to have the California--or the Highway Patrols in your state, that are going to be affecting your business. So you have to be aware of the types of regulations that will come down. If you then build your business model to be complaint with those and inherently within your business model from the very outset of the development of your business model those regulations are being complied with. You have somebody, hopefully on your team or in your company that focuses on being a compliance officer.

 

I think that’s probably the second major thing, having a compliance officer. I’ll give you another example, with the United States Army Core, when they issue a contract, a construction contract, they require three individual compliance people to be on the job site. One is a simply a safety officer, the second one is a compliance officer, and then the third one is somebody who is actually interfacing with all of them and making sure that the contract is being executed according to the terms of the army core. So if you're aware of that, when you compete for that job they know you have to pay for those people so you can build that into your bin and you’ll be in compliance with the United States Army Core. So there’s an example of being ready, prepared, and then having the necessary personnel who are experts in that.

 

I’d say the third and final thing then is that, if the regulation becomes overwhelming or overbearing you actually have a couple of options and one of them would be to evaluate whether the specific type of job that’s being regulated is a job that’s really worth pursuing. Sometimes you can avoid a regulation by not pursuing a specific type of job. Or you could actually relocate for the sake of that job if that--if the opportunity was a value oriented one that was significant enough to require or warrant to move, ie. opening another office where you execute a specific job out of that office and then therefore that job is the one that is being regulated as opposed to the entire industry.

 

Where have you seen success effectively dealing with regulations?

 

Yes. Going back to--that’s another good question. Thank you. So going back to our original statement, I really believe that most OSHA requirements, occupational safety are designed to protect our employees. So if we build into our business a core value that says, that safety is the most important thing on a job then we’re going to be compliant. So that means now that we can compete for contracts where safety is a critical issue. So we’ve had several success stories on our business for our clients in the construction industry, where they have great EMR ratings. They are automatically considered for opportunities because the custumer, whoever it might be, whether it’s utility or the government, really has safety as its primary concern, that’s probably number one.

 

Number two, I think the best success story is when you have safety for example as your primary core value on a job and your workers compensation ratings start going down and down and down and you're paying less and less and less, even though everybody else is paying more. So that’s both good for business and good for your customer and obviously for employees. And it’s really good for you because your employees stay safe, so you're not having to pay down time, or workers compensation claims but your also able to provide them with full employment opportunities and they make a lot more money when they’re working as opposed to when they’re not working. So everybody wins. The customer wins, you win, and your employees win. I think those are probably the two greatest success stories across the board. I could probably give you some specifics if we had enough time but I want to make sure we’re pretty timely here.

 

Thank you, William for sharing today. We could always do another follow-up Interview to go into these specifics.

 

Sure, I’d love to do that Dustin. Whenever you're--whenever you’d like. I enjoyed talking about small business. I enjoyed talking about the benefits, too small business and the opportunities that are out there in both the public sector and the private sector. So I would thoroughly enjoy that.

 

 

About William Osgood

 

 

William Osgood.jpg

William Osgood

Member Board of Directors at The Jonas Project

LinkedIn Profile

I interviewed Eric Zeitouni who discussed How the Financial Crisis of 2008 Affected the Global Supply.

 

 

 

 

What is your view on how the financial crisis from 2008 affected the supply chain?

 

Hi Dustin, thank you for having me. Well, the supply chain of 2008 really changed the landscape of how people conduct their commerce. For example, efficiency has become the primary concern of most supply chains. So with that, what has happened is you have a different array of changes that have occurred. For example, weight limits have become astronomical. So what that’s meant is that people are loading more weight and more product onto their loads to be more efficient. And in turn, what that’s done is created issues on the back end of the business.

 

That’s interesting. Would you say that the crisis is over?

 

That is a good question. I believe that yes, it is recovering, and it has been good growth these past few years, especially on the East Coast where there’s been double digit growth on all the East Coast ports in the past four or five years. Even though it is over, though, you still have a lot of importers and exporters that have changed the way that they conducted their supply chain, and that has been solidified. So you don’t have people going back to the old, I would say, normal ways. The new trends that everyone has adapted to have become the norm. Which is one of the reasons why if you see now what’s happening with a lot of the major shipping companies in the world, is they’re trying to implement export mandatory scale tickets, which is going to throw a wrench at the entire changes that have occurred this past seven years or so.

 

What should supply chain managers do to prepare for possible future crises or to deal with the past one that still has its effects?

 

Right, so that’s the interesting thing, which is one of the things that has changed, back to the original question that you asked on what has changed. So what you have now is you have importers and exporters trying to cut out one stop in their supply chain. So for example, you’ll have clients that would say OK, usually we’re shipping X to customer A, and they’re taking half a load. What if we were able to push a full load to them and then we could send an entire load, and then this way we could cut out one of the stops, which will basically cut out handling, storage, transportation, etc., etc.?

 

What are the positives of this change?

 

Well, the positives of these changes, it depends where you stand in the supply chain. So for someone like myself whose in the procurement and transportation and handling business, it’s gotten good for us, because what you have is you have more demand for bigger jobs.

