Category Archives: Manufacturing

Are You Willing To Go Out On A Limb?

A recent Industry Week article on how “Manufacturers are Redfining Themselves” had a great quote by Michael Collins who said you can’t cost-reduce yourself to growth. “I look at some of these companies that have been successful and see what they’re doing differently from those that are just floating along. You know what I see? They’re willing to go out on a limb and develop unique strategies. That’s what separates them. And whether you’re trying to grow a business or a supply chain, the net requirements are the same — if you want your supply chain to be successful, you have to invest in it and take chances every now again. New technologies, new processes, and new distribution models will be key to future growth and success.

And you have to rethink the value that the supply chain contributes (from a value-focussed or high-definition perspective). The sidebar provided in the article lists some good starting points, once appropriately translated to the supply chain.

  • Identify “Blue Ocean Space”
    Where are the real savings opportunities that supply chain has not yet tackled. Are there any sacred cows such as marketing, legal, or HR spend where supply chain could make a huge impact? Is supply chain involved in NPD, or only in sourcing after the design has been approved and expensive single-source components locked-in?
  • Think Beyond Processor Mentality
    Real savings come from strategic planning, sourcing, and network design – not tactical PO processing.
  • Offer a Value Proposition that Goes Beyond Sourcing the Cheapest Part
    What about quality, sustainability, and end-customer value? Customers will pay more for high-quality products that give them a (perceived) value end, and since profit is revenue minus cost, any contributions to revenue also have a huge impact on overall business performance.
  • Ask the Right Questions that Identify Risks and Opportunities
    Don’t just focus on opportunities or risks. The greatest success will come from a careful balancing of risk vs. reward.
  • Offer specialized high-value services that can’t be easily duplicated.
    Find ways to save other departments money that they can’t duplicate without your help. For example, better e-negotiations, deeper spend analysis, or better JIT inventory management with 3PL support.

Will Printing Bring Production Back Home?

A recent article over on Supply Chain Digest that asks how soon will “printed” parts revolutionize supply chains — and the world brings up a great discussion point when it notes that consumer product areas could be revolutionized by the approach and some people [are] wondering if the dynamics will, in some cases, lead to domestic digital production of some items versus offshore manufacturing in low cost countries. When you consider that 3-D printing is getting better, faster, and cheaper everyday and is already used to produce

  • aircraft titanium landing brackets
  • industrial gloves made out of nylon, stainless steel, or titanium
  • mobile-phone cases where the shape and colour is personalized for each user
  • dental crowns custom shaped to a patients mouth
  • medical implants

and that these printers can currently handle a wide range of materials including

  • plastics
  • glass
  • metal
  • ceramics
  • nylon

and that

  • 20% of the outputs are now finished products (and not just prototypes) and
  • 50% of the outputs are expected to be finished products by 2020

it makes a great case for moving to digital printing to keep costs down since the only costs are the cost of the machine, the room to put it in, the power to run it, the materials to feed it, and the engineer to come and do preventative maintenance after every X products. No HR costs for assembly workers and, most importantly, no exorbitant shipping costs, which are rising every day as the price of oil is now climbing again.

Plus, the ability to give each and every user a “custom” product without a price increase and still do mass production is enticing. It’s a great way to corner a market if your organization can do it first. And the supply chain can spend more time focussing on improving, and lowering the price of, raw material supply instead of renegotiating logistics contracts and battling fuel surcharges every six months. Furthermore, if a product can be printed faster than it can be air freighted half-way around the world, even if volumes are too high to be met entirely with a printing operation, it’s a great risk — and cost — mitigation strategy.

More Proof We’re Overworked … and in Deep Talent Trouble

As per this recent article in Industry Week on “building a lean, mean profitable machine”, productivity in manufacturing has jumped by a record 94% during the past two decades while headcount has significantly shrunk. That’s a productivity increase that’s 60% higher than any other U.S. business sector. Since technological innovations have occurred across the board, one cannot attribute all of this productivity increase to new technologies. A good portion of it is due to blood, sweat, and tears — and people working harder and longer than ever before. And while it looks good on the books, it’s not sustainable over the long term.

