Tag Archives: SIOP

Last year, the London-based Collins Dictionary named “permacrisis” as the word of the year. It means an extended period of instability caused by an onslaught of seemingly never-ending crises — wildfires, pandemics, hurricanes, floods, inflation, air quality alerts, the highest heat ever recorded in some regions of the world, economic instability, wars… the list goes on. Sound familiar? You name it, we’ve all lived through it. And it shows no signs of slowing down.

In the immortal words of Gilda Radner on Saturday Night Live: It’s always something.

The way we see it here at USC Consulting Group, it IS always something. That’s called life. While the world may be going through an unusually rocky stretch, there is no perfect time to be running your business. Whether it’s external crises like the ones we’ve described, or internal upheavals like layoffs, mergers, unforeseen difficulties or the myriad hiccups that can occur, things are going to happen. When they do, companies can thrive, not just survive, with a mix of focusing on process improvements and operational excellence, optimizing your supply chain, and implementing standard operating procedures, along with a dash of the old-fashioned notion that “this too shall pass.”

Here are a few tactics for making sure you’re on solid footing, even during the rockiest of times.

Process improvements

The goal is operational excellence, right? But is that ever truly achievable? Yes, but it can also be a moving target. It means continuous improvements to processes, becoming as efficient as possible. We find that it’s about eliminating bottlenecks, waste and other snags that can impede productivity. Getting the right people in the right jobs and empowering them to get that job done. Developing standards and key process indicators that will tell you when you’re on target and when you aren’t, and using data to “manage by the numbers.”

Optimizing the supply chain: Don’t DRIP!

What’s DRIP? It’s a popular acronym when talking about supply chain. It stands for data rich, information poor. The fragility of the supply chain, no matter the industry you’re in, has become crystal clear in recent years. Optimizing your supply chain needs to be top of mind to make sure you don’t get caught short, and as DRIP suggests, it starts with making sure you’re using data to its fullest. Outdated inventory systems can impede that. Supply, Inventory and Operations Planning (SIOP) is a method we here at USC utilizes that emphasizes inventory as a strategic tool to allow businesses to get a better look at their operations and formulate superior strategy decisions.

SIOP gives you the ability to capture, analyze, integrate and interpret high-quality data, which is the key to staying ahead of the market. The aim is to achieve process automation and glean predictive analytics, which give you a strategic advantage… so you don’t DRIP.

Learn more about SIOP in this free eBook

Standard operating procedures (SOPs)

Much is being written in the news lately concerning “institutional knowledge,” and how the loss of it can be devastating to companies. What is it? It’s what’s NOT in your training manual. It’s what the person you think is “irreplaceable” knows. The ins and outs of doing the job that your best people learn through years of experience. When they retire, or leave the company for whatever reason, that knowledge walks out the door with them. That’s why it’s so important to develop standard operating procedures for every job in your company, and write those procedures down on stone tablets if necessary.

Comprehensive training

When you have those SOPs down, that’s just the first step. Training your people in exactly how to do the job, so everyone across all of your facilities is doing it in the same way, is vital.

Sound like a tall order? It can be. That’s where we come in. At USC Consulting Group, we have 55+ years of experience helping companies optimize their efficiency, ramp up their production, solidify those SOPs and operate to the max. If you’re wondering if now is the right time to hire an operations consultant, download our aptly named eBook, “When is the Right Time to Bring in Operations Consultants?” It’s free, and it will give you more information about how we can help your business.

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The automotive manufacturing industry has been traveling a strange and bumpy road over the past couple of years. The pandemic created a traffic jam in the supply chain. At the same time, demand for new cars dried up. Who was driving? Everyone was at home during the lockdown. And on the heels of that, interest in electric vehicles began to surge. According to research by the International Energy Association, the demand for EVs is expected to rise 35% by the end of 2023 after a record-breaking 2022.

What did it all mean for auto manufacturers? Demand for traditional vehicles lowered as demand for electric vehicles grew, forcing auto manufacturers to do a delicate dance of balancing the type of production they’ve always done with the new processes and systems needed to produce EVs. The moving target of demand coupled with shaky supply brought about inventory uncertainty — how much was enough, but not too much? And then, there was (and continues to be) the labor shortage, with seasoned workers retiring and younger ones not exactly flooding through the doors.

Improving processes is paramount for the automotive manufacturing industry now. Here are a few ways you can do that:

Lean Six Sigma. If there ever was a need for auto manufacturing process improvements like the ones Lean Six Sigma can produce, it’s now. LSS is the blending of two efficiency methodologies, Lean and Six Sigma. It’s a bit ironic, because the Lean methodology, which focuses on efficiency and eliminating waste, was developed back in the day by Henry Ford… or at Toyota, depending on who you ask. It got its start on the auto manufacturing line, with the intent of eliminating the “seven deadly wastes”: overproduction, waiting, transporting, processing, inventory, excess motion and defects. At USC Consulting Group, we’ve added an eighth waste. People. Specifically, not using them to their fullest, not seeing untapped potential in great workers, and not training and developing people to rise through the ranks. Lean is about eliminating waste to produce more product quickly and efficiently.

