Manufacturing Supply Chain Woes
Phil Coerper, Lori McDonald, and
Welcome to our monthly manufacturing show. I am Sarah Scudder, CMO at SourceDay and the show host. I am joined by Lori, Phil, and Sam. They have extensive manufacturing experience, and I’ve asked them to share their nightmare stories with us today. Our show sponsor is RapidRatings. I’ve been friends with their team for many years, and I’ve asked Eric from their team (I think he’s on the East Coast today) to join (New York City). Yeah, yay, New York!
And asked Eric to talk a little bit about how his company adds value to people in the manufacturing space. So, welcome, Eric, and I’ll give you the floor.
Yeah, thanks, Sarah. Happy to be a sponsor, and, like I said, I’m in New York today. We’re helping manufacturing companies look at their suppliers from a financial risk perspective, whether they’re public or private. With interest rate hikes, inflation, and obviously mounting corporate debt, you really want to make sure the company you’re relying on as a partner, vendor, supplier is going to be around. So, we produce predictive analytics based on those financial statements, and we provide really easy-to-read analytics and analysis. We recently launched our FHR Exchange, connecting buyers and sellers to share their financial health score, and they can do peer benchmarking on themselves. So, a lot of benefits to the supplier and to our clients as well.
So, I have to ask, what’s the temperature in New York today? Today is 85; it’s going to be I think 90, actually. So, I live in Austin now, and it’s been 107 degrees, so I’m here in Pacific Grove for the week, and loving that it’s 60.
Yes, and I can actually go outside. Well, Eric, thank you so much for sponsoring this show and thanks for joining us today. Thanks for having me.
To kick off our conversation, I’d like to have you share with us in the comments where in the world you are joining us from. We typically get a pretty eclectic global group, so tell us what city, state where we’re joining us. And then also, if you have a story or phrase to describe a train wreck manufacturing story that you’ve lived through or been a part of, drop that in the comments for us as well. And this is meant to be interactive, so please, throughout the entire show today, drop in those comments, drop in those questions. We want to make sure we’re adding as much value as possible for our audience.
So, with that, I’m going to kick off today with Lori. Lori, would like to have you start off by telling us a little bit about yourself, how you got into the manufacturing space, and then, of course, a fun personal fact about yourself.
Yes, happy to, and thanks for having me. Well, as I tell you how I got into the manufacturing space, I’ll share one of my fun facts, which is that I worked at NASA Johnson Space Center as a flight controller for the space shuttle program, which was an amazing experience. So, my background’s in computer electrical engineering, and I went to school at Purdue. Through an internship, I ended up at NASA, and met my husband there. He eventually went to work for Rockwell Automation and had a promotion to Rockwell’s headquarters here in Milwaukee, Wisconsin. So, we relocated to Milwaukee, and I was trying to figure out what could be as cool as space, and I decided to start a web development company. Meanwhile, my husband Dave, who’s at Rockwell, he left Rockwell 12 years ago and now he leads our development team. So, that’s me, keeping it all in the family.
Yes, so Lori, my first question for you, again today, we are talking about the ugly, not so pretty stuff, the nightmares, the stuff that happens that sometimes gets brushed under the rug or we conveniently forget about. So, we’re gonna air all the ugly stuff today. So, I’d like to have you tell your story about how manual and outdated systems created a nightmare situation.
Yes, yes, well, so this was one of our early customers. They were a large domestic manufacturer of ribbons. They sold ribbons to Victoria’s Secret, Coach handbags, and Tiffany’s. And they had decided they wanted to sell their ribbons to smaller organizations, leveraging selling them online to crafters and without having to grow their sales team. And when you order ribbons, you need to know the pattern, the color, the width, the put-up, which is like roll size. So, all of that drills down to a specific SKU. And they also had a legacy ERP system, like DOS screens. But the nightmare scenario was that their inventory was generally tracked on index cards, you know, index cards.
And so, not only that, they wanted to both sell their products on their website, but they also wanted to enable their distributors, their resellers, to have their own websites that they could sell products that the manufacturer would drop ship, which is a great strategy but extremely challenging if you’re unable to communicate inventory. So, the good news is we found a solution to it, but it was quite a hack in the beginning. We had to basically develop a series of workarounds in order to get everything functioning in a way that enabled them to sell.
Well, I feel like you should have framed some of those index cards as a memory of how far you’ve come. Yeah, definitely. Well, what’s funny is that, you know, I don’t generally run into people who are capturing inventory on index cards today. But certainly, we still run into a lot of companies that have very outdated systems all the same.
Well, Lori, thanks for being with us today.
Phil, would love to have you introduce yourself, tell us how you came into this crazy world of manufacturing, and share a personal fact.
Okay, well, I’m also from Wisconsin, and my hometown is Milwaukee, so Lori’s a nearby neighbor of me now. It’s been about 20 years where I was running different companies all over the world, and then just made it back home to Wisconsin, near the kids. But nice to be back home. I started in manufacturing; I took a job. I was going to engineering school, and I took a job at a small company in downtown Milwaukee, on Chicago Avenue. Lori, called Peter Albrecht Corporation in their engineering group. And everybody did everything, so you would design something, and then you would go build the panels, and then you would go paint it. You would… I learned how to weld; I was in the machine shop. Everything was very small, hands-on. Then we’d go and do the actual install outside, where we’d supervise the installation. And that’s when I fell in love with manufacturers, just building something from concept, where that it was an actual working piece of equipment, and then seeing it in the field in theaters, in that case, working was just very exciting.
