How to Know If You're an Expert

Posted by Thomas Petersen on Mon, Jun 04, 2012 @ 09:00 AM

World Class and Other Nonsense Statements

World Class ManufacturingSomeday the history books will document the life and times of the person who drove out the term “World Class” from the business world lexicon. This nauseating phrase is typically found in close proximity to a statement involving taking something to the “next level”.  It is too much to hope that one individual could slay both these sayings, but one can dream.

The 80% Rule

One of the challenges in life is to objectively judge your level of achievement in a given discipline. Know too little about a subject and it’s easy to think you’re an expert, hang around experts in the field and you will think yourself a dunce. Why should you care to know? Becoming a leader in anything worth leading takes enormous resources.  This is true of people and companies.  It’s a position that few will truly attain; it’s a pursuit better left to the unbalanced. So, my suggestion is to strive for the 80% mark, declare victory and move on. The last 20% of any proficiency takes on logarithmic proportions, leaving little time in your life for the truly important things like reality television viewing.

The Proficiency Road MapPath to Expertise

So, how do you know when you reach 80% proficiency? Like physicists looking for dark matter, we will not be able to tell directly, we need to look for signs.  Here is my easy guide to understanding achievement:

Petersen’s Road Map to Excellence Stage 1: Unconscious

You can only tell this one after you passed this milestone. This is the stage when you didn’t even know there was a discipline.

Petersen’s Road Map to Excellence Stage 2: Overwhelmed

Somehow you have stumbled into a field of knowledge and skill and realize that your sole understanding of it is to know that it exists. Take heart, this is actually a big leap forward. The stage can best be described as a whirling, swirling, mass of unconnected points. If it were a road you would get run over the moment your foot touched the street.

PetNovice Learnerersen’s Road Map to Excellence Stage 3: Novice

You have connected a few of the dots, you are trying out some rudimentary tasks and you’re starting to ask questions. It's not entirely clear how things fit together, but you see how some of the pieces fit and understand the general direction in which you need to head. If you were a skier, you have just made it down the bunny hill. It’s a time of fear and excitement.

Petersen’s Road Map to Excellence Stage 4: Learner

You have decided to make a commitment to get better. You will know you’re in this phase because it goes on forever, it’s painful because of all the mistakes you make, and snarky people that are more advanced than you will make condescending remarks behind your back unless you are a young child.

Petersen’s Road Map to Excellence Stage 5: Mirage

Path to ExpertiseYou have spent enough time working on your discipline that it seems like you know something. Many people will be impressed with your proficiency and you will begin to believe them. Unfortunately, you have not progressed enough to warrant the attention of anyone who is actually proficient in the field. This is the most dangerous stage because it’s easy to remain here forever, blissfully unaware. However, it’s not a bad place to stop if your life expectancy is growing short.

Petersen’s Road Map to Excellence Stage 6: Holy Shit

This is the moment when you realize that after countless hours of investment, that not only are you not an expert, but the distance between you and a true expert is so vast you can’t even believe it. Accidently encountering a true expert in the field typically precipitates this realization. While this is a discouraging moment, take heart in the fact that most people will never get to this point. It is at this moment you have a choice: dig in or start drinking and return to stage 5. Don’t kid yourself; the last one is not a bad option. It’s unlikely anybody at the bar can refute your claims.

Petersen’s Road Map to Excellence Stage 7: Practicing

Much like the learning phase, this period takes forever, has some highs and lots of lows, and devours all of your free will. You will know you have reached this stage when the experts tolerate your presence, because you are useful as a servant. You will have mastered most of the rules and will have an understanding of why the difficult problems are difficult. You will also begin to realize that your own natural abilities are limiting, but you have achieved weary acceptance of this fact. You will also notice more lines on your face.

Petersen’s Road Map to Excellence Stage 8: Space Between the Lines
In any field, a privileged few will reach the point of not only mastering the known set of rules, Expertisebut will see the spaces in-between. They are the true experts, the innovators. Don’t be discouraged that most of them are 27 years old. When you reach this level of proficiency, everything slows down; you see all the spaces still to be colored. You can explain advance concepts in ways that make their existence known to others. You can bend and shape the field. While you may or may not be humble about your lofty attainment, you will certainly know why humility is warranted.

Are We There Yet?

So, where is the 80% point? It’s hard to say. If it’s in relation to your own abilities, you will not know until it’s over and your pictures are up on the poster board. If however, it’s in comparison to others, iPath to Expertiset’s the day you discover stage 6. So, how does this information make you more money or your company more competitive? Because it’s very hard to succeed on the basis of a lie. And in the business world that lie is usually accompanied by the phrase “world class”. My own personal journey is best summed up with the phrase; “Bartender, what do you have on tap?”

