Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
14 The Power of Planning: Supply Chain Strategies
192 Plays2 years ago
I mean, WE know all about the "supply chain" and what it all means, but, asking for a friend...what is that, and why does it matter, and why does everybody and everything get blamed for it? Join us and expert Emily Levasseur teaches Dave and Trygve the basics of Supply Chain and how it affects you personally and professionally.
In this episode, we cover:
- What is the supply chain?
- What causes supply chain disruptions?
- The current state of the supply chain
- How it impacts every business (even if you’re service-based, not product-based)
- And more…
…
Dial It In Podcast is where we gathered our favorite people together to share their advice on how to drive revenue, through storytelling and without the boring sales jargon. Our primary focus is marketing and sales for manufacturing and B2B service businesses, but we’ll cover topics across the entire spectrum of business. This isn’t a deep, naval-gazing show… we like to have lively chats that are fun, and full of useful insights. Brought to you by BizzyWeb.
Links:
Website: dialitinpodcast.com
BizzyWeb site: bizzyweb.com
Connect with Dave Meyer
Connect with Trygve Olsen
Recommended
Transcript
Introduction and Personal Stories
00:00:05
Speaker
Welcome to Dial It In, a podcast where we talk with interesting people about the process improvements and tricks they use to grow their businesses. I'm Dave Meyer, president of BusyWeb, and every week, Trigby Olsen and I are bringing you interviews on how the best in their fields are dialing it in for their organizations.
00:00:23
Speaker
Dave, refresh my memory. When did you get your car? Well, let's see, it was right at the middle of the whole COVID thing. I think it was Black Friday of 2020. Yeah. You got it from the dealer down the street, right? No, no, it was in Philadelphia.
00:00:44
Speaker
It was in Philadelphia, a city of brotherly love. That's weird, because about four months later, I bought my car, and I got mine in Northern Virginia. Why did you have to go all the way up to Philadelphia? It was the only one available, Trigby, and I wanted it very badly. So I decided to just make the trip, and I grabbed my father, and we grabbed a plane ticket, and we flew out, and 23 hours after we hopped on the plane, we were home.
00:01:14
Speaker
Yeah, I had a similar thing. I couldn't find the car that I wanted. I bought a hybrid, so I get about 38 miles to the gallon of mine and I couldn't find it anywhere. So finally I went to the dealership and I said, you know, I got my wife's approval and she said, you know, just go get the car you want.
00:01:34
Speaker
I sat down with a guy and I said, okay, here's what I want. And he kind of went, hmm, well, okay. And he did the worst thing you can ever have in a sales presentation. He turned the laptop around, showed me the spreadsheet. He said, it was a big dealership. And he said, I got five coming in in the next five months. The MSRP is the
00:01:54
Speaker
Starting bed recently and I was like, oh, this is ridiculous. Why is that? He's like, well, you know, the supply chain and I kind of nodded politely and like I knew what I was talking about. Oh, sure. Yep. Supply chain. And then in a sense that's happened. And since, you know, you and I had to fly halfway across the country and drive our car back and cars back cannonball run style, the supply chain comes up so much more in
Meet Emily LaVassar, Supply Chain Specialist
00:02:16
Speaker
business. So I thought, well, let's, let's find an expert and ask her, ask her some questions about it. So today our guest is Emily LaVassar from Waypost advisors.
00:02:24
Speaker
Emily works with manufacturing and distribution clients, primarily B2B. She offers interim staffing solutions for things like resignations, maternity leaves, or temporary projects. And she also helps with supply chain improvements. So things like managing their inventory, cash flow, working capital needs, time shipment of goods, transportation of raw material costs, all sorts of good stuff. So thanks for joining us, Emily.
00:02:51
Speaker
Thanks, Trigvi, for a shining introduction. And it was definitely interesting to hear you and Dave talk about your car purchasing. I'm curious what kind of cars you guys are buying these days that you're chasing them around the country. Dave, what do you drive?
00:03:06
Speaker
So mine is a very strange one. It's a Audi RS7, which is a 605 horse kind of crazy thing. So it's really fun, but it was also very specialized. So there were only like two of them in the country when I was looking.
00:03:26
Speaker
Wow. Okay. And I drive a Toyota RAV4 Hybrid Limited. I get about 40 miles to the gallon, but what I wanted out of my new car is I wanted leather seats.
00:03:43
Speaker
because I have an eight
Understanding Supply Chain Complexities
00:03:44
Speaker
-year-old and I wanted heated seats because I'm middle-aged and I have a bad back. We live in Minnesota. But that was a trick that I learned from a buddy of mine who, during the summer, if his back hurt, he'd tell his wife he'd go to the grocery store and then he'd turn the air conditioning on high and turn his seat warmer on.
00:04:04
Speaker
The only place I could find it in the car that I have it's it's it's a deep red burgundy color And it's got tan interior and there were it was one of five that was made that year
00:04:15
Speaker
Excellent, I'm fascinated by that guys because those are those are not you know, crazy collector vehicles that are super rare, you know, and that which was what I was thinking when you were talking about it. I mean, those are, I mean, they're special, don't get me wrong, but relatively standard type vehicles and that you experienced having to fly around the country to find what you want.