 

Do you have any final recommendations?

 

Right now we’re in a very, you know it’s a highly regulated business right now. So it’s really tough to say. I mean, we’re all in the mercy of what the laws are at the end of the day. So whatever the laws allow you to do is the best that you can do as far as trying to keep your supply chain as efficient as possible. So it’s really tough to say. It really depends on your industry, whether you’re selling, whether you’re importing and distributing sugar or plastic or paper, it really all comes down to who your customers are, how you’re currently operating, and so forth.

 

Where can a supply chain manager learn more about the options available? For example, you mentioned some of the laws.

 

Right. So I mean, the laws, when I meant the laws, I mean you have regulation coming down now on transportation companies that are basically trying to accommodate their customers. Now the transportation companies are the ones that are taking the hit on anything that happens, because they’re trying to be loyal to their customers. So it’s basically give or take. It’s up to transportation companies to decide hey, I don’t want to work with these companies because they’re breaking too many laws, and every time I have mentioned it to them they’re not informing on their fears. So a lot of it is back and forth. So if you have a lot of people that are, like for example, I get approached by a company that recycles paper, and they have loads that are north of 57,000 pounds. So in order to conduct or facilitate a load like that going, you know, for an export, it would need to be very in the close proximity to the pier. So what you have now is a lot of transportation companies that, throughout these couple years, have gotten burnt and there’s less and less of them, so now these exporters are having a hard time finding capacity, and they have to change the way that they do their regular business.

 

How do you see the economy developing potentially in 2016?

 

Like I said, I’m really gung ho and excited about it. Like I said, this past couple years, all the East Coast ports in the United States have experienced double digit growth. You know, this past four or five years, and you know, our phones are ringing off the hook. We have a lot of demand that we can’t fill a lot of capacity. So we’re really trying to increase our capacity to keep up with demand.

 

Can you also provide a brief background of yourself?

 

Sure. I started out in the industry about ten years ago, working as a clerk. I’ve always been fascinated with the supply chain and logistics business. I was promoted a couple times to associate operations manager, and then I was working in two different companies that are not existent anymore. And we have launched our own business two years ago, myself and a couple members of my old team. And we have been in the industry trying to add value to supply chains with our, old fashioned values and our new-minded technology.

 

And thanks, Eric, for sharing today.

 

Absolutely, Dustin. Thank you as well.

 

 

About Eric Zeitouni

 

 

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Eric Zeitouni

Operations Manager at Ellison Smith Logistics

LinkedIn Profile

I interviewed Tom Wentz who discussed What is the Future of Leadership?

 

 

 

 

About Tom Wentz

 

 

Tom Wentz.jpg

Tom Wentz

President at Corporate Performance Systems, Inc.

LinkedIn Profile

I interviewed Norman Katz who discussed Supply Chain Vendor Compliance.

 

 

 

 

My first question what is vendor compliance?

 

Hi Dustin, yes, it's Norman Katz and happy to Interviewed again by you, it's a pleasure to be back. So vendor compliance, well, you know that when I look at vendor compliance my--I define vendor compliance I think as internal controls for external relationships. Vendor compliance being internal controls for external relationships, these have to be written down, vendor compliance is an agreement or a contract and those are legal terms which have to be flushed out between a company, a buying company, a customer enterprise and its suppliers of goods and services. And pretty much when I consult for companies we are considering suppliers that provide goods not so much services. These are legally binding--these are legally binding document of rules and requirements of engagement covering technical operational legal and ethical aspects of the buyer-seller relationship. So again, very important that this is written down and I consider vendor compliance to be the internal controls for external relationships.

 

Why is vendor compliance important?

 

Well, for customers, vendor compliance brings efficiency across the supply chain trading partners through uniformity. Retailers for example will have thousands if not, maybe ten thousand different companies that are selling products to them and it's simply is not possible for all of the vendors, to have different bar code, have different sized cartons, different weights, submit all of their invoices differently to be communicated with differently. So, the consumer entity, the buying entity, whether it's--a retailer or a pharmaceutical distributor or a manufacturer such an automobile manufacturer or a grocery store, they need all of their suppliers to conform to certain requirements for the sake of uniformity.

 

For suppliers, yes, this is a cost burden of doing business. But they should look at it as an advantage, it's a learning opportunity and it's a chance to say, "Well, you know what, if we are being forced to receive purchase orders electronically for one customer, maybe we can take advantage of this and streamline our internal operations. If we have to barcode label our products in our cartons, maybe we should look at introducing bar coding to increase our efficiency, it's a chance to leverage this technology internally, gain competitive advantage operationally and from a data analysis perspective on who the supplier is competing with. The supplier should not be grudge necessarily having to conform because in a competitive world, the smart supplier will take advantage what their being look to doing and say, "How can we utilize what we have to do strategically into our company plan in order to better position ourselves not only as good suppliers within our supply chain but also competitively against the companies that we are competing with.

 

Can talk about how done effectively?