So, I took another job with a larger corporation, ended up in their R&D area. One fun fact is I have a couple patents in the special fuels energy efficiency area. So, they… I do have them plaqued with my little dollar bill on the wall there. So, I do actually, unlike the little inventory cards, I actually have that hanging on the wall. And ended up getting a business degree and then running the largest division. And then I started moving around and ended up running sponsored companies by equity ownership and by some family businesses and some family offices. And they had my wife as a gypsy for 20 years. I think we relocated to six different locations and 12 homes in 20 years. So, there’s another kind of side fact, Lori. I can’t… I didn’t help launch the space shuttle; I don’t think anybody can touch that one as a story. But I did tally up once how many miles I was in an airplane, and I have been around the world on an airplane 20 times. That wasn’t all at once; but I, you know, my BWA’s in the seat while you were, you know, making sure everybody was doing what they needed to do.
Another fun fact for me, I guess, is that my middle name is Ringling. My business is Ringling Business Solutions. My great-great-grandfather was one of the original Ringling brothers of circus fame. So yes, I can juggle. And you can look at it that I juggle lots of tasks. So, you can go the clown way on that. You know, that depends. Some people will treat me differently and give me different things like that. But a lot of passion for manufacturing, and virtually every company that I’ve led for over the last two decades has had a strong manufacturing backbone, a lot of tech investment, and global supply chain type of challenges.
So, Phil, coming out of Covid, we ran into, I would say, a tremendous amount of supplier disruptions. A huge one, I know, in our space, in particular, was lack of supply, single sourcing challenges, or there’s a pretty big list. What were some of the most difficult problems companies that you work with experienced, and how did they respond?
Well, I’ll go with one in particular and kind of expand to a theme that I think I see in companies we work with, clients, and other folks that we interact with. And that was coming into Covid. First of all, there was a hard shutdown. The company was on a success track. They were a consumer products offering in the HVAC space, sold to homeowners who were mainly doing renovations, sold through traditional channels of warehouse and distribution, and then dealers and installing contractors. So, kind of that third-tier distribution. And they were doing most of the assembly and a lot of the discrete manufacturing in the US at facilities in the US. So, Covid hit. Plant was shut down, and the front end was shut down. Wholesalers and contractors were not doing anything. So, it just froze the business. And at that point, the supply chain kind of kept going along. We hadn’t seen that yet. Well, then in this particular case, the business got very healthy because it was a home improvement-related type of product. So, all of a sudden, the business was rocking it. And then the supply chain hit. And the electronics component and the plastics component were the two biggies. And I’m sure your audience knows this and thinks of this, but what plastics go into and what a lot of electronic sub-components go into is everything, which meant you couldn’t get anything. So, our lead times, which were usually our advantage of being days and weeks, were now four months, five months for people to get per product to get there, which meant you missed the season where people would put in air conditioning or put another thing. So, the company led. We leaned forward and we just ordered the heck out of all the major components. And we were fortunate that we had strong supply chain relationships, and we were also fortunate that we were building a lot of stuff. So, if we could get the sub-components, we would be in good shape. Our competitors were not as fortunate, and many of the large HVAC companies, literally their lead times for furnaces, for outdoor inverters, or air conditioners that you might have outside your house, were a year plus. So, we ended up burning our cash up to put a lot of inventory in place, and then we ended up recovering out of that. But if you look at the three quarters involved in that, it was the bumpiest ride, I think, as a president CEO that I’ve ever been on.
One of the things we’re seeing now, Phil, is a lot of our manufacturing clients are now dealing with excess inventory. So, they tied up significant amounts of cash to get through this craziness, and now they have too much product. And it’s the situation about what do you do with it if it’s seasonal? Did you miss the boat? I mean, there’s a lot of challenges now with how to get rid of that excess inventory.
Right. And let me kind of end with a direct answer on that point because it leads from if the manufacturing companies came into this period of first Covid, then supply chain, now inflation, and next, who knows if they came into that period a couple of years ago in pretty strong shape and with good back-end processes to manage their inventory and manage their supply chain. And a lot of technology that’s there right now is amazing. And if that was invested in it, and they had good tech and good relationships, then even though they over-ordered, they probably didn’t have to get crazy about it. And it’s probably an easier thing if they didn’t have that. And one client that I’m working with did not have that, and they ended up leaning forward. And believe it or not, they’ve got almost a half a dozen third-party warehouses they stood up with inventory sitting in and throughout their channel throughout the United States. And the fact of the matter is, and now we are at a real horror story, the fact of the matter is that they can’t move it because the demand also shifted. Their customers might have a source different or they might have an alternative, or they might have broken spec and done something different. So, the repurposing or the finding new markets for that inventory is putting a lot of stress on those companies. The company that I was talking about in the HVAC industry, they ended up because they had good relationships and a relatively tight SKU package where they really could focus on their A, maybe B plus SKUs on where they leaned forward into their inventory and their subcomponent assemblies. They actually got through it pretty well, and now they’re coming back out the other side. But if you have companies that were a little tight on cash all along and then had to lean into that inventory, it’s really tough. And the only answer that I’ve been able to come up with is either repurposing or remarketing that type of product and finding a way to move it, even if you’re moving it, you know, at cost or, god forbid, under margin in order just to get it so that your cash position gets improved. It’s a tough situation.