00:04:37
Speaker
He's a great example of our hashtags. Yeah, and my son even, I'll tell you this, and then we can talk about what we want to talk about. And the funny thing about my car, Emily, is my son just recently, who's eight, he completely ruined my childhood. I sat him down and he watched a couple episodes of Knight Rider. And so, and then he and I went out to there. He's like, oh, what do you think of the show?
00:05:00
Speaker
I think it's boring. Like, what are you talking about? This is a car that talks to you and he goes, um, your car talks to you, dad. Yeah. But no, you don't understand that this kid had TV screens. He's like, well, your car has a TV screen. But you don't understand. He has like all the information in the world to help Michael fight crime. He goes, so Michael plugged his phone in. Right.
00:05:29
Speaker
And then it's like, but he's got that cool watch where he can talk to the car. And he literally reached over and pressed the bezel on my Apple watch and goes, Siri, start daddy's car. You were a nut writer. Yeah, I guess. I guess driving a family car. So, you know, Emily, I know all about the supply chain and I know every idiosyncrasy of it. But, you know, since Dave's here, why don't we start with the basics? What is that?
00:05:59
Speaker
Yeah, for Dave's benefit and for the benefit of our listeners. Yeah. So I would define supply chain as obviously it's a physical movement of goods and all of the activities required for that to happen, including the informational interchanges.
00:06:16
Speaker
So when I think of it, it starts with, well, it really starts with the planning process, if that exists in a supply chain. And this is sort of the, this is the mathy, sciency, nerdy piece of it that is a little bit more new. It's a younger portion of the supply chain. So this would be forecasting, right? Forecasting the demand. This would be supply planning, understanding how we bring in material to satisfy our production and inventory needs.
00:06:42
Speaker
This would be inventory optimization setting setting our optimal stocking levels so that we're not spending an expensive amount of money on inventory but we have enough to overcome any of the very abilities that might cause us to need to chew into stock and then capacity optimization particularly in a distribution and a manufacturing model.
00:07:03
Speaker
The next piece then pushes into what are we going to buy and where are we going to get it from? In supply chain terms, we would call that sourcing, where the material comes from, procurement, the management of the categories in that and how we buy optimally, and then the purchasing, which is actually creating the purchase orders, submitting it to suppliers.
00:07:26
Speaker
Manufacturing is actually a piece of the broader supply chain, so when the materials come in, they're going to get used in the production of an eventual finished good that then will be stored in a warehouse for a period of time and shipped to an end user, a customer, a retailer, whoever that is, and then eventually on to a consumer.
00:07:47
Speaker
So it's all of those pieces from the planning to the purchasing to the production to the distribution and storage of it all the way driven by what essentially a consumer needs. If we don't have consumers buying stuff, then the whole rest of the upstream supply chain is generally not necessary.
Impact of COVID-19 on Supply Chains
00:08:07
Speaker
Got it. And so where did our car supply problems come in? What's happening in the news cycle right now that everybody's blaming the supply chain on missing vehicles and late phones? Yeah, great question, Dave. And I think at a high level,
00:08:26
Speaker
What we're experiencing is just significant and completely unpredictable variability in the supply chains. And I'm going to caveat that by saying the last three to six months have started to cool off a little bit, and we're getting back to periods of stability. But certainly from March of 2020 through, we'll call it summer of 2022, what we've been living in is this unpredictability on both sides of the equation.
00:08:54
Speaker
and the two sides i'm speaking about are demand right the need for the products and then supply the the ability to get them and covid was an unprecedented time of variability on both sides right demand went crazy and it moved all over the place for various reasons then we also basically had every possible constraint you could think of in terms of
00:09:16
Speaker
Resourcing and labor for manufacturing and for the supply chain operations, warehouses, ports, vessel operations, all of those different things. And then our suppliers also had those same labor constraints and issues. So what happens then is we call it a lead time from the moment you place a purchase order until the moment product is delivered, that time extended significantly.
00:09:40
Speaker
So the problem is, if you have a normal eight-week lead time and all of a sudden your eight-week lead time extends to 12 weeks, you are going to have a four-week gap where you are not going to have product. So how that affected the cars, I think, was that it wasn't that people couldn't make cars, it was the computer chips that went into optimizing cars, right? That's really what the hiccup has been for most auto manufacturers.
00:10:10
Speaker
Yeah, at the time that the period that you guys were talking about, I mean, you think of the thousands and thousands of components that go into the final finished good of an automobile. Many of those components were significantly disrupted.
00:10:25
Speaker
the chips and the circuit boards being a couple of the big ones that continue to be problematic on a worldwide scale. And we're certainly crunched at that time because of the limitations of that supply chain. But there were many, many other problematic components because I think what we don't often think about as consumers is just
00:10:47
Speaker
All of these components that go into the things that we like circulate around the right they come from different places around the world and a lot of times they have to move from place to place they're gonna go from point a to point b and be assembled into a sub assembly and then in that assembly they're gonna move to somewhere else and they're gonna be put into a larger sub assembly and then they're gonna be moved somewhere else so you know we operate on this really global scale.
