As the year winds down, it seems an opportune time to discuss supply chain management trends. I find that those clients that pay attention to trends and find opportunities to leverage them often surpass their competition.
I’m working with a diverse portfolio of manufacturers and distributors ranging from $6 million dollar, family-owned businesses to $100 million dollar facilities of multi-billion dollar, global companies. When I see trends that cross company-size, geography, position, etc., I take note. If you can apply the “right” best practice to the “right” situation at the “right” time with the “right” people, you can dramatically increase the value of the business.
Several of the latest supply chain management trends that pop to mind include:
1. The value of collaboration:Although I’ve always believed in the value of collaboration, my critics thought it was too “touchy-feely”. Imagine how surprised they are to see dramatic growth, profit and cash emerging from collaboration! And now it is gaining in popularity to boot.
For example, SIOP (sales, inventory, & operations planning) can yield substantial results by aligning demand with supply, and more importantly aligning the various departments of the organization – and customers and suppliers – on the same page. One of my clients achieved a HUGE increase in service levels (from 60% to the high 90%’s) and a 10% improvement in margins. Not too shabby for “touchy-feely”!
2. Innovate to thrive: Since the world has become complex, global and highly competitive, we must stand out from the crowd. Operational excellence must be an assumption. Instead our focus should be on innovation. Innovation does NOT need to be a new invention or a new product or service. Instead, it can be a new way to leverage already-existing processes, tools, products, etc. How can we re-package and combine products and services in a way that provides exceptional value for our customers? Do NOT think R&D has to be where innovation starts. Involve your employees. I promise you’ll be thrilled with the results.
3. Leverage technology: It has become more difficult to “keep up” with customers’ expectations, competition and the ever-changing business environment; thus, it is essential to leverage technology for success. Of course, you can still have the most efficient, manual system possible; however, if you are spending time doing what can be replaced with technology, you have missed an opportunity to grow your business, innovate and the like.
For example, I’m finding that utilizing the “right” ERP system can give small and mid-tier companies the infrastructure they need to take advantage of GROWTH opportunities. For all-size companies, ERP systems will provide the tools to collaborate with customers and suppliers, accelerate cash flow, increase efficiencies, etc. Of course, it does not stop with ERP systems. Evaluate your needs and be smart about selecting the right technology for your needs. Perhaps bar coding, forecasting, e-commerce, business intelligence, etc.
4. The Skills Gap: According to my firm’s research study, 77% of manufacturers and distributors are facing challenges in finding skilled resources. However, I didn’t need to conduct a study to determine this trend – it is prevalent with my clients, my APICS Inland Empire Chapter (I’m the President of the Inland Empire chapter of the #1 trade association for supply chain management) and my Ontario ProVisors group (I’m a group leader for a group of trusted advisors inclusive of CPAs, attorneys, commercial bankers, etc., in the Inland Empire).
The KEY to this trend is that those executives who value people will have a significant opportunity to leapfrog the competition. I see underappreciated and undervalued people at every client. Look for them. Give them interesting work. Appreciate their contributions. They won’t be thinking about shorter drives, more money and better bosses because they’ll be engaged. Since it is clearly a winning strategy and costs us nothing, why do so many companies ignore it?!?!
5. The Amazon Effect: According to my firm’s research study, 65% of manufacturers and distributors feel customer service gaps vs. Amazon-like offerings. Amazon is driving substantial increases in customers’ expectations. For example, my clients’ customers typically expect a 50% reduction in lead times – and 24/7 accessibility in some fashion has become an assumption. Have you set up your organization (people), processes and systems to meet these needs?
6. Near-sourcing: My next research study will be on in-sourcing and near-sourcing as I see this trend continuing to gain steam in the next year. The TOTAL cost to produce in China has become negligible to the cost of producing in North America; thus, executives are beginning to think about in-sourcing and near-sourcing. After all, how will they deliver same-day or next-day from China? What type of cash is tied up in inventory, in transit and in warehouses? How can they reduce supply chain risk? And the list goes on. How do you think this will impact the skills gap?
Pay attention to trends for opportunities to grow your business, become more efficient, increase margins and the like. I’m launching a new service, the Profit Chain Accelerator Program to identify and leverage these types of opportunities. Email me for more information.
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