 

And unfortunately Dustin, I have typically not seen vendor compliance done very effectively at all. In fact, it's typically done very ineffectively because vendor compliance is typically ill-conceived and poorly communicated which only frustrates the suppliers and the customer entity staff. This is because vendor compliance requirement sometimes conflict with themselves it's because the supplier, the vendor maybe calling--maybe trying to get an answer on something and the customer entity doesn’t provide a phone number or the staff is too difficult to reach or you can only e-mail and e-mails go unanswered for days or you can only communicate through a portal --and the portal responses are not even answered. For example, within the US. Or the vendor gets two different answers depending on who they asked at the customer entity.

 

Frustrations flare on both ends, there are delays in taking supply chain actions and so there's a lot of tension and mistrust.That also comes into play when charge backs are involved, when charge backs are excessively assessed or aggressively assigned. And this just creates a lot more tension between the customer and the vendor community. Now the customer and its vendors are supposed to be trading partners, not trading adversaries and the customer entity has to realize that suppliers have as much value as customers and need to be treated as such. I have yet to find the customer entity that is a hundred percent in everything that they do. But the expectation is vendors will be a hundred percent perfect. And this is no way to start a relationship, not personally and not professionally. But this is how the many supply chain relationships are expected to exist. And in the United States we have the legal system is based on innocence before the presumption of guilt and in to many supply chain relationships it's guilt before you prove yourself innocent and even if you can and then even you do prove yourself innocent, we're still going to assess you as guilty anyway. And these--this is why too many supply chain relationships are just--are just not healthy in certain industries. So, there needs to be a much, much better job done in supply chain vendor compliance.

 

Were have you seen success?

 

So, as far as successes go, I've really only seen one or two companies come close to getting their vendor compliance acceptable. Even now, I've seen a lot of vendor compliance documentation and websites in my over 20 years of vendor compliance experience and yet I'm sure that there are many companies that are patting themselves on the back for vendor compliance documentation and vendor compliance portals but they are, and I will use the term horrible, dysfunctional and not written to their audience. When you do vendor compliance documentation, whether it's a word document and something that goes into PDF form, whether it's a website, when you write to your audience, remember that you are writing for your vendors and for your internal audience which comprises employees that may not be familiar with what you're writing about and employees leave, new employees come in and so, you have to be very, very careful about writing to you audiences internally and externally. I have only seen very, very poor jobs of that in vendor compliance and vendor compliance documentation.

 

Can you please provide brief background of myself?

 

I think I have a very unique perspective of vendor compliance in my 30-year career which includes software development, business and operations analysis and systems analysis. I've been involved in supply chain vendor compliance since 1993 with expertise in ERP systems, electronic data interchange and barcode labeling and scanning applications. My vendor compliance experience is mostly in retail but also in pharmaceutical industry, electronics, the publishing industry and the marine industry. I did spend 4 years as the supply chain consultant to the largest marine industry trade association in the United States and I also developed a unique 6-part supplier education course while consulting for the retail industry's trade association prior to its merger with GS 1 US. I have consulted--I've been consulting for 20 years and I have helped a number of companies from a vendor compliance standpoint both a technical aspect and operational aspect comply with the mandates of their top level customers as well as have helped some companies create downstream vendor compliance documentation for their downstream supply chain. Now I have a book that is being published in January of 2016 called "Successful Supply Chain Vendor Compliance". It is the only book that I can find on the topic supply chain vendor compliance. I filled that with my over 20 years of experience in supply chain vendor compliance technically and operationally with some of the unique experiences I've had that somebody had to write a book and that I was a good person to do it. So that is my experience, my expertise in supply chain vendor compliance. And Dustin. I just want to thank you again for the interview opportunity, as always, it's great speaking with you.

 

 

About Norman Katz

 

 

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Norman Katz

Supply Chain:Technologies, Operations, Vendor

Compliance, Fraud ~ Consultant | Analyst | Author |

Presenter | Instructor

LinkedIn Profile

I interviewed Rosemary Coates who discussed New Reshoring Guidebook.

 

 

 

 

Great speaking with you again Rosemary. This is going to be another interesting topic. This one on Reshoring and what's involved with Reshoring. Can you first provide a brief background of yourself?

 

Thank you for inviting me. I appreciate it. I've been a Global Supply Chain Consultant for about 25 years and worked for a number of big consulting firms and also worked for SAP for 4 years, and all of that time doing global manufacturing strategy and global supply chain strategies. During the last 10 to 15 years I have been helping companies move production to China and to develop their manufacturing capability and sourcing capabilities in China. And then, about 3 years ago or so, during the 2012 US presidential elections, Barack Obama and Mitt Romney were both blaming China for American economic woes and really over simplifying what was happening in global manufacturing. I think at that point, some company executives, sat up and took notice and started to understand that because we had shifted so much manufacturing overseas we had put a big hole in the middle class in America, and we really should take a more serious look at bringing some manufacturing back.