00:11:12
Speaker
and any of the disruptions and particularly in the shipping industry were really highly impactful of that and impacted the lead time of availability and the final delivery of your automobile. And even before it gets to that, sometimes raw materials are affected too, right? Absolutely. Component manufacturers can't even build the things to give to the people to build the thing.
00:11:37
Speaker
Absolutely. We work a lot with food and beverage companies, and there was a period in 2021, maybe in the middle of the year for six months, where they couldn't get aluminum. I don't know if you guys are beer fans, but there was an issue with being able to get enough cans, aluminum cans for beer. There was an issue with being able to get little aluminum caps for bottles. You could get the glass bottles, but you couldn't get the aluminum caps.
00:12:05
Speaker
Then, of course, we have the winter storm, an unprecedented ice storm that hits Texas last year in 2021 and really significantly impacts oil refining and plastic production, energy production and subsequent plastic production. Then there was a period where you couldn't get plastic components for things as simple as packaging.
00:12:26
Speaker
Right so we have a product but not packaging plastic resin worldwide has been an issue up until maybe the last three to six months that market has finally started to catch back up so there's all these things that we don't think about that go into building all these pieces and basically they were all in a chokehold for the last two years.
00:12:45
Speaker
Wow. Okay. So we work with a lot of manufacturers, of course. And one of the common questions that we get, or certainly one of the complaints is, yes, we're having problems with this particular component, or, you know, like you said, packaging all the way back to any difference or any, any kind of supply material can be affected. How can
00:13:09
Speaker
small manufacturers in particular kind of plan around some of these supply chain issues, or are there good places for them to look if they run into a roadblock with their supply chain? Yeah, that's a great question, Dave, and there are a lot of components to this.
00:13:27
Speaker
I love that you used the optimal word in my opinion plan how can small manufacturers plan around this and i think that it starts with the planning piece right it's almost impossible for your supply chain to have any hope of being proactive if it doesn't start with some sort of a demand driven plan.
00:13:48
Speaker
And that's a forecast, right? And there are different methods for
Supply Chain Challenges Post-COVID
00:13:53
Speaker
forecasting, but I honestly think that what's most relevant at this point is leveraging your sales and your customer service teams or your engineering teams that are working with your customer client base.
00:14:06
Speaker
to understand what are your clients seeing in their markets in terms of their demand and how does that reflect to your customers or clients and what they're going to need and then that drives back everything a supply chain and an operational supply chain should be doing.
00:14:23
Speaker
So, I think that's always my first recommendation to smaller companies, especially because the planning piece is kind of a younger discipline in supply chain. And many companies either don't have that talent or just aren't even aware of how it should be structured. So then from there, once you have... Essentially, the question is, what are we going to sell in the next 6 to 12 months to our best knowledge and ability? What are we going to be able to sell?
00:14:52
Speaker
The other piece that I think I see a lot of fall down is pushing that back into the supply chain in a way that they actually are set up for success in being proactive rather than reactive. Here's a great example. It doesn't do a lot of good
00:15:11
Speaker
if marketing is going to put on a BOGO buy one, get one sale, and you're going to anticipate a lift of 50% in your sales volumes, if you're going to plan that BOGO for two weeks out, but it takes your supply chain eight weeks to actually get the inventory you need, that's a big mess if you haven't fought that far out. So really creating that cross-functional awareness with the sales and marketing teams of, hang on a second, how are we stocked?
00:15:41
Speaker
what's our production capacity and what's our lead time to be able to buffer our inventories if we need to. And then we can start talking about promotional lists. That's one of the things that we talk to people all the time as we're trying to plan out a better source of sales and marketing alignment in a company is, you know, they say, Oh, well, what would you like? Well, we, you know, we'd like more leads. Okay, great. If I give you a hundred leads, you can close tomorrow. Is that going to, how, how crushed are you going to be?
00:16:10
Speaker
And they go, oh, well, I hadn't really thought about that. So growth for being smart about your growth is absolutely, it sounds like is just as important in the front of the house as well as the execution model behind where you're following almost the same model of needing to forecast what you need and then how to deliver it.
00:16:30
Speaker
Absolutely. So Emily, we kind of had some fun poking at the car industry. And you mentioned the interesting thing about plastics as a consequence of the Texas issues in 2021. So what other industries are being affected right now by supply chain issues? Many industries. It is getting better though, guys. I do want to make sure that the listener base is aware that things are loosening up quite a bit.
00:16:58
Speaker
Drivers of that being that consumer demand has cooled in the last couple of months for whatever the reason may be, but it has cooled. So, purchasing is down, production utilization is down in many sectors. So, it is helping.