Yeah, and Phil, I would argue your most important stakeholder today is your supplier. And if you don’t have a program in place to have great relationships and have a supplier management program, you’re missing the boat. And you need to really, really prioritize and focus on that this year.
I think that’s a great point, Sarah. And I also would encourage, especially SMEs or even into the mid-markets, to really focus on single-source product excuses. It’s always a hard one to get because you might have a very good supplier, and they’ve been with you a long time, and you’re trying to get economies of scale instead of breaking that buy up even two and a third, two-thirds, or whatever it might be. But having a single-source supplier in this environment really created headwinds for people, even if they would have been paying a little bit more in COGS in order to have that smaller buy, they still ended up much better that they could shift the book when they needed to. And in both cases, be honest and straightforward and transparent and really develop personal relationships with suppliers because you’re exactly right, Sarah.
When it’s tough, they’re gonna. That human nature is they’re gonna take care of the folks that they know and the folks that have had a strong relationship with them. Yep, awesome. Well, Phil, thanks for being with us today. My pleasure.”
Sam, we’d love to have you introduce yourself. Tell us how you got into manufacturing and share a fun or personal fact about yourself.
Yeah, sure. Hey there, everybody. My name is Sam Russem. I am the Senior Director of Smart Manufacturing Solutions at Grand Tech. I actually got into manufacturing as soon as I got out of college. I’m one of those rare people my age who has actually been at the same company since I graduated, though, so 13 years now. I started programming PLCs on the shop floor, eventually doing project management and more technical design. And now I kind of manage a team that’s really focused on trying to find those repeatable solutions that we could know that we can deploy to customers over and over again, really taking advantage of economies of scale as opposed to kind of some of the more RFP responses and customized solutions that system integrators typically do. So still a very big part of what we do at Grand Tech, but trying to do more of those kind of outcome-driven solutions as well. My team is in charge of all that. So yeah, so it’s been a really fun ride into manufacturing. And then kind of along that path, one of my fun facts is I’ve thought about it and if you live in North America, particularly the US, and you drink or eat, I have probably had a hand in making one of the things that you have eaten or drunk. So whether it’s the cheese or sauce or beer or soda or whatever, we end up doing a lot of food and beverage work, and it’s crazy to think that our work spreads that far.
So, Sam, how are the current global supply chain issues impacting your company?
Yeah, so it’s interesting kind of from the systems integrator perspective, right? Because we work for manufacturers, we’re not a manufacturer ourselves, right? So a lot of the other things we’re talking about affecting them, we’re kind of a part of that chain. So really right now, with supply chain issues, you know, for us, a lot of it is the hardware that you need to get manufacturing lines up and running, right? So PLCs, IO cards, industrial computers, things like that, even servers can have remarkably long lead times these days. You know, something that you could get in 30 days before could be over a year now before you see it. So two kind of shifts that we’ve seen around that. One, maybe going counter to the grain of what Phil was talking about earlier, is that some corporate standards need to be broken and some of those people you’ve established single-source relationships before, they just don’t have the materials to make their supplies, right? So maybe if you were a company that really standardized on Rockwell or Siemens or something like that, but you simply cannot get those parts and you need to get the project done, you might need to kind of go out of your comfort zone and break your standard to go and keep things up and running, right? Which is scary for a lot of people and that can be a tough choice. The other thing that we’ve really seen happen is to try to pivot to solutions and ways that you can improve efficiency that have no hardware component whatsoever, right? So can we offload data into the cloud where that hardware is no longer our problem? Can we focus more on software like advanced analytics and AI instead of kind of controls and new manufacturing lines to get more out of what we have today instead of having to add more capacity? So it’s interesting, kind of the way that we have to pivot just based on the constraints that we’re faced with every day.
Awesome, thanks for being with us, Sam.
Yeah, Lori, Amazon has raised the bar in terms of customer expectations on product availability. The last order that I placed with Amazon arrived at my apartment in Austin within four hours, as an example.
Yes, what kinds of headaches is this creating for the customers that you are working with?