 

Our clients started talking to us about Reshoring and as a result, we started helping with some global manufacturing strategies to bring manufacturing back to the US. Then about 2 years ago, I started the Reshoring Institute at the University of San Diego. The Reshoring Institute is focused on helping companies bring manufacturing back and teaching student interns about manufacturing. The students are learning about manufacturing at the Institute plus we are doing heavy research on Reshoring. We are helping a lot of companies understand the possibilities, in making a decision in favor of rebalancing their global manufacturing. By that, I mean leaving what manufacturing belongs in China, in China; and bringing some of that manufacturing back to the US for products that are sold in the US market. It's pretty exciting and Reshoring has really caught hold. There are a lot of companies that are considering Reshoring now. The statistics say: 54% of companies in America, over a billion dollars in revenue, are either Reshoring now or considering Reshoring. It's really a hot topic and global strategy.

 

Can you talk about what's involved with Reshoring and a little bit more about what it's about?

 

It's really evaluating the total cost of ownership and considering all of the costs in a manufacturing profile. For the past 20 years, we've been chasing low wages and low costs, whether that was China or Vietnam or Indonesia or Bangladesh. Instead of that, what we're helping our clients do now is evaluate their whole cost profile. That includes not only low labor cost and low production cost, but we also take into consideration things like logistics cost, import fees and tariffs and energy costs. Right now, energy costs in the US are very low so that helps with the economic decision about where to manufacture.

 

In the US there are manystate, regional and local economic development organizationsthat are offering incentives for companies that begin manufacturing in their areas. These kinds of incentives are really amazing. There are counties and regions in the US that are offering free buildings, tax holidays for 10 years, training credits for developing new skills, all kinds of incentivesthat create very favorable economic conditions for bringing manufacturing to new areas. There is a general feeling by executives that they have to be serious about developing manufacturing in the US to maintain the economy. The last thing we need is a weak economy in the US because that will affect the whole world.

 

How will this affect Chinese Manufacturers?

 

Well, that's a very good question. I've been doing a lot of public speaking in the last couple of years including a presentation on this topic in Shanghai about a year ago. It was all about how Reshoring affects Chinese manufacturers. There is an interesting parallel in China. I'm sure you're aware of “Made in China 2025,” a new policy that Beijing has initiated. This is an effort to bring manufacturing in China to a new level, to introduce more sophisticated, advanced manufacturing. So as we're Reshoring, some of that production back to the US, China is moving up the maturity curve, improving their own manufacturing for the Chinese market. It's a complicated issue in terms of how it will affect Chinese manufacturers but I think that in the long term, we're going to see Chinese manufacturing on the same level as you would see world class manufacturers in the US and Germany and in Switzerland. A lot of low-end manufacturing is going away. T-shirt production and foot wear is moving to lower cost countries such as Vietnam, Myanmar, Indonesia and Bangladesh, but the more advanced manufacturing is developing fast in China.

 

What are some of the pitfalls of closing operations in China and moving back?

 

I'm sure you're aware it's not as simple as just turning off the lights and closing in the door. If you're going to move production out of China, and I've been coaching my clients about this for a while, there are a lot of things to consider. You could pick up and leave, but if you do that, it's going to be a problem. First of all, you need to apply to the Chinese Government to exit China. If you don’t the Chinese government may never allow you to come back. You want to do everything that's legal and proper.

 

The second thing is, most of Chinese employees are on employment contract of some kind or another. When you stop operations and move, you have to buy out those employee contracts. That's a cost component of the evaluation that a lot of companies will miss.

 

Then, there are tools and dies and moulds that you may have paid for in China or shipped to China. You may be thinking these things are part of your IP or part of your own equipment. I have clients that thought they'd get their equipment back when production was over. But that's not the way it's thought of in China. Once you have introduced machinery or tools or dies into the production process in China, it’s considered part of the infrastructure, part of the capital goods, and its likely you will never get that back. The investment is gone.

 

Then as you know, when you stop production in China and the equipment and tooling and so forth is all still there, the Chinese manufacturer's likely to continue to make that product. They just aren’t making it for you. So it's likely to be branded as something else or sold in third world markets. You'll find that similar products are going to be competing with you. So there are a lot of concerns. We recommend you get help from a consultant and take an educated approach to extracting yourself from China.

 

And, thanks again Rosemary for sharing today on this important topic.

 

You're welcome. It was my pleasure and if anyone is interested, you can read more about the Reshoring Institute at www.reshoringinstitute.org.

 

 

 

About Rosemary Coates

 

 

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Rosemary Coates

President, Blue Silk Consulting and Author;

Executive Director of the Reshoring Institute

LinkedIn Profile

I interviewed Juergen Thurner who discussed How Product Design Impacts Supply Chain.

 

 

 

 

How does product design impact the supply chain?

 

Okay, first of all, good morning Dustin to you. Thank for this interview, for the opportunity to speak about the subject of how a product design influences supply chains and just coming to your first question. I mean, it's pretty obvious that when you think about the product life cycle which starts with typically with a concept. Somebody has an idea about a product, more people have an idea, then they develop this concept of the product together and once the concept is ready then they go into the real design work which is the eCAD drawings and mCad. The eCad depending what the product is, maybe a plastics design, housings, some are finishing some all of these kind of things. During the product designs--design engineers take decisions based on that they believe would be good for the product, but they very often do not think about, okay, this product needs to be manufactured somehow, this product needs to have component in, components need to be sourced where do we get this components from, all the suppliers for these components and all these kind of questions. Whatever they decide during their design process has a direct impact on the efficiency of the supply chain.