00:17:17
Speaker
We really got caught on everything up until about probably three to six months ago because of shipping constraints. And the US-based specifically, manufacturing and consumer sales, we got really choked on containers. Container has been a big challenge and a couple of reasons for that being just the incredible amount of demand
00:17:42
Speaker
the springboard of demand that came loose after we got a little bit more comfortably through COVID. And then the other challenge really has been China and the zero COVID policy, which, you know, they have a couple of cases of COVID in a very, what would be a large city to me, and they shut the whole city down. So it really reduces their port throughput capacity and seven of the largest port of the 10 largest ports in the world are in China.
00:18:09
Speaker
So that has been a huge problem as there's been a really big kind of back and forth in terms of the ability to move freight. And then of course, trucking. Trucking in the US was a problem as well. And I'm sure many of our listeners are well aware that trucking capacity is and is going to be an issue for years to come because of the lack of drivers and because of some of the regulations that have been enforced with good intention, intention around safety.
00:18:36
Speaker
But some of the regulations that have been enforced that limit a driver's ability to drive a number of hours. Again, that wave is receding a bit right now because demand is down and warehouses are full so shipments are down. But once we kind of spring back to a more normal level of consumerism, it's going to continue to be a problem.
00:18:57
Speaker
Do you feel like with, and at the time of our recording, we're in the second week of November going into 2022 years. So the holiday season is fast approaching. Do you see another crush of shipping problems and trucking and that kind of, are there other big things that you see in the near term future that might be impacted in the supply chain that listeners might want to know about?
00:19:25
Speaker
So yes, there are always impending supply chain issues. They're different right now. So what I can tell you is from a consumer goods holiday perspective, retailers brought in their holiday inventory six months ago, because what happened in 2020 and 21 is they didn't bring their stuff in far enough in advance. So then I didn't get there in time. So that that means that we should have better stock shelves for the items that we want.
00:19:53
Speaker
However, the flip side of that is that a lot of sales have slowed in a lot of places. So we have warehouses that are literally packed to the gills, guys. You cannot find warehousing space right now because it's just stuffed full of everything.
00:20:11
Speaker
And so the problem that that creates is it slows down the receipt of inbound containers and trucks. So I'm going to send a container to a warehouse and it's going to sit there for 30 days at this point waiting to be unloaded because there isn't warehouse capacity.
00:20:29
Speaker
What that does is it ties up the container availability and more importantly, the chassis that they use to pull the containers around. Now you have trucks waiting for hours and hours at inland and port container ports to pick up their containers. There's still a lot of congestion. There's still a lot of trouble in those types of areas.
00:20:53
Speaker
And then compound that right now by the time this airs i'm not sure this will be relevant but there's another potential railroad impending u.s railroad strike That could go as early as december 5th. I don't think it will a railroad strike would be so detrimental to the economy and to just to business and people in general that I think the government would step in and intervene there and
00:21:18
Speaker
which they've done a couple of times with other potential railroad strike issues this year. But I mean, that would be huge. Almost everything has some component of being impacted by a rail, whether directly or as a trickle down effect, that would be hugely impactful.
00:21:36
Speaker
So as things are backing up in warehouses, which then is backing up the trucks, which is then backing up the boats, which is then backing up. What I'm interested in is sort of an interesting juxtaposition with the idea that inflation is getting so high and things are becoming even more expensive. And is there a tipping point where somebody's got to clear out the warehouse, so then all of a sudden there's an 80% off sale at TJ Maxx? When's that inevitability come into play?
00:22:05
Speaker
It did happen. I forget what month it was. Maybe it was September or August even that Target announced a 90% dinger on their profits because they took a massive write down on their inventory because they just had so much and they needed to move it.
00:22:21
Speaker
You could see that at the store level. I have a five-year-old daughter going to Target to buy her some new little leggings that are normally $5.00. It's not a big expense, but $5.00 pair of leggings had been marked down to $3.00. They're just trying to get stuff to move at this point. A lot of that is happening across the board.
00:22:44
Speaker
I would continue to see prices on consumer goods fall, even through the holiday season, because they just want to move inventory.
Case Study: Toilet Paper Shortage
00:22:54
Speaker
So let's maybe play this out in terms of a real case scenario. So when COVID hit, like everyone else around the store and got toilet paper and there wasn't any. There were empty store shelves and they said, well, we'll get it when we get it. So why didn't we have toilet paper? Why did it take so long to get toilet paper back?