Yeah, well, I think this is so interesting. I mean, this won’t be a surprise to any of us, but user experience research shows that users don’t want to know the date you’re going to ship it; they want to know the date they’re going to receive it. I mean, users want us to be communicating in terms of the expected delivery date, and that’s actually pretty complicated to do, and yet it represents a competitive advantage for organizations that can pull it off. And so we’ve been working with, you know, manufacturers who are looking at how they create that better user experience. But as all of us know, as we think this through, like that means you need to know the lead time of all of your products. You have to make decisions about whether you’re shipping an order with multiple shipments or in one; you know, you’ve got you may have products that have hazardous materials that can only ship ground; you might have different warehouses that have different processing times; you might have to factor in holidays. So there are just so many things that need to be considered as a part of figuring that out. And the other really interesting move that I see in terms of like user experience is that, you know, users would prefer to be able to purchase something. And so instead of like showing it out of stock or even backordering it, to be able to purchase it but to clearly identify like the delivery time. So I can order this and have it delivered again; they want to know when they’re going to receive it. Like if I know I’m going to receive it in two to three weeks, at least I have that information and can make that decision. But of course, that requires manufacturers to be able to have those relationships with their suppliers where they can accurately predict that, even if they don’t have it today in stock, they can accurately predict when they’re going to be able to deliver that to their customer. So just a lot of, I think there’s it’s really interesting when you intersect what are the expectations of customers with the challenges that are happening on the supply chain side.
Phil, we talked a little bit about in your last question about cash flow and some of the challenges. We’d also like to get a sense from you about how you are helping companies balance inventory levels this fall. So we have all the craziness before, people have purchased large amounts of inventories; what are you seeing as best practices now, what are you recommending to people through the end of the year?
So I’m gonna kind of come up a little bit, what Lori said, as far as being able to promise an expected delivery when maybe the product hasn’t arrived, the raw materials haven’t arrived yet or the manufacturing process hasn’t occurred yet. And so now we’re into the demand planning side and then the supplier planning side, the outcome of that. And I think the number one is to invest whatever technique the company is using for demand planning today, whether it’s spreadsheets, whether it’s a basic demand plan flow, or whether it’s a more integrated system with the ERP processes that the company is running. Investing there, both in some good people who know how to do that as well as the tools for them to be able to do that, really can pay dividends because modern demand planning allows you to do what-if scenarios, and that technique is really critical because everything you’re doing is a what-if scenario. Back in the day, demand planning was kind of such a heavy lift that the demand folks would put a lot of time into it and then they would get the result and then that would kick the messages to the purchasing people and they would go. Today, it’s iterative, and so they’re looking at substitutions and they’re looking at okay if it’s seasonal, what’s really going on, and they’re able to fine-tune that. And with supplier portals, again, I’m going to go tech on us here a little bit, the supplier portals can actually have, in a lot of different ways, your supply chain participating in that where they’re keeping their lead times on certain SKUs, to Sam’s point. A lot of the companies that are really doing this well are now down to the subcomponent, so they used to be ordering a circuit board, now they’re managing the supply chain of who’s making chips and they’re actually helping their supply chain make decisions on chips and maybe make some compromises on what they’re using there or change specs, what have you. Sam, like you were talking about. So if you have the tech to really work with your suppliers and you have the tech to do demand planning, now you’ve got a really good chance to say, what am I going to believe? Because I’ve got to make a decision. Am I going to believe this was a bubble and I’m going to go back down, or do I believe this was a trough and I’m going to get back to a run rate? And once you make a decision what you’re going to believe, now you’ve got the technology to execute on that decision and have the best chance of meeting this fall or next spring, whatever your cycle is, as far as having the materials you need to serve your clients.
Sam, what’s a common mistake you see companies make as they try to integrate manufacturing with their supply chain?
Oh yeah, good question. I mean, so the technology part is something I think that’s really evolving in a lot of interesting ways where the manufacturing world and the supply chain world are just so much more directly connected. The real-time communication of data of what’s actually being made on the floor, syncing that up with the materials available to them. One thing, again, kind of the delivery piece that we’re talking about here, just maybe a little microcosm of that, but the technology interactions between supply chain and manufacturing is interesting. One of the things that I think is really going to kind of help bring it to the next level though is kind of getting out of the tech and getting back to the human element of it. Where I feel like those teams and the people that work in them are very separate, not always speaking the same language. A command or a request from the supply chain right really can be something that comes to manufacturing, and they just don’t even really know what to do with it because they’re just kind of speaking in different languages. Right, so I do think that a lot of it kind of comes to not over relying on technology and kind of thinking of the people behind the screens and making sure that you are picking up the phone, calling people, and kind of working through problems between two pretty hectic environments that can both serve to benefit from just more communication.
Lori, you have a story about a company who had good visibility into their inventory on hand, and yet they were losing sales due to poor backorder handling on their website. Tell me about this.
Yeah, well, and I think it’s interesting. Problems can occur at many points, and so even if you’ve got the data, if you’ve got systems that don’t enable customers to do what they want to do, it can still create an issue. And I met with an industrial supplier who was struggling to be able to allow customers to place back orders for products, but in particular, it’s products that they had. So, as an example, they had nine of a particular SKU, but the customer wanted to order 20. And so, you know, this supplier wanted to say, ‘Well, we’re shipping nine out today, and the other 11 are going to ship in two to three weeks,’ which certainly, you know, we’ve set up systems to do that for customers, and yet the e-commerce software they were on would only allow the customer to order nine, or the product would have to be marked as if it was already out of stock, and they would have to pre-order or backorder. And so I think, like understanding the requirements for how are you going to create a really great user experience in order to ensure that you’re enabling customers to purchase the product that you have available quickly. You know, and coming back to what I was saying earlier, user experience tells us that again, customers want to know not when you’re going to ship it but when they’ll receive it. So, if you can be providing that information on your product page to be able to communicate about product availability in terms of when they’ll receive it, that that really is part of what really creates a much stronger user experience for customers.