 

I'll give an example, design engineers typically, and I can say that because I'm an engineer as well by education, they want the greatest and best components in a product, they want to have the highest functionality, the most features in their product because they are just design engineers. That’s a natural thing. Therefore, they may tend to see that components which are overly expensive for--or which are over-engineered, meaning containing features and functions that are nice to have in a product but not necessarily required for the basic function of the product. So there is a buzz word called 'just enough technology'. If you take that into consideration while you design your product, just enough technology, just build in what you need for your product, just specify your tolerances as narrow or as wide as you can and only as narrow as it's required for the functionality.

 

If you do that, then you may end up with a right components with a right functionality and therefore at the end of the day, with the right product cost. If you don’t do that, if you--if you create the fanciest and the highest sophisticated functions in your product, you may end up with a product that’s completely great but it's totally expensive, nobody wants to buy because it's too expensive. It has too many functions for the user and that’s a direct impact on the supply chain.

 

Furthermore, you may select components from suppliers that are maybe niche suppliers, that are exotic suppliers, suppliers with a location in very remote places in the world. The cost of components, the shipping transportation, logistics to the place of manufacturing might become really expensive which also has a direct negative impact on the cost of your product and therefore on the supply chain. The bottom-line of the thinking here is this that in every product life cycle, let's say if you think of a product life cycle, from concepting to design to volume manufacturing to end of life and to support the phases and also to the reverse supply chain, meaning, return, recycle, refurbish and so forth, repair also, that’s the entire product life cycle.

 

If you think about the entire product life cycle, then it's clear that in the supply chain, money is spent or money is saved in terms of your product cost. That’s what design people need to take into consideration, all these dynamics of today's supply chains. Typically design engineers, they know a lot about mechanical designs, electrical designs but they do not--know not much--they don’t know much about supply chain dynamics.Here is when the purchasing people come into the play, into the game. But this brings--typically, the classical purchasing people into the game. This doesn’t make the situation better, it makes the situation maybe even worst because sourcing people typically are paid against how much they save on components or whatever they purchase on the market for the company.Their priority is to buy the cheapest components but this this behavior also has a very negative impact on the entire supply chain, of the entire supply ecosystem, because when you only buy what sourcing organizations typically do, they separate a product into commodities.

 

So for example a display would be a commodity, the main board would be a commodity, the housing would be a commodity, plastic parts would be a commodity, battery would have been a commodity, interconnects would be commodities, cables and so forth. So they divide a product into commodities and then they source on a very low level, meaning, on a very detailed level, they source components at the cheapest price because that’s what they all paid for, to save money for the company which means sourcing the cheapest components.

 

Then you may end up with a so called best bill of material, best BOM, which means the cheapest possible summary of cost for all individual components added up for the product. But that not does not necessarily represent the base supply chain because you may end up with a supply chain with a ton of different players from all over world, you're having a huge effort for logistics to bring all these components together to the place of manufacturing for your EMS or contract manufacturing partner, you have to manage all these different suppliers and therefore, this does not create the best supply chain either. And at the end of the day, such a supply chain maybe more costly than a supply chain that was purposely designed.

 

So what needs to be done, it's very important that a design engineers understand supply chain dynamics, purchasing people understands supply chain dynamics and the backside of this best BOM sourcing. They need to come together and maybe what they need to do is they need to find the so called diamond suppliers. Those are suppliers who not only provide components but who can also provide engineering services, all component integration services like take their own component and the component from another supplier and integrate it into their component so that you as the end customer, you purchase the higher integrated product, let me say a module rather than a component which takes a number of players out your supply chain and moves it in the supply chain of your suppliers which is easier for you to manage and to handle that. It cuts logistics cost, that cuts cost of managing suppliers and that speeds ups--speeds up supply chains and it's very important that sourcing people, design engineers, they understand these dynamics, they come together, they see like the so called diamond suppliers even in very early concepting phases. They should bring diamond suppliers to the table as well and ask them for their help in the development of the design of your product.

 

So co-creation is the--is the magic word. Co-creation with your key suppliers, with your diamond suppliers. If you're able to this and if you are open enough to bring external design problems like the design engineers of your suppliers to the table to create your product then you will end up with the extremely lean supply chain because it contains only a few players and that makes a supply chain agile. So what you get a lean and an agile supply chain at same time. This is, nowadays called under a buzz word called lean agility, it's a combination out of lean and agile and this exactly what you need to strive for in order to produce your product at the lowest possible cost in total, not only cost of components or cost of the product but also cost of the supply chain, that’s the idea we had. So that was a lengthy answer to your question, does that make sense? 

 

Can you provide a brief background of yourself?

 

I have almost 30 years in the high-tech electronics business, I have an engineering background. After university. I started working in manufacturing for Hewlett Packard in Germany. And did that for a couple of years, took over responsibility for the entire surface mount assembly department. Then after a couple of years, I moved into test and measurements at HP and then until 1999 I ran a group of sales people, I was a sales manager by then with a group of sales people dealing with telecommunication industries providing the telecommunication industries with test and measurement equipment.