Six Sigma, the other side of the Lean coin, is about quality control. Minimizing flaws and defects. But it’s deeper than that, rooted in data. The goal is to improve cycle time while eliminating or reducing defects.

SIOP. It’s difficult to achieve careful, accurate planning for the future when the road ahead contains so many bumps. That’s why we take the usual sales and operations planning (S&OP) process to a different level by adding inventory to the mix. The goal is to look ahead, anticipating the inventory you need while also coordinating with sales, marketing, and finance to involve the entire organization in this process. A key to SIOP is using inventory as a strategic tool to help offset variation in either demand or production issues.

Predictive Maintenance. Yes, it sounds extremely basic, but we find that heading off trouble before it starts can eliminate the risk of bogging down your entire production line to fix what’s broken.

Skills Training. Investing in training is playing the long game, but in light of your best people on the line retiring and fewer people to take their place, it’s paramount. Training has advantages in addition to the obvious — your people being more skilled on the job. It also demonstrates in a very tangible way that you are committed to the growth and success of your employees. You gain loyal workers and create a pipeline for advancement. It’s a win-win.

Technology Investments. USC Consulting Group is not about coming in and asking manufacturers to invest in the latest and greatest technology in order to become more efficient. No, efficiency takes harder work than just installing a new machine. However, in some cases, it’s necessary to level up. Legacy technologies don’t have the same features and capabilities as newer models. And in the auto manufacturing industry, you’re dealing with producing an entirely new product with electric vehicles. It may be time to look at your technology and decide if it can take you into the future or keep you in the past.

Doing business in the automotive manufacturing industry is like driving a manual transmission. You are constantly shifting gears to keep pace with traffic – in this case, the consistent change of consumer demand. Operations consulting helps companies improve their processes and be prepared for what’s coming down the road. We help manufacturers become more efficient and profitable in this or any economy.

Is working with operations consultants an untraveled road for you? Please get in touch. We’d love to talk with you about it.

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What’s on the road ahead for consumer goods manufacturing? Although the industry is multifaceted and varied, encompassing everything from household goods to food & beverage to apparel and more, most arms of the consumer goods industry are facing similar challenges. Supply chain woes. Geopolitical instability. Economic uncertainty paired with rising costs. Ecommerce disruption. Changing consumer preferences. Labor shortages.

A common thread running through all of those challenges: Stress. According to Deloitte’s “2023 Consumer Products Industry Outlook,” which surveyed executives at CG companies with more than $500 million in revenue, seven of 10 respondents said their job is more stressful now than it was five years ago, due to those ongoing challenges. We believe execs in many industries feel the same.

Here are some trends affecting the consumer goods manufacturing industry today:

Consumer Goods Manufacturing Trends

Challenges remain on the road ahead, but the ride is getting smoother.

Continued supply chain disruptions. No, it’s not over yet. The supply chain bottleneck that most industries faced during the pandemic has improved in some areas but has not gone away. According to a new survey by Coupa Software, 82% of supply chain leaders report bracing for continued supply chain issues in the next year. The industry is looking for ways to take the risk out of its supply chain, namely by reshoring or nearshoring supply to offset the worry about once-reliable sources. One of the wild cards in terms of supply chain is the current geopolitical instability, with the war in Ukraine lingering and tensions heating up with China and Russia.

Economic pressures. A recession is looming. (Or is it? Nobody seems to know.) Prices are rising. Inflation is through the roof. In addition to impacting consumers’ pocketbooks and spending habits, these economic factors are in league with rising costs of raw materials, transportation and labor costs to create a miasma of financial uncertainty. It has caused 80% of respondents in the Deloitte survey to report they’re raising prices further to compensate.

Labor shortages. For the consumer manufacturing industry, the labor shortage doesn’t just mean a lack of warm bodies. It also means a lack of skilled workers. The old guard is retiring, and the new generation taking its place needs the skills to operate today’s complex machinery. It means increased training and outreach from trade schools. The problem is, the numbers of young people going into the manufacturing field are dwindling just when we need them most.

Changing consumer preferences. While human behaviorists will be studying the effects of the pandemic on consumer spending for years to come, we see one thing clearly. Preferences and habits are changing. A heightened awareness of the environment is driving younger consumers toward sustainable products, and companies themselves are being held to those standards. Buyers are turning to the comfort and familiarity of known brands rather than taking risks. They are also more focused on health, having lived through a pandemic.

e-and-m-Commerce surge. This is also about consumer behavior, with a twist. The ecommerce surge that started during the pandemic is showing no signs of slowing down. According to Forbes, in 2023, ecommerce sales are projected to grow to 10.4%,with the global ecommerce market hitting $6.3 trillion. Mobile commerce (people making purchases from their smartphones) is poised to hit $415.93 billion this year. For consumer goods companies this may mean the need for a souped-up e-and-m-Commerce site for direct-to-consumer opportunities.

