Market Driven Change in the Supply Chain

time for change

Disclaimer – this blog is not a statement of support for any political ideology. I am commenting on a market environment.

Are you ready for the new market reality?

We are past the nervous pre-election jitters and are now settling into an immediate post-election reality.

your vote counts usa election badge illustration

The present reality is showing a changing market direction. Many firms who had announced closings or expansion outside the country are now changing their decisions and remaining:

  • Carrier
  • Ford Motor Company
  • Fiat/Chrysler
  • Sprint
  • One Web (startup investments)
  • Apple
  • Others….

How does their decision affect you directly?

First off let’s consider how the original spin off effects, of the decisions to leave the USA, close plants or open new plants outside the USA, would have affected you – their vendor.

  • Layoffs
  • Facilities
    • Excess space
    • Wrong location
  • Excess inventory based on demand re-alignment
  • Lower sales
  • Margins
    Inventory Reconciliation
  • Drop in top line revenue
  • Adverse financial and banking effects
  • Inflated customer importance
  • And much more

We all know how losing a customer affects us – that is why we try and avoid it. When companies relocate/shut down/reduce operations local jobs are lost. The ripple effect is dramatic and painful for the local, regional and national economy.

It is important to note that relocations may not affect a global supply chain as the work is still being performed in a different location. However, the ripple effect is still in place for local vendors.

So why is it so important we keep, expand and build net new plants locally?

The ripple effect described above but in reverse takes place. Are you ready to become a part of that supply chain and increase your own top line revenue and grow profits?

Just an FYI – the cost of labor by remaining in the USA will not be as low as it would have been by relocating in lower cost countries. Therefore, the firms investing locally, will be looking for concessions from their vendors – not just the government. They will re-evaluate their supply chain links, individually, and move forward with partners. Can they afford you as a partner? Can you afford them as a customer?

Are you a ready partner? Do you have issues to solve? Are you aware of your issues?

  • Employees
  • According to the current edition of The Conference Board Job Satisfaction survey, and for the eighth straight year, less than half of US workers are satisfied with their jobs. In 2013, the percentage of workers satisfied with their jobs was 47.7, well below the historical level of 61.1 percent in 1987.
    • Job Satisfaction: 2014 Edition
    • “do more with less” which has been a rallying cry for employers is no longer a reality. We reached the “less” part of our employee pool and now need to start considering more. Do you have a capable management team that can assess the real requirements for the growth?
    • Since so many employees are dissatisfied with their jobs I can guarantee that your better employees, in other words the ones you cannot afford to lose, will be the ones leaving the company for greener pastures.
    • Your experienced employees are retiring.
  • Facilities
    • Are they adequate?
      • Age of buildings
      • Layout
      • Location
  • Procurement
    • Do you have a supportive supply chain?
      • Can you increase your supply and maintain quality levels?
    • Can you negotiate costs down?
  • Sales
    • Maintain margins while satisfying customer expectations
    • Sales force expertise:
      • do you need to revamp your sales force?
      • Do you have the tools for your sales force?
  • Logistics
  • Efficiencies
    • Are you efficient? Do you have analytics? How good are they and how timely do they represent your day to day business?
  • And much more

This is not a doctorate dissertation and so I will not go into further details nor outline further areas – I am sure you know what they are and their effects.

My question for your consideration – can you be responsive and take advantage of such opportunities?

The answer to this question is probably a big NO!

Can you see the real margin not only at the order header but by line item?

Can you process EDI orders?

Can you collaborate electronically – real time digital collaboration– with customer and vendors?

Is your inventory accuracy level over 98% minimum?

Do you know your labor costs?

Do you have forecasting and planning capabilities?

Can you onboard new vendors?

The market is changing! The causes are many and are factual.

U.S. industrial manufacturers are optimistic about their own prospects for 2017, according to PwC’s fourth-quarter Manufacturing Barometer.

A significant majority of PwC manufacturing panelists (78 percent) noted that they believe the U.S. economy began to show “sharp upward growth in the fourth quarter of 2016,” the report notes. Most panelists (85 percent) also forecasted positive revenue growth in the year ahead, with average own-company growth expected to be around 4.6 percent in 2017.

Brighter Days Ahead for U.S. Manufacturing? January 16, 2017Jenel Stelton-Holtmeier MDM Magazine

Can your system get you to the next level required to participate in this growth opportunity?

Can you flexibly re-organize your warehouse?

Can you be flexible with your customers and take advantage of new inventory management approaches?

Are you able to digitally collaborate with your vendors and customers?

Do you know your real margins by order/line item/customer/item?

Any do you have useable work flows based on your real business processes?

Should you be answering no to more than a few of my questions, consider Advanced Supply Chain Software™, the solution that will assist you in meeting our new market’s requirements successfully. The solution that will get you to a YES when facing the real needs above in your company.

Please contact us for more information on how we can help you drive success with technology as the market continues to change.

Dominic Telaro

Article written by

As the Vice President, Industry Solutions and Sales, Dominic is an APICS Fellow and Certified in Integrated Resource Management. Dominic has spent half of his career in manufacturing and distribution from shop floor and warehousing positions to management. The second half of Dominic’s career has been in consulting, product management, product development and both consulting and software sales.

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