 

About the AuthorOperational Consulting

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

 

Tags: leadership, world class, expert, management consulting

Supply Chain Secrete #38: Supply Chain Leader Needed

Posted by Thomas Petersen on Mon, Mar 19, 2012 @ 09:15 AM

The purchasing profession has changed rapidly over the last ten years. SuppStrategic Sourcingly chain leaders were once only found in large organizations, now they are found in companies of all sizes. The speed of this change has created a skill set gap within the profession. Today’s supply chain leaders need to have experience conducting business internationally, analytical skills to create supplier networks, confidence in dealing with the senior leadership teams, and sales skills to sell their vision. CEO’s that stumble staffing this position can find their companies losing their competitive position in short order. So getting it right is critical to health of the organization. Here are three signs that a change might be needed;

No Formal PlanStrategic Sourcing Strategy

Proactive teams have a plan. If your supply chain group does not have a document that includes goals, objectives, metrics, and data analysis there is a problem. Your leadership group needs to be driving their agenda with an emphasis on cross-functional alignment. This means overcoming resistance from other departments that may be uncomfortable with the increasing influence of supply chain. Having a well thought out and documented plan is the cornerstone of building alignment inside and outside the organization.

Rarely Uses Analytical Data

Strategic Sourcing DataIf your team rarely presents information that goes much beyond spend and savings data, chances are the leader isn’t comfortable with analytical data. Designing supply chains involves understanding the interdependence of multiple variables including cycle-time, cost, performance levels, and risk to name a few. The team’s analytical techniques should evolve as the organization matures and the company’s business changes. Your team should have a package of analytics along with a technology plan for improving the responsiveness of their supply chain.

Supply Chain LeadershipAversion to Plane Tickets

If your supply chain leader has fewer frequent flyer points than your director of sales, it may be time for a change. A supply chain is a dynamic entity; it requires constant monitoring and change. Leaders must travel to understand the issues in the field, sell their vision, and build alignment. This can’t be done by e-mail or phone calls. In the past, the profession was frequently inward looking and reactive. Changing this dynamic takes a leader with a positive spirit who is comfortable with change, and understands the importance of communicating his vision.

Supply chain leadership is a fundamental ingredient to improving a company’s competitive position. If your team lacks a formal plan, rarely presents analytical data and spends most of their time inside the factory, then it’s time to make a change.

About the AuthorStrategic Sourcing Consultant

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: supply chain management, Strategic Sourcing

Supply Chain Secrets #103: Part Names Matter

Posted by Thomas Petersen on Thu, Jan 19, 2012 @ 09:05 AM

Strategic SourcingApparently, I have upset the powers that be in the universe. I know this because I spend a significant portion of my life looking at manufacturing part descriptions entered into ERP systems. I do this not because I am a masochist, but rather I am trying to save my clients money and I need to know what they are spending it on.  The part descriptions they enter either represent an outpouring of creative expression or they are the result of a poorly thought-out haphazard process deplored by those people chosen to enter the data. 

ERP SystemsTaxonomy for Supply Chain People

The name field is significant and it is used by engineering, operations, supply chain and finance. When developing your part description standards, think big to small. Use the same approach that biologists take when classifying insects, simply skip the Latin.  A screw is part of the fastener family, it’s a screw, it attaches wood or metal, it is made from a specific material, it has a length and thread classification. You get the idea. Develop a name guide for each production commodity and the order of description.  Use commas to delineate the description. 

Don’t Forget About the BrandsProcurement

Often times engineering will specify a specific brand and model number. These parts will be purchased through a distributor. Distributed parts are notoriously difficult to negotiate because distributors work on thin margins, sales regions are protected and manufacturers try to enforce pricing uniformity. The best chance to reduce the cost of these items is by negotiating directly with the manufacturer. To do this successfully, it is helpful to know your spend by manufacturer. You may not want to use the description field to capture this data, but find another searchable field in your system and input the manufacturer, brand and manufacturer’s part number.

Slow and Steady Wins the Race

Developing a logical naming system will save your company money. It is a big effort to straighten out thousands of descriptions, so work on it over the course of a couple of years. In the end it will allow you to negotiate better pricing and spend less of your waking hours on earth trying to discern the meaning of LAP-5-DIS-S00-P009-XR 1/4.