Proven methods for success

At USC Consulting Group, we specialize in helping companies reduce operating costs and improve efficiency… in this economy, or any economy. In our 55+ years in this business, we’ve rolled with a lot of changing tides and helped our clients do the same. We find that trends, challenges, economies and other factors can affect those tides, but tried-and-true operating methods can right the ship every time.

Two of the most powerful methods we use to help companies become more efficient and profitable are SIOP and LSS.

SIOP. Sales, Inventory & Operations Planning takes the normal sales and operations planning (S&OP) process and adds inventory to be as important of a variable and a strategic tool. Following this methodology helps manufacturers eliminate waste, increase efficiencies and achieve an optimal level between not enough and too much. It’s also an unparalleled tool for inventory management, which is a tricky business today given supply chain shortages and changing consumer preferences.

Balancing between too much inventory and too little has been the ongoing challenge after the pandemic, and SIOP can help you get there. If you would like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Lean Six Sigma. Two sides of the same coin, Lean looks at making processes more efficient and reducing lead times, while Six Sigma focuses on cutting down on defects. Both are useful goals when aiming to optimize your processes, throughput and ultimately, your bottom line. Together, Lean Six Sigma is a powerful process methodology.

But it takes years to master the balance between speed of throughput and quality of the end product. We have certified black belts in LSS on staff to guide these projects but also train your staff in the techniques. The goal is to make process improvement changes and ensure they are sustainable for years to come.

Interested in hearing more about how we can help? Give us a call and we’ll start by listening.

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The COVID-era supply chain disruptions are slowly but surely easing up for manufacturers around the globe. While the worldwide market is not yet fully recovered, signs point to a strong resurgence in 2023, with a return to normalcy by 2024. Even though good news is on the horizon for manufacturers, there are still a number of challenges to be aware of that will impact day-to-day operations. Here’s an overview of a few of the top manufacturing challenges for 2023, and how to handle them.

Challenge: Legacy technologies

Many manufacturers operate with legacy technologies — outdated hardware or software systems. These outdated systems can cause disruption for an organization in a few key areas.

The first problem: Legacy technologies can cause efficiency issues. Since these systems can be years (and sometimes decades) old, they simply don’t have the same features and capabilities of newer software on the market. Additionally, these legacy systems can pose a security risk. Older technology doesn’t have the same safeguards as newer systems, and cybercriminals have a much easier time infiltrating outdated software than one that is up-to-date.

Despite these problems, manufacturers can be hesitant to change systems due to familiarity, not wanting to enact a full system overhaul, or a mix of the two.

Strategy: Invest in new technologies and smart warehouses

Investing in emerging technologies should be a priority for manufacturers heading into the new year.

It’s a wise strategy, not only to become more efficient and protect systems from infiltration, but newer technologies can increase safety in the workplace and free up employees to handle more productive tasks. A recent survey from Deloitte found that 85% of manufacturing executives think that some form of robotics on the production line could increase employee safety, and 78% agree that updated technology can minimize repetitive work, empowering employees to focus on more productive and impactful tasks.

Challenge: Inflation

Starting in mid-2022, inflation across all essential goods prompted public backlash, not to mention squeezing the wallets of consumers and businesses alike. Bearing the brunt of the blame was the global supply chain, and the bottlenecks and scarcity it caused in markets across the world. Although those pressures are easing headed into the new year, inflation will still be a factor in 2023.

Strategy: Re-evaluate costs during design

For manufacturers, inflation means more careful planning to ensure operations remain lean, mean and profitable.

One way of doing this is by implementing Design to Cost — a method in which a manufacturer combines cost management with decision-making during the design stage of a product. Rather than the normal method of thinking about costs after a rough design of a product is made, the unit and material costs are fully integrated during planning to ensure products are profitable.

This type of thinking seems to be the reality for manufacturers in 2023, as a recent Forbes survey found that 87% of manufacturing CEOs plan to increase prices in the new year. Therefore, it’s important for all manufactures to think ahead, and integrate material costs into their design process as soon as possible.

Challenge: Inventory uncertainty

Inventory uncertainty remains one of the manufacturing challenges in 2023. Despite the healing global supply chain, manufacturers still need to strike a proper balance between stockpiling inventory and buying just-in-time. Striking that balance can be tricky. Not getting it right can cause businesses to become over- or under-leveraged at a moment’s notice — affecting the bottom line in the process.

Strategy: SIOP

Sales, Inventory & Operations Planning, SIOP, takes the normal sales and operations planning process and makes inventory just as important of a variable and a strategic tool. Following this methodology helps manufacturers eliminate waste, increase efficiencies and achieve an optimal level between not enough and too much.

We recommend that the SIOP horizon be a minimum rolling 14-month period that gets updated monthly. The aim is to look ahead multiple quarters to make sure inventory is available exactly when you need it. Involving a wide range of departments such as sales, marketing, engineering and finance, SIOP is a system that involves the entire organization to ensure yearly goals and objectives are met.

If you would like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

Keep moving forward

There will be manufacturing challenges in 2023 and beyond. By addressing your legacy technologies, adjusting to inflation fluxes, and taking the uncertainty out of your inventory management, you will be able to fine-tune your operations for optimal performance.