Oh, Lori, you had such a good answer, you left Sarah speechless. I guess I did, I guess I did. Did we freeze her? She said she was having a little bit of an internet challenge, so maybe there’s just a lag there. You go, Sarah. Sarah, are you back? Hey, Sarah, I’m back. Sorry, our internet’s a little bit spotty here. All good. Lori knocked it out of the park.
All right, so Phil, Sam mentioned a little bit about talent and…
Let me carry forward maybe with what we were already talking about then, and hopefully Sarah’s internet improves, although she’s in such a wonderful spot. It’s hard to feel too bad for you, Sarah.
I know, and you didn’t get me a tee time at Pebble Beach, so I mean you’re kind of on an uphill battle here anyways. But I spent all morning running around trying to find the best internet spot in the place too, so hopefully it’ll let us get through the next 30 minutes.
So Phil, my question for you is around talent in the manufacturing space. How is the ability of manufacturers you work with to hire and retain talent evolved during Covid and all the supply chain disruptions? And then maybe in particular highlight and talk a little bit about millennials entering the workforce and how this has impacted the companies that you’re working with.
Well, as everybody on the panel and on the call knows, this has been just a major challenge for years in manufacturing of getting skilled labor and then also dealing with the different drivers and the different culture type of norms that millennials bring as they’re entering the workforce. And now the last time I looked at data was in, I think, February, but it’s crossed 55%. I mean, it’s just driving towards the majority of workers, especially new workers coming in. So, the first thing and the process, it’s still people in processes, and I like to highlight tech. I thought Sam made a great point on don’t forget the people, on your employees, really don’t forget the people, really don’t forget the relationships. So, let’s say you’ve put in a lean manufacturing process and let’s say that you’ve also got some good technology around some of the things we’ve been talking about on this call and a lot of challenges. Engage the folks that you have with those and give them tools. How can consistently be communicating with what you’re doing, what you’re investing in, what it means to them, and how it impacts their ability to help the firm? And I’ll relate that to millennials. I think the one thing I’ve learned both from having kids in that space as well as having employees and clients with a workforce and labor in that space and talent in that space is they want to feel like they’re making a positive contribution. They want to feel like they’re making a difference and they really want to be a part of something. Those are the basic things. It’s a lot more than money and it’s a lot more than remote work. As a matter of fact, I had dinner with a friend of mine in a small manufacturing firm last night. He’s here in Wisconsin, and I asked him about remote work, and he said our policy on remote work is if you want that, you’re in the wrong company. So, a very hard policy. But he hired 20 people. He’s got, he’s had about 75. He hired 20 people in the last year, most of them in that 30, right, early 30s, and he’s only turned over two. And so I asked, I said, ‘Ron, well, how did that happen? Why that’s a very high success rate for hiring in this environment?’ And he says, ‘We engage with them. We find out their life story. We talk about where we’re going. We’re talking about how they can grow with the firm and we just make that piece feel very good.’ So, there’s a lot of ways companies can really improve retainage besides just money, but the horror story and the tough part is the price of poker has gone way up. It’s and you know, the inflationary pressures, the ability of some of your longer-term really good talented people are probably getting recruited. There’s probably some turnover there like companies haven’t had. Those are also real things that manufacturers are dealing with.
I’ll go one other thing, kind of on the plant floor, and it relates to almost every topic that we hit, and that is pick a really good fundamental manufacturing process. So, I’ve used lean the most in the different ones. I’ve used Six Sigma a few times and a few others that you know that were more quality-type processes. But I found lean to be something that does a few things. Engages the employees in real improvement, especially if you’re doing one-minute lean, where their ideas are driving change in their particular area of the facility. Very powerful. And the second thing is you’re bringing those cycle times down. So, you’re managing the inventory or you’re able to get to where Lori’s trying to get some of her clients, of being able to have a great customer experience because that product is making it from raw material inventory to finished goods to out the door in days instead of weeks or months because the manufacturing process is good. So, that draws your employees in, and it also solves a lot of other very real issues that are facing manufacturers.
Phil, you talked about retention and what you can do once you have the millennials kind of keep them engaged. What have you found that’s working to actually attract them in the door? How do they see your job posting? How are they getting them to engage and go through the interview process? I think finding talent is another key challenge other than just the retention piece. Right, great question, so first of all, have your marketing people write your job postings. That’s—I love HR, I love the engineers, the way they write a technical job posting, right? That’s great, but a technical job posting should be written by somebody who’s also doing blogs and is also interacting directly with folks that are out there in their language, on their level. Sarah, you mentioned, make it fun, have it, you know, that make it interesting and let your culture really show. And then the onboarding starts right out of the gate. It starts right out of the gate of really connecting with the people as they’re coming in. And use your best millennials, your best employees, your superstars that are in the business. Another kind of breaking the norm, use them in the interview process. Don’t just have it be the supervisor and maybe a peer and someone from HR. You know, let them get to know the team, let them get to know some of the other people, especially the folks that have that excitement about the firm and the business. Hugely impactful for closing. And the third one that I will say on that is go back to your resource, which are the people in your business that already are excited to be there, that are the ones that are the influencers, that are the ones that you know are going to change, the ones that you always bring the work to because they always get it done. So, they’re busy, have them help you with messaging and referrals, have them help you how do you connect? And then the Glassdoor and the other things that you can do, just technically make sure that your brand isn’t out there and that you don’t have things hanging on your brand because these folks are going to look and make sure that you’ve done your work on how do we look externally with all the media and social sites that are out there. Yeah, I was gonna say a lot of the manufacturers that we work with have no social presence, and one of the first things I’ll do is when I go look at a website, I’ll go look at where they have their social media presence, what do they have listed, and I think it’s a huge miss for manufacturers who are trying to recruit top talent if you don’t have a presence on some of the social platforms and, in particular, a video content strategy, especially if you’re looking to recruit millennials.