00:23:15
Speaker
Yeah, I think the biggest thing on toilet paper was the run on demand, right? Everybody had this panic moment of, you know, this is the classic story, right? This panic moment of, oh my goodness, I may not be able to leave my house for a while. I need to make sure I have toilet paper, right? And so everybody went out looking to stock up on toilet paper. And that's that variability that probably
00:23:38
Speaker
Probably what happens with toilet paper is it's a very, very stable, what I call pull pattern, right? The purchasing is very, very stable on an aggregate level, right? And now all of a sudden, you're doing double or triple the volumes, you're pulling your inventory down immediately, but that lead time to order a new product for the for
00:23:58
Speaker
Charmin or whoever it is to order new product hasn't changed and in fact, it's extended So you've drawn down all your stocks and you don't have new stuff coming in for weeks now. That's it I mean, that's where the toilet paper went
00:24:11
Speaker
So basically any given store gets so many cases of toilet paper because people know that or the stores know this is about how much it's going to use and then all of a sudden everybody slapped up and they're like, oh my gosh, we got it. And it's not like it was a stomach flu. So I don't, I still don't know why toilet paper went crazy, but it's, it's just the wildest thing. But so all of a sudden everybody was asking for it and there's no,
00:24:39
Speaker
It's like a just in time kind of thing, sort of, isn't it? With supply on that kind of consumer good? Or is it just stable? I don't think so. That type of thing is not just in time. I would say there's inventory stock. I'll go back to my favorite again because we're in Minnesota.
00:24:57
Speaker
Target has some stock of toilet paper, right? And then the distributor who distributes that has a stock of toilet paper. And then Sharman has their stock of toilet paper and all those types of things. So there is buffer stock in the entire supply chain, but there's only so much. You can't keep infinite because if you think of it this way, think of inventory this way. I love relating this to a human being who may not work in supply chain. If you're going to go buy more toilet paper, you have to pay money for that.
00:25:26
Speaker
You're spending now twice as much on toilet paper that's just gonna sit there a little bit longer and so a company has to do the same thing if they're gonna increase buffer stocks they have to spend money then to increase those stocks that are just gonna sit there and the possible future that they would need to sell a little bit extra.
00:25:44
Speaker
They have to pay the store money. They have to pay the store it and move it and you get increased damages. There's all sorts of stuff that happens. There actually is a mathematically statistically optimal stocking level based on some different parameters that many companies try to operate that way so that they're not overextending themselves on their working capital, their cash flow. But they also have enough to overcome normal fluctuations in demand.
00:26:14
Speaker
And that's where Waypost comes in, right? We can help. We can help companies understand what their optimal stocking levels are. Yes. That's actually one of my favorite studies to do. So yeah. Cool.
00:26:26
Speaker
So, because I don't like single ply, it's just a thing I have. So, I sketched this out a little and loosely speaking, because I'm really not an expert at this, for toilet paper to get into my house, it would have had to, it started as a tree, so there would have had to have been a logger to cut it down, a sawyer to break it down, and then it would have had to have been delivered on a truck
00:26:54
Speaker
to a milling factory, which then would have pulped it in some way. So now we have a paper product of some kind. Now we have to take that raw material then. So we've talked about three different styles of people so far. The fourth is that has to be converted in some sort of manufacturing way into toilet paper.
00:27:19
Speaker
two-ply, of course. And then it has to be packaged, which is the fifth different specialization. Then that has to be put into a warehouse for delivery. Then it has to be put into my store for delivery. And there's trucks along the way. So there's nine steps into something as simple as toilet paper.
00:27:42
Speaker
At least, if not more, because there's probably a distributor somewhere in the middle there. And then not only do you have to get to the store, so then the retail store has to receive it into their inventory and then they somehow have to get it out to their shelves. And that actually is a very challenging piece of the whole retail food and consumer good retail distribution is just getting things moved out to the shelves.
00:28:08
Speaker
So at Waypoint Advisors, Emily, what are some of the things that you're seeing that are sort of common fails that businesses are hitting with this kind of thing right now? What's the frequently asked issue question that you're getting a lot of right now?
00:28:25
Speaker
Sure. Okay. So 2024. So, um, we post, we post it. Yeah. Way post. Okay. So frequently asked questions. The most frequent thing we're getting asked right now is about inventory and staffing. So almost all of our new clients that are reaching out at this point are
00:28:48
Speaker
saying, I have too much inventory. My warehouses are overwhelmed. My production operations are overwhelmed. I'm seeing an incredible amount of scrap. How do I fix this? And that goes back to really understanding what are those drivers of the inventory? What does the forecast look like? What does the lead 10 look like? What is your purchasing team doing? Is your purchasing team well connected enough to what your inventory levels should be to make the right decisions? And do they have the data and information to do so?
00:29:18
Speaker
I think the second biggest thing that we're getting questions on right now, and again, we're in the second week of November and we just saw a rate hike by the Fed and we're seeing some inflation numbers that are coming down and we're seeing a lot of layoff information coming out, but up to this point,
00:29:34
Speaker
It's been taking hundred at least in the upper midwest in the twin cities area it's been taking one hundred plus days to fill supply chain roles and more specifically supply chain manager director and about so purchasing sourcing planning whatever so the other question we got a lot is hey.
00:29:54
Speaker
I can't have this role open for three to four months. Do you have someone who could step in and keep us moving and keep my team engaged and make sure that we're continuing to improve processes? Oh, and by the way, can you shed some light on how we could continue to improve processes? And yes, that's that is absolutely something that we do and we love to do. And it has been a huge value for companies so that they're not just hanging back in the pocket for three or four months while they fill that role.