If your business could use some horsepower to power up your team on improvement initiatives, contact USC Consulting Group and we will put our over 50 years of experience to work for you.

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The global supply chain is a delicate framework in which every participating business needs to stay nimble and adaptable — because, as we saw during the pandemic, one singular event can throw a wrench into the entire system. Innovation and optimization need to be top of mind.

But what qualifies as effective optimization? Given the complexity of the flow of goods, cash and information between multiple producing, storage, delivery and consuming partners, companies can easily neglect key areas, or focus too hard on others. Disruption anywhere along the supply chain line can (and does) create major headaches, stifle throughput and force manufacturers into a dance of optimizing supply and demand.

We can help with that. At USC Consulting Group, we’ve been helping companies optimize their operations for more than half a century. We’ve learned a few things along the way. Here are some important do’s and don’ts for optimizing your supply chain. It’s about helping your business through the ongoing disruption and preparing it for unforeseen events in the future.

Don’t: Use outdated systems

There’s a tendency for many businesses to take an “if it ain’t broke, don’t fix it” approach. However, just because something is working in real time doesn’t mean there aren’t improvements to be made. In today’s data-rich environment, one of those improvements involves data analytics.

Outdated inventory systems, suboptimal communications and disconnected information are some of the biggest areas that hold an organization back. The limitations of legacy technologies thwart the goal of end-to-end transparency along the line and impede rapid-response decision making. Before you know it, you can end up in a data-rich, intelligence-poor environment. It’s so common a scenario now, there’s even an acronym for it: DRIP. Aptly named, because the potential power of all of that data is dripping down the drain if you’re not equipped to use and interpret it.

Do: Use SIOP

Sales, Inventory, and Operations Planning (SIOP) is a method we use here at USC Consulting Group that emphasizes inventory as a strategic tool to allow businesses to get a better look at their operations and formulate superior strategy decisions.

SIOP takes advantage of the wealth of digital data available to business owners to gain a strategic advantage. Having the ability to capture, analyze, integrate and interpret high-quality data is the key to staying ahead of the market. The aim is to achieve process automation and glean predictive analytics, which allow you a clearer look at your operations to make better-informed decisions.

Don’t: Segregate internal planning and communications

Silos! How often do we hear about the dangers of silos in businesses? It’s the concept of departments working separately, having poor communication and perhaps duplicating or negating each other’s efforts. We like to identify it as “the left hand doesn’t know what the right hand is doing.” Any way you refer to it, segregating internal planning and decision-makers leads to trouble in your supply chain.

These systems separate workers into independent subsections with little to no visibility between external partners. These separate groups work in their own ecosystem, unable to effectively communicate with other departments or relevant groups. This not only slows an operation down, but extinguishes any potential spark of collaboration or innovation that may arise from working in conjunction with each other.

Do: Increase information flow

Uncertainty in the supply chain is caused by disconnected information. A truly effective and innovative workplace allows all relevant personnel to communicate with each other.

Internally, abandoning legacy email and phone methods of communication in favor of end-to-end, 3-way knowledge sharing and open social platforms speeds up collaboration and enhances efficiency. Externally, keeping a concurrent, continuous and completely open demand plan is essential for maintaining healthy, profitable business relationships.

Enhancing communication and information flow internally and externally is another key for staying ahead of the curve and fostering innovation for supply chain businesses.

Don’t: Test out a new system on a limited basis

There can be hesitation for a business to roll out a new system, opting instead to test it out in certain departments or methods of communication. This can be a mistake.

Without full implementation, a business never sees the full power and potential of a new system and will be quick to abandon it in favor of the legacy methods they have been operating with for years. The right system can revolutionize operations on all fronts, from internal communication to vendor relationships to future workplace innovations. Without every aspect of a business running on a new method, a business owner may never see the full payoff.

Do: Find a trusted method and go all in

While there certainly are challenges with implementing a new system, it’s important to find a trusted method and go all-in. For example, let’s look back at our SIOP system.

Different areas of a business have different roles and objectives. Sales is eternally optimistic, operations wants to know precisely what is going to be produced and shipped, purchasing makes conservative commitments to suppliers, and finance has to predict performance and cash flow. Getting everyone pushing in the same direction for a system change can be a daunting task.

We have found that SIOP works optimally if your entire enterprise uses it. If you allow a facility, business unit or a customer team to continue to operate outside of the SIOP process it will undermine your efforts. That is why it’s so important to get everyone on board for a new process to truly see the difference it can make.

At USC Consulting Group, we’re dedicated to helping our clients weather any storm, including the kind of supply chain tsunami we’ve all experienced recently. Give us a call today to talk about how we can put our expertise to work for you.

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Like most industries today, the building products industry is faced with a host of challenges. These uncertain economic times aren’t helping matters any. Here are some of the top challenges we’ve identified, and tactics to combat them.