So produce video content, have your team members, have your millennials in that content, because that is a great way to show your culture and why somebody should consider joining the team. And a quick add to that, Sarah, what is your firm, product services culture? What have you done to make the world a better place? What’s your environmental and your strategy in order to have your facility be environmentally sound? And brag about that stuff. And then the third one is, what are you doing from a social standpoint? A lot of these manufacturers have really, really great participation in charitable causes. That’s super important stuff to have out there front and center as people are evaluating whether you’re the type of company that they want to work with. And probably you have a really good environmental policy for your facility. You know, where you’re recycling, where you’re energy efficient, you’re putting LED lights in. You probably, your product and service does make the world a better place. All you have to do is make sure that that story is being told to folks. Yeah, and I would just thumbs up that from my perspective. I think the organizations that are the most successful at hiring really are thinking about how they share their vision, where they’re headed, you know, to your point, Phil, how they’re contributing to the world. That’s why people choose to go work at a place.
It may not be that they’re the top dollar in terms of salary, but they really want to have something that is meaningful work, a place of belonging, a place that they see themselves growing in their career, and a way for them to contribute. And, Sarah, to your point, I do think like video and social presence, like thinking about you know how you can be in the places that those candidates are. It really is a marketing effort, marketing for talent. There’s a lot of cool content and video opportunities at manufacturers, so take advantage of that, show your machinery, show your team in action, show your products being produced, show your products going out the door. So, I’ll give you one story on that, and that is a company that does every employee within the that comes on board within the first whatever it is, 60, 90 days, they’re asking if they’re on the plant floor, they’re asked to come up with one idea for their area that makes their area better and make a videotape where they’re telling the story of their idea. And there’s no approval, they’re allowed just to implement it, you know, they—it’s there’s a lot of trust there, and those videos are posted on this manufacturer’s website. So you can go see the employees telling their story of what they did to make their area a little bit better, and there’s dozens of them. Very impactful stuff and also so simple to do, so easy and simple to do. That’s a really cool story. And then, you know, the other thing that’s—this is kind of making me think about too, right, is that it should be easy because it should be varied too, right? These are things that you guys should call. This isn’t trying to win— Sam, I think you’re having a poor internet connection as well. All right, well, we’ll come back to you, Sam. We’ll let you get unfrozen. Lori, question for you. Tell me about the situation you encountered where a manufacturer was losing money due to poor data architecture, data integration, and code. Yeah, well, I will, and this story, you know, in some ways I feel like it comes back to what Phil was talking about about talent, in some ways, in that in many manufacturing organizations, they don’t have a lot of—if they’re looking to digitally transform, many times they’re limited in the talent that they have internally to make that move. And in this instance, it was a manufacturer that we had a sales opportunity with and we lost it, and they went to work with another firm on implementing their digital commerce solution. But the firm that they worked with, and this is really common for manufacturers who don’t necessarily have a lot of experience in implementing e-commerce sites, they went with a company that really was more of a design marketing focus than the intern and didn’t have as much technical expertise. And in the end, they had a really nice-looking site, but you actually couldn’t order most of the products. And it came back to you that there were issues with that.
What consequences of this acceleration of tech solutions is this causing? Right, and this is interesting because I think before all of these disruptions, there was a gradual, and, Sam, you’re in the space for sure where you’re seeing it from the process control side, there was a a gradual increase in automation, and it was probably accelerating slightly, but it really hadn’t—it especially in mid-market, it really hadn’t fully taken hold. It was—it was still relatively gradual. And then, in with the clients that I had and the companies I was working with, it froze. All right, it froze because of just—okay, wait a second. You know, how’s the business conditions, what’s really going on? And if they are still doing something, they may be finished from there. It’s a mixed bag. I have—I have manufacturers that have looked at this and said, okay, this labor issue is never going to get better, and the inflation’s only going to make this more expensive if we keep putting it off. Let’s go ahead and invest in automation. And I have other clients and companies that I interact with that are saying, you know, there’s so much uncertainty, not sure. So, let’s go to the ones that are accelerating and implementing. The unintended consequences or consequences of this is, first of all, it’s been my experience at your first swing of the bat with automation on the plant floor is not going to be what you’re hoping it’s going to be. It’s going to be, oh, if you did do well, it’s going to be…
Okay, all right. That’s if you did well. If you didn’t do well, you’re wondering what you’re going to do with that funny-looking weird, you know, robot thing that’s sitting over there or maybe that material handling thing that you automated a little bit.
