Where will your business take you in 2017? Success and beyond, one would hope, but in these uncertain times, strong preparation and planning will be the key to achieving your potential. Strengthening and opening export channels will be imperative for many companies. Supply Chain Associate, Diane Thyer presents 5 important points to keep sight of in the coming year…
2017 is now upon us and the Christmas break, where reality was suspended in a Disney induced fog for the best part of week, is now well and truly over. This year is likely to prove just as challenging as 2016 with BREXIT and President Elect Trump making themselves felt; although in the case of the President Elect this is mostly on Twitter.
However, in the words of Barack Obama on that historic US election night, ‘no matter what happens, the sun will rise in the morning.’ With that steadying note we must act less like rabbits caught in the headlights and more like fearless warriors when it comes to ensuring our supply chains remain profitable. Here are five things as a fearless warrior you need to consider in 2017:
#1 Get lean for seventeen
Not to be confused with Lean in 15 a recent and popular health trend!
Review your 2016 supply chain thoroughly and involve all of your employees in this review. By adopting Kaizen (Continuous Improvement), a process where employees at all levels work together proactively, you really will be able to accomplish much more. Whilst they will have just as many good and bad ideas as you, the more ideas that are generated through your continuous improvement strategy the quicker you get to where you want to be. Kaizen recognises that your employees actually are your greatest asset in staying lean and profitable.
It is also worth remembering that simple and small improvements are just as likely to get you a ‘big win’ as making major, and potentially disruptive, changes to processes. And when someone talks about a process in terms of ‘we have always done it this way’ you know it needs some Kaizen thinking. In properly lean organisations Kaizen becomes the default and natural way of thinking for employees at every level every day. If you are truly using the Kaizen approach you wouldn’t hear that statement…EVER.
#2 Start before the end
If you are not yet exporting then now is the time to start. Why? If you are to be able to take advantage of opportunities you have to start before the end of something. My colleague Phil Broek in his December blog outlined the advantages of exploring the MENA market and the potential opportunities. With a weak pound, exporting has never looked so good, and this is where you could increase the profitability of your organisation ahead of others.
In 2014 the OEC reported the UK as being the 9thlargest global export economy exporting $472B, with the top export market being the US at $51B. This could of course change with Trump’s ‘Made in America’ rhetoric. Although Steve Banker, writing for Forbes online last month, believes that the main export markets to feel the brunt of this will be China and of course Mexico. Luckily the Americans, god bless them all, still have a ‘special relationship’ with all things British and I don’t necessarily see that changing anytime soon.
Whilst BREXIT and the Trump effect are going to provide as many opportunities as problems, ensure the fearless warrior in you is ready for the opportunities, but is also ready in respect of solutions for the problems.
#3 Remove your walls
If you truly want to be lean and stay profitable now is the time to break down the silos in your organisation, and across your network of suppliers and customers. In today’s fast paced global market place it is important to have one transparent process from start to finish either as a B2B or B2C organisation.
Supply chain strategies are now expected to be planned and implemented collaboratively and sustainably, providing a transparency across the whole supply chain network. Is this scary? Yes it is. However this transparency can be managed by having access to the very latest information through analytics and KPIs. It is easy in our busy world to let analytics slip especially as a smaller manufacturer. Ensure this is part of your daily routine by making them public on every notice-board, at every meeting, in every newsletter and make sure there is a hyperlink in every email you send out to your network. In doing this you will ensure that the entire network knows and owns what needs to be done to achieve the desired results.
Looking at the plethora of manufacturing scandals in 2016, most resulting in spontaneous combustion, fostering the supply chain transparency outside of your own organisation silo will enable you to be responsive, flexible and agile. However above all it will demonstrate trust in your process and trust in your product, less spontaneous combustion more spontaneous applause.
#4 Keep up with the tech
Gartner report that in 2017 digital business incompetence will cause a quarter of businesses to lose their market position, this is no different for your supply chain.
AI –artificial intelligence and robotics have for a long time played a significant part in supply chains and in essence are nothing new. However the pace with which automation and technology are being introduced in this area is faster than ever before. Forget ‘if you snooze you lose’, now it’s ‘if you blink you lose’. From the late 18thCentury when manufacturing used water and steam power there were 200 years to the late 1960’s before electronics and IT were being used to automate production. Today fifty years later and supply chains look very different to those of the 1960’s as we rapidly move towards what is being called the 4thindustrial revolution.
The understanding and procurement of autonomous robotics needs to be one of your highest priorities over the next 3-5 years. During this time we are also likely to see the emergence of driverless delivery vehicles, Apple, Google, Amazon and the major players in vehicle manufacturing are already investing in developing this technology.
In the move towards increased automation it is inevitable that traditional supply chain jobs will be lost. These will be replaced by people whose main function will be to manage and maintain the software to control your robotics. Whilst this is probably not all going to happen in 2017 it is important that you have a strategy for investing in the technology needed for your supply chain. You also need to be aware of your people planning. How are you going to recruit and retain those tech people whose skills will be in high demand? Are you able to up-skill any of your existing staff? And as more robotics equals less people, ensure you start your planning for an as painless as possible reduction of manual labour heads.
#5 No one likes a recall
Over the last couple of years we have seen a number of industry giants brought down by faulty components; for example Toyota, Vauxhall, Whirlpool and BEKO have all had to issue recalls.
However probably the most damaging recall just last summer was Samsung’s flagship product the Galaxy Note 7, the one product in the Smartphone market to rival the iPhone and give Apple a run for their money. That debacle ultimately resulted in the phone being completely withdrawn from sale and production permanently discontinued. During this time Samsung’s operating profit fell by 30%, and whilst a monolith like Samsung can probably ride that out, not every organisation is in the same position.
As the cost of importing raw materials continues to increase due to the weakened pound, there is always the temptation to reduce the cost of manufacture through reducing the quality of components. However as we have already seen getting component quality wrong could cost you much more.
Ensuring quality throughout your process is paramount and, if you are going to incentivise your parts buyer to reduce costs ensure that there is a caveat that quality must not be compromised. Certainly look at sourcing the same components from another supplier, but always maintain the quality.
in a lean operation you should be continuously focused on improving the supply chain process. Your strategy therefore should be about driving down the cost of the whole process by everyone, every day. Think spontaneous applause not combustion…
I hope you have enjoyed this article and I would like to take this opportunity to wish you a prosperous and peaceful new year. I will leave you with this quote which I think sums it all up:
‘Don’t wish it were easier. Wish you were better.’– Jim Rohn
Diane Thyer is a member of the Institute of Export and is the Supply Chain Associate at Middleton-Jones. Diane can be contacted at DianeT@middleton-jones.com