 

Then I moved to the EMS industry and served as a direct to business development for global accounts like Siemens for a number of different EMS suppliers. Then I worked a couple of years MFLEX which is a US-based supplier of flexible printed circuit assemblies dealing with a small phone industries and during that time I go into the situation that I had to dive deep into the supply chain thing because one of customers was Sony Ericsson. And Sony Ericsson did exactly what I just described, they only source the cheapest components. We, as an American company, we could not compete the Taiwanese and the Chinese suppliers of flexible printed circuit assemblies so, I have to find out different ways to be successful with my customer.

 

What we did then by that time, we built the first Sony Ericsson smart phone which was the Experia 1. We did a reverse engineering, disassembled the whole thing, we analyzed their supply chain and we came up a conclusion and the proposal to Sony Ericsson how to streamline their supply chain. I did that in cooperation with Dr. Henry Polmey he is the headmaster of Aachen University in Germany and he was at least in Europe, very famous for being a supplier chain specialist because he once concepted and designed a factory for HP which was called the solution factory and his factory won like 3 industry awards in a row for the best logistics concepts. And from him I learned my supply chain background and together with him, we created a proposal for Sony Ericson how to streamline their supply chain by modularization by doing different things in product design. And that at the end of the day brought me into this supply chain thing today. I'm working as senior advisor in subjects like supply chain design with a Swedish consulting company called MTEK  consulting MTEK Development and what we do is proving consultancy and advice to our customers in the electronic space in terms of one is operational excellence and the other one is supplier chain design. That’s, in brief, my background. 

 


About Juergen Thurner

 

 

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Juergen Thurner

Senior Advisor at MTEK Development AB

LinkedIn Profile

I interviewed Peter Brennan who discussed "White Glove" Delivery, Returns Management, and Domestic and International Forwarding.

 

 

 

What type of situations are white glove delivery services needed?

 

Dustin, very good question. Typically, the types of situations were White Glove Delivery Services are needed would be sensitive or delicate equipment manufacturers. Deliveries that require inside into data centers, into hospitals, doctors offices, etcetera were they need inside placement facilities that don’t have docs. Then, obviously, installation and de-installation as well as assembly on the product as well as dunnage removal and Masonite on the floor, and things like that to protect the floors. Very well prepared, very well equipped. The equipment is typically very sensitive and expensive.

 

How are these services delivered effectively?

 

The difference in terms of delivering these services I think are, there’s a lot of companies in the marketplace today that claim that they do white-glove and really what they do is they’ll have some day labor, that help with the delivery and they call the White-Glove Delivery. Unfortunately, the equipment itself isn’t equipped to handle the kinds of deliveries that are required. The network that we utilize can handle up to 6,600 pounds and they’re right equipment, they have lift gates, they have lots of different equipment including decking bars, pad wrap, straps and all the other equipment that is used, on equipment that is packaged with corner boards. Those are the kinds of things that really allow them and the two men or more to make a delivery efficiently, safely and keep the integrity of both of the product and the location where the delivery is being made. Intact, clean and secure.

 

What trends do you see in this space?

 

The trends that I’ve been seeing honestly are quite unique. I think in some ways they’re actually favorable for companies like Champagne Logistics. We see our customers looking at landed cost which is the total cost including not just the transportation but also adding to that the cost of claims, the cost of damage, the cost of customer dissatisfaction. When they look at the landed cost, they’re arriving at a solution that sounds like white-gloves in specialty transportation because we do it more efficiently than rather looking at, okay the line-haul is very cheap but then they have a high claims ration, you have a lot of damage and you have unsatisfied customers. When you put that combination together, that trend is favorable for companies like Champagne Logistics. The other thing we’re seeing and I think this is going to continue, there’s a sensitivity to the environment. 

 

If you have delicate equipment and you’re spending lots of money to put crates around it to protect it from damage and any kind of issues in transit, our network, we can move those pieces of delicate equipment, they can pad wrapped and secured without doing the crating. There’s an environmental benefit and clearly there’s also a cost benefit. You avoid the cost of the crate although our transportation solution is a little higher. When you look at the total cost you really are in at advantageous situation and you’ve helped the environment as well. Those are two things and that we’re seeing a lot of and we continue to try to respond to our clients and support that.

 

Please provide a brief background of yourself?

 

With respect to my background, I’ve spent 30 plus years focused almost primarily on high technology customers and sensitive equipment manufacturers including those who make and manufacture medical devices. I’ve started my career in transportation and then it evolved over time and I’ve spent a lot of time in the abroad high tech supply chain and that includes specialty in value added distribution, logistic solutions, transportation as well as global responses for clients who were trying to make their supply chains more efficient. I retired from UPS in January 2014 and I’ve had an opportunity to work with some former colleagues here at Champagne Logistics which allows us to really focus on that specialty, high touch, high execution support of clients which frankly makes it a lot of fun. I think that gives a lot of value to the clients. It’s like a nice marriage in terms of taking my experience in kind of putting it in a form, and fashion that allows us to really create value for clients. Thanks very much for the opportunity to communicate about Champagne Logistics and what we do and more specifically what is white-glove and specialty transportation in North America done by expert like Champagne Logistics. Thank you, Dustin, enjoy your day.