 

Strategic Sourcing ConsultingAbout the Author

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: Strategic Sourcing, product development, continuous improvement, procurement

Supply Chain Secrets #20: Sourcing Internationally Part 3

Posted by Thomas Petersen on Thu, Jan 12, 2012 @ 09:00 AM

In Part 2: Sourcing Internationally, we covered how to prepare and execute the quoting phase of a strategic sourcing event.  The next phase is to qualify and select a supplier. Put on your combat gear, this can get messy. A thick skin and perseverance are essential for this phase. Switching to an international supplier and working through the associated issues will upset some people. Working through the selection process as a team and sticking to a rigorous process will help you overcome this resistance.

International Sourcing Step 11: Due Diligence

Once you have narrowed your field down to a few suppliers, send them an e-mail letting each know that they have been selected as a finalist and provide a timeline for the next steps in the Beauty Pageantprocess. This strengthens the supplier’s engagement with the due diligence phase. Now it’s time for the swimsuit competition. Provide the supplier with a list of items you would like them to complete. This may include a company presentation, completing a self-audit form, references, photographs, and details of their quality control process.  Look for additional feedback on the supplier from online forums or sourcing databases that rate suppliers. 

International Sourcing Step 12: Getting a SampleInternational Sourcing

Provided the upfront charges are not cost prohibitive, getting a few samples from a few suppliers is a good next step. Pick a several parts that are representative of the items being sourced. Send the supplier documentation and a sample part when placing the order. Set up a conference call to answer any questions after receiving the sample.  Sending a physical sample is a good idea anytime you order a new part from an international supplier. A “golden sample” reduces misunderstandings and improves the supplier’s chances for success.

Keep in mind samples can be misleading. A sample that meets your requirements is a good step, but doesn’t ensure the supplier will be a good selection. Conversely, a sample that is out of specification could be the result of a miscommunication rather than a lack of capability. What the sample will do is provide a foundation for additional engagement and discovery during the qualification process.

International Sourcing Step 13: Supplier Visit

International sourcing requires travel; it is very difficult to qualify a supplier without showing up. Some companies try to avoid this expense and simply hope for the best. This is a mistake.

The cost of a trip is short money, compared to the potential savings and the cost of getting it wrong. There are a number of issues to consider when setting up your visit; I will cover those in my next blog.

International Sourcing Step 14:  Negotiation

We have qualified our suppliers and we are prepared to make an award. It’s time for negotiation. International suppliers expect this step. The trick is to know when to say when. Sometimes suppliers do not have a good handle on their costs. They will win the business and realize that they cannot make money at the price they quoted. Some will come back and ask for an increase, others may skip steps in the manufacturing process. Once you have a final price, do some work to validate the supplier’s cost and profit. Have the supplier work through these details with you. It may mean that you have to make adjustments to your pricing to ensure that you are getting the product you expect.

No SurprisesInternational Sourcing Step 15: Develop a Detailed Implementation Plan

Cutting in a new source takes careful planning. Develop a detailed implementation plan by getting inputs from your cross functional team. The goal is to avoid surprises. This includes communicating with your incumbent suppliers. They will not be happy, but they will respect the fact that you didn’t blindside them. In general, do not shut off your current supply of parts until you have received at least one qualified production lot from the new supplier. For some more complicated parts you may want to consider splitting the business between your incumbent and the new supplier.

International Sourcing Step 16: Communicate, Visit and Adjust

International relationships take care and feeding. Inevitably, problems will arise during yourInternational Sourcing relationship. Developing a solid relationship with your counterparts will help you successfully navigate these issues. Once things are rolling it becomes easier to let the communications slide. Avoid this trap by setting up an annual communications plan with the suppliers. This should include one or two visits a year. If the supplier can travel to see your facility, you should encourage them to do so. You may want to entice them by paying for their hotel room. Face to face meetings are the foundation for a strong relationship.

Next in International Sourcing: Supplier Visit Travel Tips


Strategic SourcingAbout the Author

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: Strategic Sourcing, sourcing strategy, international sourcing

Supply Chain Secrets #19: Sourcing Internationally Part 2

Posted by Thomas Petersen on Thu, Dec 22, 2011 @ 11:00 AM

Supply Chain Secrets #19: Sourcing Internationally Part 2

 In Part 1: Sourcing Internationally, we covered how to get the process going. Now that we have developed our plan, squeezed our boss for a budget, identified qualified suppliers, sent them the bid instructions and confirmed their interest, what do we need to do next?International Sourcing

 International Sourcing Step 6: Quoting Template

Provide the suppliers with a spreadsheet quote template to use. This makes it easier to drop in their quotes for comparison and it specifies the terms of the quote. Tell the supplier not to change the format when inputting the data. Some suppliers will insist on providing their own quote form, have them send both your template and their form. Typically, I ask the suppliers to quote without transport or FOB their dock. This takes one variable out of the mix. Also, let the suppliers know that if they have an exception to any of your terms to clearly state this in the quote. You don’t want them not to quote because they didn’t like your payment terms. There is usually a way to negotiate past the differences later in the process.