Challenge #1: Post-COVID demand

As the tumultuous start to the decade began to ease back into normalcy, the industry saw an increase in consumer spending and a boom for the construction and building products industries. What was behind it? Potential customers had time to sit and think. A year or more of being involuntarily secluded in their homes put their current infrastructure to the test. Who thought that kitchen countertop was a good idea? Wouldn’t it be nice to open the wall up and put in a breakfast bar? And… while we’re at it, let’s install that screened-in porch to go with it. The projects consumers had been thinking about for months were finally able to be realized and construction started up again with a vengeance.

Great! But building products manufacturers have been struggling to meet this ever-growing demand.

Strategy: Don’t turn down work — extend your lead time

Many of our clients have more work than they can handle right now. While it may seem unrealistic to take on every project in sight, it’s important to shore up your bottom line that took such a hit during the pandemic. Extending your lead time by a few weeks will allow you to accept more jobs and keep business flowing.

Challenge #2: Supply chain bottlenecks

A post-COVID boom is great for business — until you can’t get the materials you need at a price that makes sense. Supply chain disruptions have been commonplace for a few years now and that disruption is touching nearly every industry imaginable.

The pandemic showed just how vulnerable the current state of the supply chain is across the globe. From shipping and transportation delays to factory disruptions and material shortages, it has never been more important to keep a close eye on where and how you are sourcing your materials.

Strategy: Implement SIOP to keep a careful watch on your inventory

Being mindful and proactive about your inventory is the best way to make sure you have the materials you need, when you need them. We are helping many of our clients implement Sales, Inventory and Operations Planning (SIOP) to do just that.

SIOP is a process that facilitates having the right inventory conversations at the right time by integrating customer-focused demand plans with production, sourcing and inventory. Using this method, companies can get a clearer look at their operations and create better-informed strategy decisions.

Read more about SIOP in our eBook, Sales, Inventory & Operations Planning: It’s about Time.

Challenge #3: Rising Costs

We get it. This problem is everyone’s problem these days. Despite the already razor-thin profit margins in the building and construction industry, material prices continue to rise across the board. Your business isn’t operating for free, and finding ways to complete projects under budget and stay profitable is proving to be a harder challenge with each passing quarter.

Strategy: Include an escalation clause in your contracts

There are a few strategies you can employ to combat rising costs, but each has its pros and cons. Should you finance material purchases? Raise your prices? Will these strategies help your bottom line, or will it cause customers to look elsewhere?

Ultimately, the wisest strategy seems to be including an escalation clause in your contracts, stating that if prices increase by a certain percentage or more during the duration of the project, you have the right to adjust your costs accordingly. This provides the most flexibility for your business without risking losing customers to cheaper alternatives.

At USC Consulting Group, we’re here to help you through these uncertain economic times. And the good times, too! If you’d like to learn more about these common industry disruptors and our solutions, download our free eBook, “Constructing the Building Products Industry: An Outlook of Challenges and Solutions.”

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Supply chain disruptions were the cause of significant chaos during the early stages of the pandemic. Product shortages and price hikes made shopping for things like cars, appliances, and even some grocery items next to impossible.

It seems that the worst of the pandemic is behind us, and yet the lessons it taught remain crucial for avoiding future disruptions. In this article, we look at what the pandemic has taught us about supply chains.

Global Supply Chain Management

Global supply chain management is the responsibility of overseeing raw materials as they transition into products and make their way onto store shelves. The job of the global supply chain manager is to reduce costs, eliminate risks, and increase efficiency.

During normal times, the overwhelming number of variables that go into the process of product development make global supply chain management difficult. Covid, however, completely changed the world’s understanding of how vulnerable supply chains were.

Supply Chains are Endlessly Connected

A look at the numbers shows that supply chain disruptions occurred across the board following the first wave of the pandemic in 2020. It’s true that supply chain disruptions were up almost 700%–a startling though not particularly surprising statistic.

However, some of the stats aren’t as easily explained. For example, factory fires went up almost 150%. Prices soared. Almost 30% of businesses said they needed to find new suppliers altogether.

When one thing goes wrong in a supply chain, it’s very easy for others to get out of sync as well. Factory fires rose because of employee shortages. An absence of one raw material, or, for that matter, processed goods, can have significant ramifications for a wide range of different industries.

To that end, the pandemic showed just how vulnerable supply chains really are.

Does the Made Just in Time Model Still Work?

For decades, manufacturers have worked to be very precise in how much product they generate, creating just enough at exactly the right moment to supply immediate needs. This is done mostly to guarantee that they achieve their bottom line and avoid waste.

From certain perspectives, including a focus on sustainability, it is a good model of production. But what about in times of crisis? Covid-19 showed that unexpected supply chain disruptions can lead to shortages that last months, or even years.

While producing a significant surplus is not practical, manufacturers need to consider advancing their strategic sourcing and SIOP methods. Minimizing waste and improving efficiency is the key to it all.  That way, they can protect their margins in the future and avoid shortages.

Think Small Picture

While the pandemic was a big picture problem, many supply chain disruptions are very local. A strike in one village, power outages, bad weather. Highly localized Covid spikes. In the world of supply chain management, it is very possible for something small to have major ramifications.

Supply chain managers are now equipped with technology that makes it easier to anticipate even minor disruptions, pivoting quickly into solutions that will provide relief.