 

 

About Peter Brennan

 

 

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Peter Brennan

Global Supply Chain and Logistics Executive

LinkedIn Profile

I interviewed Sanj Sethi who discussed Importance of Good Design of Supply Chains.

 

 

 

 

What does design mean to me?

 

I think the easiest way that I can talk about design is what I read in a planning document mixed with what I think about it.  Design to me is an integrated way of making products and services sustainable with really low maintenance but they still need to look good, they need to last over long period of time, and be able to adapt to the future needs and fit in the environments well.

 

Why is design important in supply chains?

 

First of all, I think design itself is important everywhere, not just the supply chain.  But because there’s a renewed thurst on personalization and the fact that the folks everywhere, be it in the factories or be it the consumer, they are seeking personalized products and services.  That makes it really important to create a supply chain that will support that.  If companies do not do that, they lose out on two things.  One, they lose out on the innovation part of it, but more importantly they are ready to be disrupted by others. 

 

One of the reasons we have seen so many disruptions in the business world is because either a whole chunk of people or a chunk of orgaizations have completely missed out what their end-user is looking for or, they have been so comfortable and cozy and laid back, that they have failed to respond to what the end-customer and people throughout the supply chain are looking for.  One of the cool examples is a company based in UK that started doing a digital production of creating knitwaer.  What they did was that they just transformed the industrial needed knitting machines into 3-D printers.  By doing this, they went on to a zero-stock, on-demand method of production and distribution, with no need for maintaining inventory or, worry about surplus manufacturing.  They ended up also spending less on the usual very expensive prototyping, and that in turn, means the lead times for production is very short.  You look at from any perspective and the result is that at the end, it benefits everyone. To me, design is extremely, extremely important in the supply chains.

 

How is it done effectively?

 

I think it is, while there cannot be one single formula for every single industry, while there cannot be one single formula for everyone, the effective way of doing the supply chain will stick with a couple of things.  One, you have to be taking the real feedback and what I mean is real feedback I mean combining it with the desires and needs of the users, but being smart enough to be able to force or mold how you want the supply chain to give because users may want it certain way but your current technologies, your current systems might be obstacles, and you have to figure out how you can mold it to the needs and desires of the users and what you can profitabeyproduce for them. 

 

Of course, this also means that you have to have the work power or the workforce which is built of not only people from production but people from creative side, people who can design well and that tells you why one website for the same product or sort of product is much more effective in getting the user response while another one is a complete flop.  That’s what we see multiple times when new products, new services, new items are launched, and then a copycat item comes in and actually does better than the original one.  The reason is when all forces align, when the creative team, the design team, the coding team, with the development team, with the quality control, they all come together and you have people who understand what will make an effective production line well and an effective chain.

 

Where have I seen good results?

 

I think the biggest example of being practical, profitable, sustainable, and with good products is Apple.  As Steve Jobs seems to have said that you cannot just rely on the user needs and wants. He’s supposed to have said that Ford (the car maker) had said that if I ask the people what do they want, they would have said we want faster horses.  The whole idea on just relying on one part of the equation is not going to work and I think Apple is a prime example of that.  Google is a fairly decent example of that.  It’s probably not the best example but they still manage to do the reverse engineering, meaning they went with what the thought would be needed and kept it redesigning. I still don’t rank it anywhere close to an Apple design, but they did build up something which was valuable and useful.

 

Can you please provide brief background of myself?

 

I’m more of a management practitioner, listener, observer, adviser.  I’m also a very big tennis fan.  Roger Federer to me is the ultimate design of a tennis player.  As for me, I have almost three decades of experience in some high world class organizations.  I worked with companies in Asia Pacific,I’ve worked with companies in North America- both US and Canada.  It’s been from domains from pharma to high-tech.  Initially, it was pharma but once I moved on to software and the computing, it’s been high-tech ever since.  I’ve been lucky I worked with some of well-respected companies, but more importantly I worked with highly successful cross-functional teams that have helped build really innovative product, so I’m very happy to have that kind of experience. 

 

Now, I run a company called Sethi Inc.  Our website is incsethi.com and we are bringing in some IT products to the market.  One of those products is an all in one application: a tablet and smartphone-based application for restaurants.  We also build mobile apps , we are into NFC, which is the near field communications.  We build micro sites and micro apps as well.  That’s about me. Thank you very much for this opportunity to share my thoughts.  Obviously, I wish every one of your readers, listeners a great 2016.  Hopefully, we’ll speak again on another topic of interest.  Thanks again.

 

 

 

About Sanj Sethi

 

 

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Sanj Sethi, PMP

Mobile Apps, Digital Menus, RFID/NFC, eConsulting. INCSETHI.COM

LinkedIn Profile

I interviewed Mike Carpenter who discussed Visibility and Scalability.