00:30:22
Speaker
What are some of the
Improving Supply Chain Management for Small Businesses
00:30:23
Speaker
industries that your clients are in? You don't have to say the exact ones, but what kind of supply chain issues are you focusing on right now? Sure. So our biggest ones, and I think this is just kind of a factor of our network and where we're located physically, but food and beverage is a big one for us, food and beverage ingredients. And you mentioned it in the beginning, Trigvi. Thank you.
00:30:45
Speaker
be to be right so we're we tend to not do kind of the retailer direct to consumer side we can but be to be and then almost fell off my chair there guys sorry and then medical device was another one that we got into early on and so we've seen a lot of activity around medical device.
00:31:05
Speaker
Then, to be honest with you, the rest of it, what we say is, as long as it moves a product, so if there's a physical, manufactured, or distributed product, we can be helpful in that space. We've done board games. We've done balloons. We've done towels. We've done pots and pans. We've done clothing. We've done automotive, so there's a lot of different places that we can play. Amazing. You mentioned balloons. Is Helium really
00:31:34
Speaker
in short supply now? Yeah, it was. I'm not super close to the helium market in the last, we'll call it three months. But I mean, it was in very short supply. And actually, it was one of the biggest drivers of of demand reduction for the balloon companies out there is they just haven't been able to get the helium they need. Right. And a lot of that, that's geopolitical disruption, right? A lot of that is coming from the conflict in Ukraine and Russia. Sure.
00:32:03
Speaker
Ukraine's big in the helium space? Yeah, I think that area of the globe supplies, if I'm not mistaken, I don't have my statistics on this here, guys, but supplies the majority of the helium. Wow, okay.
00:32:19
Speaker
Fascinating. So, Putin is trying to ruin my kid's birthday party as well. Amongst other things. One of the things that's really fascinating about all this is that it's not just the US that we're talking about here. I mean, it is truly the entire world is interconnected now.
00:32:38
Speaker
So shipping and all of those things that come in when that evergreen locked the canal ever given it was so huge. It was like, well, it's just one boat. But no, it cut off the entire it added like three months to the shipping times for things that were critical. Yeah.
00:33:00
Speaker
Absolutely. And part of the issue with that is just how long it takes to get around the globe if you're not going through the Suez Canal. So if you've got to divert your ships around the Horn of Africa or in other places, it takes a really long time to get through there. I think one of my favorite examples, guys, and I doubt that consumers saw this because this was very much a B2B issue. When the conflict in Ukraine and Russia began,
00:33:28
Speaker
And as it continued, companies decided they didn't want to do business with the Russian oligarchs. So what we didn't realize is... Trigvi, when you were going through the steps to get toilet paper to a consumer, what you're talking about are the tiers, the tiers of a supply chain. So there's us, we're going to get our product. We have our tier one, who's the distributor that's sending us our product.
00:33:54
Speaker
Here too would be whoever is supplying the distributor here three would be whoever is supplying the wood pulp or the sorry the paper to the toilet paper production here for would be whoever is bringing the wood pulp to the plant right so those are your different tears so what ended up being sort of true and interesting is.
00:34:13
Speaker
A very large portion, something to the effect of 80% of white paper, food paper bag packaging. So like a 50 pound bag of food starch, for example, is packed in a two-ply bag that has like corrugated paper on the inside and then white paper on the outside and then the logos are printed. Something like 80% of that white paper was owned by Russian oligarchs.
00:34:38
Speaker
And so if you didn't want to do business with Russian oligarchs anymore, you didn't really have any other options because the other 20% came from China and there were some serious shipping constraints out of China. So a lot of food production suppliers were on their heels trying to find alternative solutions to that white paper bag issue. And who would have thought? Yeah. I thought it was just seizing yachts.
00:35:06
Speaker
More than that. I mean, maybe a little less important on the white paper bag side than a yacht, but yeah, absolutely. That's the worst FBI seizure ever. You're not taking down Capone. You walk into a warehouse that's full of paper bags. Yay, we did it. But worth so much money at one point earlier this year. Yeah, that's true. So what steps Emily can small businesses do to do better in the incoming years?
00:35:35
Speaker
Yeah, I think great question, Trigby. And I think back to that planning piece. If your business, if you can't clearly answer the question of who's responsible for making sure that we're taking those consumer customer client insights and driving them back through the supply chain in a way that helps us make better decisions,
00:35:54
Speaker
If you can't answer that question, then I think that's a good question to start asking, is how do you mature your supply chain planning organization? Then also the whole end to end. And the second piece I would give to that is data. How can you make sure that data and information are flowing through the organization as well so that it isn't reliant on Bob going and talking to Marge to convey that message to the supply chain?
00:36:20
Speaker
One other thing I didn't mention that I think is really important is also making sure you're not getting caught on your heels in terms of supplier management. So we would always recommend where possible that you have more than one supplier for a particular material, right? So you're not beholden to them. Those are the companies that got really caught on their heels in 2021 specifically with price increases or lack of product availability if they didn't have a qualified substitute.