So, first of all, go in with your eyes open, crawl, walk, run, so that you don’t end up getting a head on your skis and trying to do all of this automation that’s supposedly going to help you, just to have it be either a mess or something that didn’t satisfy you because you’re going to make adjustments along the way.
The first consequence is misses as people are investing in that, and then either, well, okay, we’re not going to do any more, or what are we going to do to try to fix this? And then the second one is back to the people. People are really smart, and they’re particularly observant about something that might impact their livelihood, right?
So be as transparent as you can and talk openly about what you’re doing on automation and what the plan is, and especially with your folks, if they’re direct or especially indirect type of folks on your payroll, to how it could offer opportunities for the company to grow. How those opportunities always mean that good people have a spot, and how maybe there’s opportunities if it’s going to affect them where they can be trained to do other things in the firm.
A lot of the tech that I’m involved in, on ERP or supply chain or stuff like that, opens up tremendous opportunities for good employees to do other things for the firm, but there’s also going to be some attrition due to that. And so, it’s good to find your voice on how you’re going to speak about that attrition.
I’ve seen manufacturers make a mistake to say nobody’s ever going to lose a job here due to automation. First of all, the employees know it’s not true, and second of all, it’s not true. So, it’s really best if you figure out the right messaging and language to say, ‘This is what we’re doing. Yes, there could be some impacts, but the impacts are going to be positive because this is where it’s taking the business.’
And then don’t rush into automation, even if someone is telling you it’s better than sliced bread. It might not be that well sliced. I would also argue it’s really important for manufacturers to prioritize change management in their budgets. So many times, I see that get cut if there’s financial challenges in a quarter and they’re looking at implementing new software, but just buying software does not solve a problem. You have to get the team engaged and involved in the process, and change management is actually sometimes more important than the software that you buy.
I totally agree with that, Sarah and Phil, what you’re saying. And the most, like, I see a lot of things like change management or continued iteration after the initial installation or things like that do get slashed out of these budgets. But the most expensive thing you can do is have a project that doesn’t work and doesn’t actually deliver value, and you don’t actually get anything out of it. You just essentially flushed all that money away. Right, so absolutely, all that planning, making sure you’re putting your money in the right places, not spending money to spend money, but spending the right amount of money for what you want to do and the value you hope to get for it. This something should always be considered.
So Sam, would like to ask you, what’s the biggest train wreck you’ve ever run into on a project in your 13-year career, and how the heck did you overcome it?
So, it is on an individual project. So, this is kind of more of a direct story, right? But we were doing a big server cut over for a food and beverage manufacturing facility, upgrading every server that ran everything that went on in that plant from an older version of Windows to a new one, new hardware, new everything. This cutover happened to be scheduled during Super Bowl weekend, at a time where the IT teams’ home team was playing in the Super Bowl. So, at two in the morning when we ran into an inescapable thing that we needed the IT team to help us out with and couldn’t get any of them on the phone, we had to roll back. And we had to, like, sit there and say, ‘Actually, make this kind of very hard call and say, okay, if we can’t get the right people, we can’t get the right resources, this clearly isn’t going to get done. Production is king, we gotta keep things running.’ We’re spending the next six hours undoing everything that we have done and we will all figure out how to deal with this kind of the next morning when people are back, right? So, it was a tough call that we all had to make. It was crazy to do. It was a tall task to try to roll back all of that work in just six hours to get the plant back up and running again. But it was a really great lesson in kind of the value of planning and thinking of some of those external factors that might come in and hit your project that you weren’t expecting, but also just being willing to make the hard call. Right, if we had said, ‘Like no, we’re going to kind of push this through,’ that plant would have lost at least a day of production. It would have cost a lot more than it took us to come in for another weekend and take care of it again some other time, right? So, just kind of being willing to make that hard choice was, yeah, it was a challenge.
Phil, one of the themes that I’ve noticed you talking about today is about the challenges with forecasting and predictions and planning. What are you seeing are the biggest forecasting challenges that you and your clients are experiencing, and what are you doing to, I guess, prepare as much as possible or put something in place to have some sort of a solution?
So, I’m going to come at that question from a little different avenue, and that is, start with your SKUs, start with your product, and really look at your recent data and look at what’s really going on with the individual product areas. What really is a SKU, what really is a BSKU, what really is this the slow movers, and where is the recent trends driving the demand for those products? As was mentioned earlier, focus on what matters. You probably, if you got, you know, four thousand, five thousand SKUs, that’s too big of a problem to try to solve, especially if your business is very bumpy and has been very bumpy the last several years.