International Sourcing Step 7: Develop a Sourcing Workbook

Put together a sourcing spreadsheet workbook. I like to create tabs for the;

  • Sourcing schedule
  • Supplier requirements and commercial terms
  • Part data
  • Quote template
  • Contact information contacted suppliers
  • Logistics cost estimate
  • Quote analysis by part
  • Quote analysis overview

It may seem like more work than is necessary, but you will use this workbook over and over again for other bidding programs. It will be a valuable tool and gets better each time you use it.

International SourcingInternational Sourcing Step 8: Hound the Suppliers

Whether a supplier is domestic or international, they seem to lose their focus quickly. Do not sit around waiting for their response. If they have not replied in a day, check to see if they received your information. If they don’t ask any questions about your bid package, this is a bad sign. Check in with them to see how they are doing with their quote and when they expect to have it completed. Persistence is important in moving the quoting phase along. Now some of you will think, if I have to hound the supplier, then I don’t need him. Sometimes this is true, many times it is not. The supplier doesn’t know you; they do not want to waste their time.. Sometimes their reluctance is simply part of the courting process.

International Sourcing Step 9: Have More Suppliers in Reserve.

Typically engage 3 to 4 suppliers in the initial quoting phase. It’s hard to chase around six suppliers at one time. If you are not getting the right level of responses from one of the suppliers, add a couple of more into the mix. Have these suppliers identified ahead of time. This gives you a better chance of having quotes to compare. You do not want to get through the process and yield only one quote.

 International Sourcing Step 10: Quote AnalysisInternational Sourcing

At this point you should have a number of quotes in your sourcing workbook. First step is to normalize the quotes by increasing them with the landed logistics expenses associated with their location. Remember not all countries are created equal with regards to logistics costs. You may need to get a quote from a carrier to develop your estimate. You may also want to account for any differences in the quoted terms. The goal at this point is to narrow the selection down to a couple of suppliers for the due diligence process. It’s also a good idea to review the initial quotes with other members of the team. Get their opinions. This helps to gain support for your project and avoids problems when you are ready to make an award.

International Sourcing Part 3: Let’s make a deal....

About the AuthorStrategic Sourcing

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: supply chain management, Strategic Sourcing, sourcing strategy, international sourcing

Supply Chain Secrets #18: Sourcing Internationally Part 1

Posted by Thomas Petersen on Fri, Dec 09, 2011 @ 11:27 AM

International Sourcing BudgetEvery manufacturing business is faced with sourcing critical production components from international suppliers. This is rarely an easy process, however, the difficulty can be compounded if management underestimates the investment required to be successful. Ultimately, it will involve an Amex card, plane tickets, Fed-X bills, bad Skype connections and some dead ends. Here are some steps that should ease the pain.

International Sourcing Step 1: Type Up a Plan

The first step is to write down your plan, include other groups in this effort. This will help create the buy-in and support. Start the document by stating the goals of the project. Identify the key success factors, sourcing criteria, technical specifications, task list, timeline, and roles and responsibilities. Develop a budget; this may come as a shock to your manager. Stick to your guns, management is likely to deny that the project requires any kind of expenditure. This is wrong. Make your case and the value of the expected outcome. They will eventually see the error of their ways or they will fire you. Better to go down swinging I say. Other things to consider for your plan include a qualification process, risk and risk mitigation strategies, a total cost worksheet model to compare quotes, and a PowerPoint presentation for management and other interested groups. Remember to update your plan during the course of your project.  


International Sourcing SpecificationsInternational Sourcing Step 2: Use Industry Standard Specifications

Finding the right supplier requires technical documentation. Take the time to develop component specifications in an industry standard format. Review the specifications suppliers publish for their products. Make sure you mimic their format. This means busting out the metric system unless you are sourcing in England. This can be a tricky step. Simply converting a drawing into metric doesn’t always work. International suppliers are going to use metric stock. This can impact tolerances, the manufacturing process and product cost if this step is not done correctly.