 

 

 

 

I’m looking forward today to hearing your views on visibility and scalability in the supply chain.  Can you talk a little bit about what do you mean by visibility and scalability with some maybe specific areas that you are focused on?

 

Sure thanks Dustin [ph], it’s great to visit,it's a little bit damp here in Atlanta with the tendency to rain over five days. Anyway, my current challenge is to assemble and deliver and install a pretty technical, expensive device into polymer plants and there’s a number of bottle necks right now from vendors to our shop, assembling them to information from our customers in the customer website. What we are trying to do, taking, given the different levels of maturity, we’ve installed a CRM system, it’s got a lot better information, visibility into the sales cycle, budget cycle, decision making cycle of our clients. That’s worked a lot better at predicting closes from weeks to months,to quarters, used to be we think we're going to close this in 6 months.

 

Now we can get it down to a quarter and we are pretty close to gettingit down to a month.  As we understand that, we build, we have engineering build some material,we have assembled bills of material. We’ve built out tons for every component. We have worked with vendors to get what they can assemble into sub components logically, what’s there sweetspot for us.  All of this is now shared and accessible from our team from the sales team to the engineering team to the manufacturing team to the delivery team, now to our vendors.  We can all log on and look at availability and look at orders and look at assemblies, and look at assemblies on order and assemblies in the inventory.We're pretty certainly capitalized, so we trying not to carry that much inventory.

 

It’s about a 12 week process with 60 day lead tons,12 week process once assembled to work,to get it up and running at a client.  It delivers big value for the clients so they want that shortened, 60 day lead times on parts.  If we want to cutthe lead times on parts in half and we want to shorten our assembled tests and sell time.  We can do that with resources, we can have a few people, we can double up field engineers, but we are seeing a lot of power by sharing orders earlier with vendors, giving vendors, sharing, making available to vendors our financial plans and sales plans. We have gotten, we are in the middle of using that visibility to information, visibility to forecast.  We've got another vendor involved and interested because these are big deals to them as well.  I guess,I mean visibility, I'm using visibilitybased problem, where sharing information,we are making ERP level transactions visible.  But that’s kind of baby steps, the second level of visibility to our sales cycle on our sales plans, that’s getting vendors interested in partnering with us more.

 

From your point of view, why is visibility and scalability important?

 

We cannot deliver to our investors on our promises, and we can’t, we lose all those orders that we can’t deliver.  The situation we face is, these are very good problems,you get into a global chemical manufacturer, and we test this thing out, do a proof of concept on one reactor.  The results are dramatic, payback is in 6 months on the device and these guys have a hundred to 300 reactors where this could be deployed.  It goes from one order, an order of one to a second order of two, to a third order of 20. It’s not going one at a time in other words. We can’t be, we don’t want to put ourselves in a position of saying, okay we can deliver it. 

 

At current, 3 months ago, delivery times, we could do 20 in a year, we need to do 20 in a quarter for instance, without investing a huge amount of money. We want to push things back to the vendors to get them to assemble, to get them to hold inventory. We want to do what we're good at, which is a science, which is the burning and testing and install and training. We want to keep that, that’s were good at, and we’re going to bring on more sales people. But that visibility up and down the supply chain from the customer all the way back to the vendor, makes the vendor go, wait there really is 20 and there’s a reason for me to play ball because they share all this information. It makes partnering real instead it just lip service.

 

Can you talk a little bit out of how it’s done in practice?

 

Very good question. This is person to person meetings. Now we've got about three and a half to three and three quarters years of operations, pretty year last year and a half we sold four of these devices. It has, that is what interested people is. We’ve opened, we've opened a communal obit to some of these vendors, but this is personal face to face meetings, CEO, CFO and in occasionally the chief science officer.  To get them, it’s almost like selling a venture capital deal.

 

Here's our business plan, here’s our business case, this is why you should be very interested partnering with us.  Whether they’re financing our inventory by building things and holding them in inventory, whether they're giving us better terms, it’s all, so far information exchange and trust.  Showing them how they, in another over used term, showing them how it's a win situation, we can deliver volume to them in space they were not in, and it serves our purposes as well.

 

Thanks Mike can you also share a brief background of yourself.

 

I’m a long time KPGM guy. I started in audit like 30 plus years, started an audit many years ago, became an audit partner, switched to consulting in the early 90’s. I have done everything from ERP implementations of large scale to global shared services for fortune ten sized companies, ended up leading and building some pretty large businesses for the consulting practice like I’ve ran 500 person, hundred twenty five million dollar consulting business. I've spent a lot of time with GE and a lot of time with UPS and many others. Interestingly enough, I started in Mom and Pop oil field service companies in the Louisiana oil field.  I know what it's like from both ends of the spectrum.

 

Thanks Mike for sharing today.

 

Fantastic, it’s great to talk to you, it’s always great to share, and I learned a lot from others who’ve shared, so I’m happy too to share as well.

 

 

 

About Mike Carpenter

 

 

Mike Carpenter.jpg

Mike Carpenter

CFO - APMT, Inc.

President - Hibernia Management Consulting, LLC

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