There’s a reason that 9 out of 10 employees are looking for a new job. They feel like they’ve been worked to death and that there couldn’t be a job that is possibly worse than their current job. Considering that production is becoming more and more specialized and reliant on precision machinery and technology, this is not a good thing as the industry as a whole is facing a dire shortage of skilled production workers, scientists and engineers. Add this to the predicted shortage of up to 100,000 logistics workers by mid-decade, and you see a deep talent shortage looming across the supply chain.

How does your organization plan to manage it … before it’s too late?

S. 510 Is Days Away From Becoming Law – Is This The End Of The Farmers Market?

I must admit that I have been a little remiss where S510 is concerned. I thought it was just another bill designed to improve labelling and traceability through the supply chain and that its net effect, if passed, would be to simply increase costs for any growers and manufacturers who didn’t already have modern systems in place to document and track every step of the agriculture-based supply chain — from farmer’s field to store shelf.

(I know that most manufacturers don’t have these systems in place, but since the technology has existed for quite some time now, I don’t have a lot of sympathy for them. Given the US crackdown on everything import, export, and supply chain related over the last few years with the threats of terrorism and all the tainted food scandals, there’s no way a food and beverage manufacturer could not claim that they did not know it was coming eventually. Plus, there are quite a number of low-cost SaaS and open-source systems out there that can do the job for a fraction of what a good ERP/MRP would have cost ten years ago when the costs were truly prohibitive.)

However, after reading this recent piece by Sam Osborn over the VBS.TV blog, I’m a little worried. Sam is calling it “The Most Dangerous Bill In The History of America”, and if he’s right, he’s not far off.

According to the post, the basics of the bill grant the FDA supreme authority over every seed that will eventually grow into an American food-stuff and the supremacy of this power stretches to the inspection of growing, harvesting, sorting, and storage operations, minimum standards related to fertilizer use nutrients, hygiene, packaging, temperature controls, animal encroachment, etc. And the bill calls for the inspection of any purveyor of food, ranging from a farm corp beast like Perdue to your Aunt Maye who sells blackberry jam at the town fair. This would literally put farmer’s markets and most organic food producers out of business.

And it gets worse, according to Dr. Shiv Chopra, S.510 would preclude the public’s right to grow, own, trade, transport, share, feed and eat each and every food that nature makes. It will be unconstitutional and contrary to natural law. (Source: The World Prophecy)

And the bill, dubbed the Food Safety Act, passed the House of Representatives on December 21 with a 215-144 vote. All that’s left is for President Obama to sign it into law. Is this the end of the organic supply chain?

Car Companies Do It Again!

Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.)

For a blog post, I don’t often get off on international issues but this one has been making me crazy for years.

From an op-ed in last Wednesday’s New York Times:


In addition, even when it comes to the trucks and S.U.V.’s that Americans actually do want to buy, the bailed-out automakers are building vehicles faster than they can be bought. Inventory levels at both companies have ballooned this year, to the point where G.M. now has nearly three months’ worth of sales sitting on its lots and Chrysler’s excess inventory (in terms of days of supply) is exceeded only by such marginal players as Saab, Mitsubishi, Suzuki and Mazda.


Allowing new cars to pile up on lots may well be the most deadly of Detroit’s new-old bad habits, as the practice not only artificially inflates sales numbers (which, ridiculously, are booked upon production, not when a vehicle is driven off the lot), but also lead to yet more incentives, fleet sales, subsidized leases and subprime lending.

from A Green Detroit? No, a Guzzling One by Edward Niedermeyer

The auto companies’ manufacturing people love to brag about low in-plant inventory. But can you think of a more expensive way to hold inventory than in the form of finished goods?

Between inflexible supply contracts and labor contracts that required paying laid-off employees, the car companies had really no short-term variable costs, so it paid to continue to run factories when there were no sales. However, the labor contracts should have gone away, and I hope they negotiated more flexible supply contracts. Maybe this is just habit?

Thanks, Dick! (Global Supply Training)

Share This on Linked In