International Sourcing Step 3: Get Engineering InvolvedInternational Sourcing Engineering

Engineering support is critical to successful international sourcing. International sourcing is a messy process, often times engineering will flee at the first sign of trouble. Make sure you line up the organizational support required to prevent this from happening. Often times it is necessary to make changes to your component design and possibly your product to accommodate a component that can be sourced abroad. Tolerance studies and tradeoffs require engineering time and input.

International Sourcing Step 4: Develop a Supplier Profile

There are hundreds of thousand of suppliers in the world and all you need for your project is one good one, maybe two. Develop a list of supplier requirements. Prioritize the list; even weight the attributes to develop a supplier-scoring matrix. Your supplier attributes matrix will allow you to quickly whittle down potential suppliers to a more manageable list.  This step will also help to reduce some of the subjectivity of the selection process.

International Sourcing Step 5: Start the Investigation

This is step where people like to ask others about the suppliers they know. While this can be helpful, it is more likely to lengthen the process and lead to more misses than hits. Conduct your initial research online. Start contacting suppliers directly and begin a dialogue.

International SourcingInternational Sourcing Step 6: Develop an Introduction Letter

Your supplier introduction letter should do three things; explain why the inquiry is important to the supplier, introduce yourself, and explain what you want them to do. The first objective is obvious, describe your company in a compelling fashion and detail the business opportunity being presented. The second objective is to humanize the inquiry. International business tends to be more personal than domestic business. Give them a reason to engage you as a person. You will be amazed at the difference this approach will make in the responsiveness of a supplier. Lastly, explain what you would like them to do next. Be specific. Give a single estimated production volume, target pricing, sample due dates, estimated production ramp-up date, etc. The more specific you are, the more real the opportunity feels to the supplier.

International Sourcing Part 2: You Have their Attention, Now What??......

About the Author

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Startegic Sourcing ExpertMassachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

 

Tags: sourcing strategy, international sourcing, supply chain development

Lean Organizations: Stop the Madness of Performance Reviews

Posted by Thomas Petersen on Fri, Nov 18, 2011 @ 12:14 PM

In a ritual similar to getting children to eat brussel sprouts, human resources badgers their managers to complete their obligatory performance reviews. The only Lean Organizationdifference is that eating brussel sprouts has some benefits. The review process has three main attributes, it displays that your manager can only remember your performance over the last 3-months, the goals that were laid out at the beginning of the year are no longer relevant, and raises are woeful. A typical performance review takes several weeks to recover from, longer if you a not a red wine drinker. So what should companies do instead?

Lean Organizations Focus on Where Improvement Comes FromLean Organization

If you want to encourage people to improve their performance, help them find opportunities to gather new skills and ideas. Instead of a spending time on performance reviews, develop a Career Development Plan for each employee. Review the plan at least a couple of times a year and make changes as necessary.

Lean Organizations Pay for Skills

If the idea is to give everybody a cost of living raise, simply do that on January 1st. Don’t bother meeting with everyone to try to convince him or her why 3% is a really a good raise. It doesn’t work. Raises over and above the cost of living should come for the acquisition of new skills and responsibilities. Do not tie raises to the review process. The compensation discussion will derail your conversation. Use bonuses to reward outstanding performance, it encourages people to keep it up and prevents a spiraling payroll based on deeds of yesteryear.

How Well Do I Play with Others

One of the most important tools for giving feedback to people is a 360- review process. ThisLean Organization provides a more balanced perspective of how an employee is working as a member of the team. It’s hard to ignore feedback when it comes from multiple sources.  This type of feedback can help people make adjustments to their work habits to improve their effectiveness in the organization.

Lean Organizations Know When to Say Stop

Many managers use the performance reviews as a chance to tell an employee what is driving them nuts. Regardless of the delivery, talking about the three things that a person could do better, rarely has the intended consequences. It mostly makes an employee more nervous and less confident. The better approach for giving constructive feedback is to provide it when an issue arises. This gives the issue relevance and does not feel like an avalanche of disappointment. The same is true when an employee does something above and beyond. Praise them in the moment and remember a gift card goes a long way as well.

Stopping the performance review process takes courage and perseverance. If you’re successful, you will have the satisfaction of knowing that you made your company a better place to work.