00:36:49
Speaker
Now, there are legitimate reasons you may not have a qualified substitute. If it's a highly specialized material, if you simply don't have the volume where it doesn't make sense to divide the volume you do have between two suppliers,
00:37:03
Speaker
But then what I would suggest is making sure that your supplier management strategies match your needs. So if you have particularly highly specialized material or a critical material, you don't get this material delivered when you need it every day, your production facility is down. That is a critical material. You need to make sure that you have a very strategic and tight relationship with that supplier, that you're sharing information openly, that they understand how critical they are to your operations,
00:37:32
Speaker
because you are beholden to them and they have the ability to really impact your business. So those are probably the biggest pieces I would recommend. There are other things out there that I know manufacturers are dealing with on a day to day basis that we don't have a good solution for manufacturing labor.
00:37:51
Speaker
That's going to be a problem for a while. And we can't help in that space necessarily, apart from potentially being able to plan. And our recommendation would also be to drive efficiencies at a plant. And there's a lot of talk of automation at production facilities. That's not specifically our space. I'm happy to talk to anyone about it. But those are just things that we're going to languish with a little bit for years to come.
00:38:16
Speaker
I think one of the things we've seen in that same space and in the recruitment is don't sell the thing, sell the results. So one of our recruiting companies that we worked with, one of the things we found is they blamed the website. They were saying, oh, the website is not functioning. And we were like, well, no, it really is. But they were putting up job posts that said something like second shift machinist in whiteboard.
00:38:46
Speaker
And that was the job description. It was like, well, A, how much does it pay? What's it like working there? It's from 1983. Why would I want to work at a company that I'm pretty sure I'm going to have to scrape on stone tablets in order to work there?
00:39:03
Speaker
So just even from that sense, I know, you know, this is primarily about supply chain, but we find just so much more context in selling the end result of you should come to work here because of X that we just aren't seeing a lot of people doing because it's just, they're so strung out and they're going right into trying to get into just come here, just come here, just, no, you still got to sell it somehow. Right.
00:39:30
Speaker
Emily, as we look at this from a planning perspective, I think we talked a little bit ago about, you know, if you're trying to plan for the future, what do you need to know? How about for a company that hasn't really given any serious thought to supply chain, what kind of systems can they put in place or what kind of steps would you consider or encourage them to try in order to start planning for supply chain and start taking it seriously? Like, where do we start?
00:39:59
Speaker
Yeah, I love that question, Dave. So my answer based on observations is that a lot of smaller manufacturers have a supply chain that is very, very tactical, transactional, reactive. And part of that is because a lot of times supply chain gets wrapped up under operations. It falls under a COO or VP of Ops, which is fine. That's not a critical point for me. But I think what's important is to start
00:40:26
Speaker
thinking about your supply chain as a critical capability to your business so thinking more strategically about the supply chain and what it needs to be for your company and where you need those capabilities to be and one of my favorite examples is so many people in supply chain.
00:40:46
Speaker
get addicted to it, I think, because it's fun and it's a different challenge every day. I get to get in and figure out how to do this and it's high intensity. A lot of them are the types of folks that maybe didn't enjoy a different role in the business, so they got dumped into a supply chain role. But they don't necessarily have a background in it. They don't necessarily have a lot of
00:41:08
Speaker
different experiences, they just kind of got put there because they were willing to do it. And my challenge to companies is to really kind of think differently about how you elevate your capabilities and your strategic thinking there. Because you might be shooting yourself in the foot a little bit on your execution by not thinking more strategically about your supply chain.
ERP Systems and Supply Chain Management
00:41:27
Speaker
So enhancing those capabilities. And I think from a system perspective,
00:41:32
Speaker
Great question there too, Dave. There are a lot of tools out there on different... I'm going to use the term tier, but I mean something different. There are a lot of tools out there generally called an ERP, Enterprise Resource Planning System, that will get you off of Excel and will allow you to tie together your whole business operations.
00:41:53
Speaker
including giving you visibility to what we're purchasing how long it's taking to get it like what are our forecast look like what are patterns look like so you can make better decisions once you have those capabilities that you built in your teams then you have the data and analytics to use some buzz terms to actually make more insightful decisions on what you need to do.
00:42:14
Speaker
And I would say, don't overcomplicate it. Not every company should go out and buy SAP. That is a very complicated system, right? There are much simpler systems that are going to be a step change from recording data or not in Excel that are very easy, not very easy, nothing's ever easy to implement, but much easier to implement, much more insightful, and much less expensive without overcomplicating things.
00:42:40
Speaker
Is there a continuum of service? So if you start on a very small ERP or in a system, where would you consider the absolute table stakes? How big of a ERP or what's a minimum investment that people should be ready to be spending in order to get an ERP? And then how much might it take to actually get that thing online? Because there's a lot of sunk costs that are involved in setting it up, right? Yeah.
00:43:08
Speaker
I cannot answer the cost of an ERP implementation. What I will say is the minimum requirements for an ERP in my opinion.
