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2018

According to an Industry Week article, Apple is considering designing chips in-house.  The Japanese Nikkei said that Apple could replace as much as 50% of the power management chips that go into iPhones with its own design.  That could be a dramatic change!

Supply Chain Impact to Component Vendors
Apple has developed its own processors for years but has recently increased its focus on the in-house design of components. There have been recent changes in supply chain (recent acquisitions have reduced the number of chipmakers).  Could this be a change in strategic direction or a response to a changing supply chain or something else?  No matter the reason and whether it will come true, the question is whether you would be aware of this change if you were in a related industry or dependent on suppliers related to this potential change.

What Should We Consider and/or What Impacts Could Arise?
Of course, if Apple moves design in-house, it will impact the current supplier (Dialog); however, it doesn't stop there.  The suppliers who supply Dialog should be thinking about the impacts and how they can redeploy resources.  It begs the question of the level of diversification of your customer base.  Has this been a priority?  Is there a way you could turn part of this situation into a positive, whether you are Dialog or a related company?

Think About Potential Changes in Your Industry
Even if you are unrelated to any of these companies and impacted parties, it pays to be thinking about potential changes in your industry.

  • Are you in lock step with your customers and suppliers?
  • Do you know what is on their minds?
  • Do they know what you are thinking?
  • Could it be of benefit to brainstorm markets, products, and more with supply chain partners?
  • Do you have relationships within your industry that could alert you to key trends or do you attend important trade events?
  • At a minimum, what are you doing to ensure you are not surprised?

If your strategy includes keeping your eye on industry and customer change and your ear to the ground, you most likely will see the change coming so that you can steer the right course.  If not, now if the time to get started.

LMA Consulting Group elevates business performance.80% of our clients only utilize 20% of their ERP system, and they are not alone.  So, if this is common across typical companies, why do so many of them call to throw out their current system and find one that will resolve their challenges?  It’s a good question! 

Changing Systems and Keeping Service Levels
When clients call with this dilemma, we make sure pursuing a new ERP system makes sense.  It is NO easy initiative to change systems and keep customer service levels intact.  It requires a significant outlay of funds to not only purchase the system but also to implement.  Contrary to popular belief, the software cost is SMALL in comparison to the implementation cost.  Thus it pays to take a second look at whether it would make sense to more fully leverage your ERP system.

There are some situations that dictate an upgraded ERP system.  For example, a few include the following: a recent merger or acquisition; an outdated, unsupported system; a highly customized system that isn’t scalable (and/or dependent on key resources); a system such as QuickBooks that easy to outgrow…  It pays to take another look regardless, but especially at the rest of the scenarios that arise.  Are there ways to leverage your ERP system more fully?  Most importantly, can you leverage the system to support your customer and profit differentiators?  What could you learn from the user group community?  LinkedIn can provide some answers.

Is it time to take another look at your ERP system?
In our consulting practice, we have seen a few examples of ERP systems that were “hard to imagine” in terms of being outdated and non-functional in terms of basic business tenets.  Even in these situations, there were opportunities to further leverage the ERP system to achieve business outcomes while pursuing an upgrade.  Why not take a second look?  Even if you are above average, you likely have 50-70% opportunity to expand functionality.

Improvement in service levels alone can make a second look well worthwhile.

Recently, we worked with a large, complex organization to provide an external assessment of the supply chain organization and how well it was prepared to support scalable growth.  It reminded us of the value of taking an outside view every now and then.  Whether you take yourself outside of your organization, hire a consultant or ask an executive from another division or trusted customer to take a deep dive into your organization, you’ll likely wind up with a few ideas – or, at a minimum, a confirmation that your i’s are dotted and t’s are crossed and ready for growth.

Growth has many challenges
It is MUCH easier to downsize than it is to grow successfully.  NOT more pleasant but it is simpler to cut back.  Unfortunately, we are all too familiar with this exercise.  Yet growth has many of the same challenges:

Cash is a constant challenge – by virtue of growing rapidly, you spend money in advance of shipping and receiving payment.  The quicker you grow, the tougher it can be without a line of credit especially for a smaller organization.

  • Are your people ready for growth?  What “used to work” might no longer be sufficient.  Have you prepared for these needs?
  • Can your operations keep up?  Do you have the resources, equipment, and support resources?
  • Suppliers are likely to be ill prepared unless they are in lock step with your growth plans.  Regardless of the preparedness of your team, nothing will occur unless your supply chain is aligned.
  • If caught by surprise, you can certainly throw resources at the issue but to achieve scalable growth, you should have thought about your processes, systems, metrics and more.  For example, determining that you’ve outgrown your ERP system as you “hit the wall” is too late.  It will take time to select the best system for your needs AND it will take between 6 months to 18 months to implement, depending on your size, complexity, ERP partner, scope etc.

Growth is a hot topic.  For example, according to our recent Supply Chain Briefing, McKinsey predicts 20% manufacturing growth by 2025.  However, regardless of your industry, if your company isn’t growing, it is dying.  We have NEVER seen an organization “stand still” and “maintain” successfully.  Have you?  Thus, growth is core to success. 

Plan or After-Thought
The key is whether it is a plan or an after-thought.  Which is it for you and your organization?

Amazon and Whole Foods
It seems like Amazon is in the news on a daily basis lately.  Their purchase of Whole Foods is shaking the entire grocery industry.  How can an already slim-margin industry respond FASTER and less expensively to customer needs and preferences (think organic) whenever and wherever they need it? Amazon thinks it has the answer.  And they just might.

Offer Value
My Mom wants me to get her Prime membership so that she can receive discounts at Whole Foods.  And, she is quite excited that the tea she purchases was on a great sale.  Although she wants to pick her own produce and get her meats split up the way she prefers, she wouldn't be opposed to having deliveries of staples if it was convenient and inexpensive.  How do you convert an entirely new segment of people?  Offer value.

Stay Ahead of Your Competition
Instead of running to keep up with your customers and competitors on a daily basis, what can you do to GET AHEAD of them?  For example, I received a call from a potential client recently who found me in an online search for VMI (vendor managed inventory) expertise.  This CEO realized that instead of responding to his top customer's request for consignment inventory as a way to win a significant new contract, perhaps he should expand his thinking to a strategic VMI partnership to create more of a win-win.

Are you thinking beyond your immediate obstacle or idea?  After 13+ years of consulting, I can guarantee that my most successful clients are always thinking.....