Not only is this beneficial for future situations, but it can also help businesses navigate what is left of the pandemic. While the proliferation of vaccines has significantly diminished the worst Covid-19 outcomes, there continue to be spikes and variants that can lead to worker shortages and other forms of supply chain problems with potentially debilitating consequences. The right technology makes these situations easier to anticipate and react to. Speaking of which…

Data is King

Data processing and implementation can have a significant impact on the future of supply chain management. Data-driven technological solutions can be used to anticipate probable disasters, and help supply chain managers find solutions quickly.

In the context of a pandemic, data might be used to predict viral spikes which then result in employee shortages and subsequent supply chain disruptions. Even in run-of-the-mill operations, however, data implementation can have a significant impact on how products find their way onto store shelves.

Fleet management technology is a good example of this. Using IoT sensors and data algorithms, fleet management technology can analyze routes, economize fuel, and improve vehicle maintenance automatically, making it easier for manufacturers to guarantee on-time deliveries.

Not only does this save money, but it can also improve the efficiency of the entire manufacturing process.

Backup Plans

Finally, the Covid-19 pandemic illustrated the importance of having alternatives for our supply chains. To ensure minimal disruptions, supply chain managers should consider multiple streams of production, ideally finding localized or nearby solutions for manufacturing that can be tapped quickly when the need arises.

Globalization has allowed manufacturers to shop around anywhere, looking for the most affordable option for their production needs. While this remains appealing, having contingencies, even if they come with a higher sticker price, can be an invaluable component of avoiding disruption.

* This article is written by Andrew Deen. Andrew has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and is currently writing a book about scaling up business. You can follow him on Twitter @AndrewDeen14

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Slowly but surely, consumers are returning to the marketplace in full force after a number of tumultuous years. According to Industry Week, consumer spending is up 20% from this time last year. While that number is great for a manufacturer’s balance sheet, there are still challenges in the industry that are keeping CEOs up at night. Here is a look at a number of concerns of top executives — and ways you can tackle them head-on to get a good night’s sleep.

Problem: Retiring workforce

Ah, retirement. The day valued, longtime employees get their gold watches and leave the plant for the last time. It’s great for the employee, not so much for their CEO. That’s because as retirees head out to enjoy their golden years, they’re taking all of the institutional knowledge they’ve learned over many years on the job with them. The median worker age as of 2018 was 44.1 years old — over two years older than workers in other industries. And that was in 2018, the most recent stat. Those folks are 48 now. But you don’t need stats to tell you that. A walk around your shop floor (or a talk with HR) will give you the lowdown on how many of your employees are nearing retirement.

Solution: Capture that knowledge

It pays to be proactive in most situations and this is one of them. Capture that institutional knowledge before your seasoned vets walk out the door. Create mentorships between older and younger workers. Film a roundtable discussion featuring your best older workers talking about the ins and outs they’ve learned over the years. Ask your seasoned vets to be part of updating your manuals. At USC Consulting Group, when we go into a manufacturing business to improve efficiencies, we understand that the people on your front lines are your greatest resource and our greatest ally in that effort.

Problem: Skills gap

The other side of the institutional knowledge coin is the lack of skilled workers to replace them. You’ve heard about the skills gap, certainly, and this is it. There is a dearth of qualified people out there. Or enough people. Manufacturers in the U.S. are expected to see 2 million unfilled jobs by 2030. It paints a grim picture for companies that aren’t planning or prepared for the future of their workforce.

Solution: Training

If you’re not finding skilled people, one solution is to create robust training programs that will get them the skills they need. It’s an investment, yes. But a worthy one.

Another tactic: Partner with a local trade school or community college to target upcoming grads.

Problem: Employee engagement (or lack thereof)

Are your employees happy? Do they feel valued and appreciated? If you don’t know, now’s the time to find out. To add to the problem of an aging workforce retiring and taking their skills with them, the new generation of warehouse and manufacturing workers are less and less inclined to begin and continue careers in the industry. The Great Resignation is a countrywide juggernaut that has prompted many of the younger workers to resign from and reject positions where they don’t feel adequately fulfilled or see a future career. The manufacturing industry is not immune.

The younger generation of workers needs validation and appreciation to stick around. Only 36% of U.S. employees are engaged at work and 74% are actively looking for a new job at any given time with their current employer.

Solution: Start walking the floor

Walking the floor is an oft-overlooked yet crucial way for managers and executives to engage with their team, foster relationships and directly affect employee retention in a positive way.

Getting out onto the shop floor shows employees that their employer cares about them and their career. For the employer, this strategy fosters retention while also affording an opportunity to discover any standout employees or ways to improve day-to-day operations. This directly combats an aging workforce by keeping new employees around long enough to become skilled themselves.

Another tactic: Invest in career pathing for your employees. It starts with promoting from within and giving people a roadmap for how to get there. It’s a powerful tool. In fact, 94% of employees said they would stay at a job that invested in their career development, according to a survey on LinkedIn.