00:43:19
Speaker
in any ERP is going to be your finances and your order management. You need your customer service teams to be able to enter orders in the system. You need to have visibility to inventory so that the system can net that all out. That's a minimum, and then your finances need to flow through. Once it ships, you got to trigger an invoice, and there has to be some way for when payment comes in, that all gets tracked in the system. Those are table stakes on an ERP.
00:43:47
Speaker
I would say a table stake that I would say also is what's called material replenishment planning or MRP. That's essentially the purchasing side of an ERP. You can set up very basic parameters that will take, here's what we have on order, here's what we have on inventory, here's the production plan. I'll come back to the production plan piece. Here's what we know of our order lead times and the system will trigger you to say, this is what you need to buy and when.
00:44:13
Speaker
Particularly, if you have a lot of SKUs and not so many buyers, thousands of SKUs, a couple of buyers, you need that automation because it's not realistic to be reloading spreadsheets every single day and looking for which ones are running out two months from now. I would say the MRP is also a table stake. The other two pieces that
00:44:37
Speaker
from a supply chain perspective, I would also recommend is that planning piece. You can implement pieces. They're usually what's called like a bolt on. It's not a standard ERP module, but you can add them on. But that's what will allow you to take in forecast information and pump that into the system. So it's not just what we have on order. It's not just what we have in inventory.
00:44:58
Speaker
we can also bring in what are our anticipated sales and forecast and inventory stocking points that will then have the mrp system tell your buyers what they need to buy and then the last component of that which i would say approach with caution can be very valuable but in in my experience in seventeen years
00:45:18
Speaker
I have seen a lot more companies struggle with implementing production planning modules that i have seen them be successful but that would be the other piece of the equation right is not only what you have an order not only what you have an inventory.
00:45:32
Speaker
not only what you are forecasting, not only what your targeted stocking levels are, but then let's bring in the production plan from the plant and then have that tell the buyers what to buy. You can get a lot more accuracy if all of that stuff is functioning correctly.
Expertise in Supply Chain Planning
00:45:51
Speaker
You can get a lot more accuracy in your purchasing signals, but again, the production planning piece, depending on the business, can be quite complicated.
00:46:01
Speaker
Well, this all just sounds awful. There are dozens of people involved and dozens of plates spinning at any given time. That could fall at any time and you need to have a complete backup of all that. All just so that I can have my toilet paper with a nice little red bear on it.
00:46:21
Speaker
Some of us enjoy this after me. Well, I mean, I think if anything's painfully evident of this is this is not for the amateur. This is if this is something that is affecting your company, you need to have a higher level of expertise than just somebody an entry level person to do this kind of work.
00:46:41
Speaker
I really think that is the tip of the iceberg. Not to say that there isn't value in the entry level, but if you're just gutting it out and reacting to everything, then it's time to start thinking about how do you get the capabilities in place to enable you to be more proactive than reactive, for sure.
00:47:03
Speaker
Wow. All right. Well, uh, Dave, do you feel like you understand supply chain a little bit better now? I don't know if I'm a pro, but I sure am a whole lot smarter than I used to be. The biggest thing that I'm taking away from our chat, Emily, and again, the, the theme of our podcast, right? Is dialing it in. And there's a lot of knobs and dials in the supply chain.
00:47:26
Speaker
Yeah, absolutely. And so planning and looking at alternative sources and making sure that you've got the right person in the seat and definitely hiring a consultant to help guide you along the way are things that our clients should be thinking about.
00:47:42
Speaker
Yeah, I think all of those things and cautionary with the consulting word, I know that frequently puts people off, but there are a lot of ways to approach how you get better practices. I know everybody likes to talk about how can we be best in class or implement best practices. How about we just go for better practices and let that step change occur before we shoot for the moon in that case.
00:48:07
Speaker
But yeah, it's definitely not for the faint of heart and it can be really, really hard work. But getting to that more planful, proactive place is going to put a little less burden on the teams and make them feel a little bit more fulfilled in their work, shall we
Conclusion and Contact Information
00:48:23
Speaker
say. Right.
00:48:25
Speaker
Emily, if people feel like I feel, which is just, I'm just exhausted thinking about all this and thinking, thank God I know you. If people want to get ahold of you for help, how can they find you? Sure. So you can check us out on our webpage at waypostadvisors.com. We have a couple of buttons you can push there to contact us. They could also reach out to me at emilyl at waypostadvisors.com via email.
00:48:51
Speaker
I could geek out on supply chain stuff all day long so I always encourage people to call and have a conversation and we can share a lot about what we're seeing in terms of practices with our clients and what we know that might be helpful. By the way guys I mean if you're looking for a job I'd be happy to work with you at any point because you're half experts now so give yourself some credit.
00:49:13
Speaker
Wow. No, no. I want no. We would be the weak links in the supply chain. Yeah. Yes, we are. We are the weakest links. So Emily, thanks so much for joining us and thanks so much for giving us a good once over on what this is. And again, if anybody is looking to find her, you can find her in the show notes and as she said at waypostadvisors.com. Thanks, guys. Really appreciate the time. Great conversation. And I'm glad you both got your cars.