So, focusing on the ones that matter and saying, ‘Okay, here, we’re not going to lose on this front. We’re not going to lose in this market space with these products, with these SKUs on that front. That’s going to be a win. We might lose on some of these other ones, but we are going to win here.’ That thought process is super helpful. Then get your best folks gathered around whatever tech you have and really talk it through. What do we really think is happening? What do we think is going to happen? What seasonality, what new products, what new markets, whatever that is. And then this last one is where it takes some courage. Call a play and run a play. You can make yourself crazy overthinking this thing. At some point in time, you got to say, ‘Here’s our plan and lean into that plan,’ even if you know it’s only going to be 80 percent good. If you are constantly going back and forth, ‘Well, maybe,’ and you start taking that outside into your supply chain or into your plant floor planning or your resource planning, you’re not going to fix the problem. You’ll probably, instead of getting an 80-plus percent great result, you’ll be down at a 60 percent great result because you were in that, you just weren’t sticking with what your team said, ‘This is what we believe we need to do.’
So, Lori, one of the big things in your space, when I say your space, I mean e-commerce in particular, is preparing for the holiday season, which has already started. What do you anticipate is going to be the biggest challenge for manufacturers this holiday season in particular?
Oh, that’s a big question. Well, and, you know, so for some of our customers are more in the B2B space, so they don’t have as much holiday fluctuation. But I would say, you know, I think one of the greatest challenges when it comes to the holiday season is really to be ready from a fulfillment perspective in terms of, you know, and it really comes down to preparation in terms of systems and… But, you know, even most organizations don’t have the perfect tech stack in place or the perfect systems there. And I think in just coming back to some of the themes that I hear many of us going back to repeatedly, I do think that while the technology is really a key part of making sure things run smoothly, your people and team can pull together to really often problem solve around it. And so, it’s a matter of communicating well and creating transparency with the team about what the highest priorities are, so that they can really be successful with it.
So, I think having clarity for teams going into the holiday season in terms of what are the highest priority products and what customers you’re targeting, and then determining how you’re best gonna support that. What about Lori from a supply chain perspective? Making sure that companies are able to get the product or parts or materials that they need, so they actually have something to sell.
Absolutely, yes. Well, that often isn’t on my side of the work, but that is absolutely critical. Yes, so I’m sure others of you can speak to that better than I can.
Yeah, I think, Phil, you mentioned earlier about the challenges with single sourcing, and I think this year, in particular, manufacturers need to really, really put some thought into having diversified suppliers across the board. So, when you are ordering and preparing for anything this year, but in particular for the holiday season, that you have suppliers in place in case something goes wrong.
Yeah, and you know, again, I’m old school on a few of these. A proven, tried and true people and process, right? The process that you have of setting up a new supplier and getting them approved and getting any certifications or quality standards and getting the first article, whatever that process is, there’s a lead time on that process. And you can lean that out. And again, if you put the good people, empower them to what was Lori was leaning at in Sam earlier, that you get good people around that empower them and say, ‘Here’s the why. First of all, we really do need to get, you know, these 100 SKUs that were now or substrates or whatever it is that we’re not buying from this one really good supplier. We really do need some options.’ And so, it’s important. Let’s get the process of approving that supplier really buttoned down tight and see if we can do it quicker and more effectively so that we can stand up more of them sooner. Especially from your previous question, if you’re already headed towards a holiday or whatever your seasonal blip is, you know, some folks are in a spring seasonal blip. You know, use those off period times of your seasonal business or whatever your trends are, your monthly trends are, to improve the floor and to improve your supply chain, so that when you get to the when it’s hot and heavy, you know, you’re still doing some of that. But hopefully, you’re reaping the benefits of doing that.
Sam, what do you think the next train wreck in manufacturing is going to be?
Oh, what, you want to end on a light note? Sam, you get all the train wreck questions. You know, we really appreciate you on that one. Yeah, no problem. I don’t know what that says about me, but anyways, no, so actually, I mean, one of the things that’s come up a lot that we’re talking about a lot in our business with a lot of our customers is cybersecurity these days. I mean, if you are a manufacturer that is already hurting because of supply chain challenges and inflation and labor challenges, a cybersecurity issue could be the thing that takes you down to the mat. And I’ve seen even in the best of times, an intrusion can lock down and shut down facilities for days on ends or collect confidential information, things like that. It can be really scary. So, now when things are a little bit rougher again like it can be really threatening to a lot of businesses. And it’s something where we know that there’s been an uptick due to global troubles. I think it was they’re they’re saying I believe that they say it’s a maintenance outage at this point, but I’m actually in Ontario right now where there was just a huge internet disruption that took out the internet for half of the country for almost an entire day, right? So, again, maybe maintenance, but again, a lot of people are also thinking that could have been a cybersecurity issue too. So, really making sure, especially if we’re talking about offloading workloads to the cloud, more AI, more kind of analytics, focusing on software projects like I had mentioned earlier might be a good idea. If you can’t get all the hardware in, doing that with cybersecurity top of mind, I think, is a good way to avoid something that could be really catastrophic.
Oh, we have a frozen Sarah. Hopefully, that remedies. Yes, well, and I totally agree with you, Sam, in terms of cybersecurity. I mean, obviously, it’s a requirement all over the place. Oh, Sarah’s back. Thanks for filling in though. I appreciate it. Yeah. Oh, maybe she’s not back. You know, we lost her… And I actually have a client who just, and with the front-end website and the through the credit card, you know, they got slammed, you know, three thousand and four thousand and ten thousand, you know, just throwing the orders at it and just and brought it down. And they had a nice recovery plan, but when you do your recovery plan, that’s disruptive.