Problem: Worldwide supply chain disruptions

While the COVID-19 pandemic has slowed down, the manufacturing problems it caused are still very prevalent in the industry today. Bottlenecks in every level of the supply chain and overcrowded shipping ports have become the norm over the past few years — with little signs of slowing.

According to Industry Week, a 400% increase in shipping costs from China and a 45% increase in ocean freight wait times — both increases relative to last year — is a trend that could continue for 6 to 12 months, if not longer.

Solution: Reshoring

Reshoring has long been suggested as idealistic and beneficial for the country, yet unrealistic. That is, until now.

The dramatic increase in outsourcing costs and interminable shipping wait times has resulted in many Fortune-500 companies — General Motors, Toyota and Samsung, to name a few — making considerable investments in the improvement, expansion and new developments of their manufacturing plants in the U.S.

Reshoring is a way for U.S. manufacturers to invest in the country and claim valuable subsidies, while also shielding themselves from any potential global supply chain issues.

Problem: Inventory management

Dialing in proper order quantities, reorder triggers and keeping an accurate and adequate lead time have long been hot buttons for manufacturers. The aforementioned bottlenecks and disruptions have not helped.

The issue compounds when all departments have a different viewpoint on the situation: operations, sales, finance and business executives can all have contrasting requirements and best practices when it comes to an inventory management philosophy. Any divergence in departmental expectations mixed with a lack of communication can spell disaster for any manufacturer.

Solution: SIOP

SIOP expands on S&OP — the business management process that involves sales forecast reports and planning for demand and supply — by adding a crucial component: Inventory.

SIOP is a powerful tool that helps your company get departments in sync, ensures that everyone is on the same page and realistic about the process, helps you manage and roll with changes, and measures performance.

“A key to SIOP is to emphasize inventory as a strategic tool to help offset variation in either demand or production issues,” explains David Shouldice, Senior Vice President and Managing Director at USC Consulting Group. “One lever of control in the SIOP process is to make inventory harder working as a strategic tool.”

SIOP helps you wrangle your inventory management, achieve the optimal balance between not enough and too much, and settle back into Lean manufacturing principles that can eliminate waste and help ramp up your efficiency.

These aren’t the only challenges keeping CEOs up at night. At USC Consulting Group, we have more than 50 years of experience helping manufacturers find opportunities for greater efficiency and productivity. Call us today to talk about how we can help you get a good night’s sleep.

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Remember the familiar line from an old TV cop show: “There are 8 million stories in the Naked City”? As USC Consulting Group’s Vice President and Senior Operations Manager Paul Harker likes to point out, the same could be said about your inventory.

Like most dramas, the story of your inventory management can take unexpected turns. It’s very easy to get lost in the din of safety stock levels vs. Lean principles, order quantities, reorder triggers and the lead time to replenish the stock. Supply chain disruptions and shortages haven’t helped matters over the past few years. The plot unravels when these stories don’t add up to a single coherent tale.

Major characters in this inventory management drama:

Operations, which sees inventory as a buffer against fluctuating demand. But how much is too much? They don’t want an excess of stock, which would fly in the face of the popular “just in time” or Lean operating method, which, admittedly took a bit of a hit during the pandemic when people panicked about shortages and bolstered their safety stock.

Sales wants product at the ready at a moment’s notice, not “just in time,” but “all the time.” They’re not overly concerned with storage space, inventory investment or production efficiency.

Finance looks at inventory as a double-edged sword. They want to reduce inventory in order to free up cash and minimize carrying costs. But inventory is also collateral. High levels of production, whether the goods are sold or not, can absorb overhead and drive better month-end results, which are Finance’s Holy Grail.

Executives are focused on achieving quarterly corporate objectives and view inventory in terms of dollars.

At a fundamental level, all of these decision-makers speak different languages, have different perspectives and conflicting messages. Of course, everyone has the same goals: efficiency and profitability. But they may be at cross purposes getting there.

The Hero: SIOP

You might be thinking: “Is that a typo? Don’t they mean S&OP?” Yes and no. No, it’s not a typo. And yes, S&OP, the business management process that involves sales forecast reports, planning for demand and supply, and other factors, is the foundation of all of this. We just think S&OP is missing something: Inventory.

When you’re focusing on inventory, it elevates the entire planning process up a notch. When your inventory is optimized, things tend to fall into place. But it is not an easy mark to hit in these days of supply chain disruption and the sometimes conflicting goals of key decision-makers. With SIOP, you can circumvent these challenges and make your inventory work for you.

“A key to SIOP is to emphasize inventory as a strategic tool to help offset variation in either demand or production issues,” explains David Shouldice, Senior Vice President and Managing Director at USC Consulting Group. “One lever of control in the SIOP process is to make inventory harder working as a strategic tool.”

As Shouldice notes, it’s about having the right conversations about the right topics at the right time.

This isn’t a one-and-done process. The SIOP planning horizon should be at least a rolling 14-month period. We recommend that our clients update their plans monthly. Some do it more often than that. The point is covering a sufficient span of time to make sure the necessary resources will be available when you need them. The plans take into account projections made by the sales and marketing departments and the resources available from manufacturing, engineering, purchasing and finance. All of that together works toward hitting the company’s goals and objectives.

Using SIOP for inventory management

Sales, Inventory and Operations Planning helps your company get departments in sync, ensures that everyone is on the same page and realistic about the process, helps you manage and roll with changes, and measures performance.

One powerful component of SIOP is that the process involves all of the key players in your inventory drama.

Here’s who we typically see take part in the SIOP process:

• President
• Vice President, Sales and Marketing
• Vice President, Operations
• Director of Logistics
• Vice President, Engineering
• Vice President, Finance
• Vice President, Information Systems
• Vice President, Human Resources

Different languages? You bet. But getting them all working together cuts down on the noise of those different languages. One reason SIOP is such a critical management tool is that key players from many departments are working from the same plan, and able to compare actual results to plan, evaluate their performance, and prepare updated plans going forward. SIOP: The universal translator, or C-3PO, for your business.

It is a powerful tool to help you wrangle your inventory management, achieve the optimal balance between not enough and too much, and settle back into Lean (or just in time) manufacturing principles that can eliminate waste and help ramp up your efficiency.

If you’d like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

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After a couple of difficult years, manufacturing is roaring back in the U.S. There’s a lot to be optimistic about. Consumers are consuming again, fueling high demand. Manufacturers in many facets of the industry are reporting a big uptick in orders, and it shows no signs of slowing down. But, that doesn’t mean manufacturing will enjoy a challenge-free year. There are several factors that continue to bedevil the industry. Here’s a run-down of some of the manufacturing challenges you might be facing in 2022, and strategies to handle them.

Challenge: Shortages of skilled workers

This is a big problem for many industries, and manufacturing is getting hit especially hard. IndustryWeek reports that 54% of U.S. manufacturers are finding it difficult to attract skilled workers to get the job done. That’s up from 38% before the pandemic. From a study by the Workforce Institute at HR solutions company UKG, pain points for employers include getting “ghosted” by workers who simply don’t show up for their shifts (a shocking 68% of manufacturers said they let employees go because of it between January and March 2021), high turnover and intense competition for skilled workers.

Strategy: Focus on retention and hiring

One of the best ways to win the talent war is to keep your people from walking out the door. Employee retention means focusing on their needs, their experience in your workplace, and their future. Promote from within. Provide your people with opportunities for increased training and upskilling, so they can learn and grow. Lay out career paths for your frontline workers who you think may be able to move up the ladder, so they can see the future with your company is about more than their current job. Involve them in the process when you’re looking at your operations with an eye toward greater efficiency. Another powerful way to boost your overall efficiency is to cross-train your people to do more than one job, so that when someone doesn’t show up for a shift, someone else can easily step in. All of this training and upskilling helps employees feel engaged. It lets them know you believe they are important to your company’s success.

When you do need to hire externally, cast your net wide. From the same Workforce Institute study, 62% of manufacturers have hired or considered hiring people with special needs, 56% have hired retirees, and 52% are considering hiring people who have been incarcerated. You may not have considered this talent pool in the past, but there are great advantages to hiring people who traditionally have trouble getting a break. Increased loyalty is a big one.

Challenge: Supply chain disruptions

This has been a major headache for manufacturers since the start of the pandemic, and it is still causing problems.

Strategy: Look at solutions to address time, pricing, production, inventory and information

According to David Newman, Supply Chain Practice Leader for USC Consulting Group, there are a number of tactics to use to combat supply chain disruption, but none are perfect. The most common and easiest to employ are the time solutions. Things like expediting freight (which is a supply-side response), or delaying order fulfillment (which is a demand-side response). But, if your customers have other options and they have low customer loyalty, delaying delivery dates can significantly reduce your revenues. Alternatively, premium freight if you have a low margin product can wipe out profits. Prices can skyrocket, and if you can’t pass those costs on to the consumer, it can erode your margins.

For more supply chain expert advice, watch Newman’s full video, “How to avoid supply chain disruptions” below as he shares his best insights for manufacturers to get around this vexing challenge.

Challenge: Inventory uncertainty

Supply chain disruptions naturally lead to worries about inventory. Manufacturers who have been committed to Lean methodologies have been tempted to stockpile inventory, just in case. But that’s a slippery slope that can erode your efficiency and margins.

Strategy: SIOP

It’s about adding inventory to your sales and operations planning process. It’s a powerful way to balance your inventory, achieving the optimal level between not enough and too much. Between just-in-time and just-in-case. It helps you settle back into Lean, eliminate waste and ramp up your efficiency.

The SIOP planning horizon should be at least a rolling 14-month period. We recommend that our clients update their plans monthly. Some do it more often than that. The point is covering a sufficient span of time to make sure the necessary resources will be available when you need them. The plans take into account projections made by the sales and marketing departments and the resources available from manufacturing, engineering, purchasing and finance. All of that together works toward hitting the company’s goals and objectives.

If you’d like to learn more about SIOP, download our (free) eBook, “Sales, Inventory & Operations Planning: It’s About Time.”

2022 will present its share of challenges for manufacturing. To talk with the experts at USCCG about how to solve them, contact us anytime.

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