About the AuthorSupply Chain Cost Reduction

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: lean manufacturing, Lean Organization, organizational restructuring

Supply Chain Secrets #7: There is No Next China

Posted by Thomas Petersen on Thu, Nov 10, 2011 @ 11:39 AM

There is No Next China

high tech manufacturing executives resized 600Get a group of manufacturing executives together and at some point over coffee someone will ask: “So, where is the next China?” What they really should have asked is “Where on the face of the earth are there 1,331,460,000 people, producing 351,000 new engineers a year and where everyone over the age of 4 wants to run their own business.” Uhmmm…let me think…nowhere. This conclusion is a real conversation killer.

 India isupply chain development resized 600s Not China

India is the first country that comes to mind when people wonder what’s next. However, the talents of India differ from China. India’s supply base tends to be stronger in industries that depend on originality and depth in science and math. They are strong in chemicals, pharmaceuticals, software programming and cheesy love stories. They are not as strong as China in electro-mechanical fabrication and assembly. Transportation can be difficult and on-time delivery can be a challenge. While it’s true a country the size of India defies generalizations, they have taken a distinctly different path than China.

 How About Vietnam?

It is in the same area, but no, it’s not the next China. If Vietnam were cloned, it would take 14 iterations to approach the population of China. It’s simply too small. Add a trifecta of rising costs, poor infrastructure and corruption; it’s clear to see its time to move on.

 Play Billy Ball

In terms of supply chain development, it’s back to the drawing board. A well-constructed supply chain can no longer be designed by simply circling China. Rather than hoping toperational consulting resized 600o discover Atlantis, it would be best to think about the question in a different way. How can you construct the next China? Start with dollop of Brazil (193 million), throw in Indonesia (230 million) mix in some India carefully, and season with Malaysia, The Philippines and Mexico (224 million). Success will come from gaining knowledge of specific countries and constructing a supply base that leverages their distinct competitive advantages.

 About the Author

tom petersenTom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

Tags: supply chain management, supplier selection process, supply chain innovation, strategic consulting services for high tech manufa, supply chain development

Supply Chain Secrets #12: Three Things to Stop Doing Today

Posted by Thomas Petersen on Thu, Oct 27, 2011 @ 10:30 AM

Stop Telling Suppliers They’re Partners
At best this is meaningless business speak best avoided, at worst it’s a green light to allow your material costs to rise. Partnership is like respect; it’s something you achieve over time.supply chain innovation It’s not a label; it’s a way of acting. Forget about calling suppliers partners; instead make sure you have two or three qualified suppliers for the same commodity. Let them know they are part of a select group of suppliers who will have the opportunity to bid on new contracts.  Their success with your company will depend on their competitiveness, supply chain innovation and communication. Healthy sustained competition is your best path to creating business partners.

Stop Cutting Purchase Orders
Purchase orders are waste of time and money. Every time you cut one, say to yourself “How can I stop doing this?” Cutting down on the number of purchase orders involves setting up operational consulting firm 10 25 11 resized 600automatic replenishment programs, supplier portals, blanket orders with simple electronic releases, the use of p-cards, and creativity. Too often we feel comforted by the stacks of paperwork on our desk, despite our claims to the contrary. Stop complaining and start eliminating. These efforts take time and require agreements to get hammered out with accounting and IT. It may take awhile, but the benefits are well worth it.

 

Stop Chasing Variancesstrategic consulting services for high tech manufacturers
Accounting lives for variances. Given the opportunity, they will have manufacturing and purchasing people spending countless hours running down variances. Fight back, they will not go down easily, but it’s a battle worth winning. Use that same energy to validate actual build times and review part costs. These activities will have a more dramatic impact on your business then spending hours each month chasing down variances tied to standards that are often incorrect.

About ThreeCoretom petersen

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom provides strategic consulting services for high tech manufacturers.  His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.comor follow Tom on twitter @3CoreConsulting.




 

Tags: operational consulting firm, supply chain innovation, strategic consulting services for high tech manufa

Supply Chain Secrets #33 - Hidden Labor Where Are You?

Posted by Thomas Petersen on Thu, Oct 13, 2011 @ 01:09 PM

manufacturing strategyIn the world of high tech manufacturing labor is often less than 10% of the cost of goods. This leaves people wondering why a country like China can have such a cost advantage. There will be claims of subsidized material cost, undervalued currency and lack of environmental regulation. While these may be legitimate issues, one major factor is typically overlooked, stacked labor content.

 Long ago, companies like American Shoe from Beverly, Massachusetts built shoe-manufacturing equipment by starting with rail cars of iron ore. They ran giant fhigh-tech-manufacturingurnaces, cast their own parts, did their own machining and assembled their own product. Over time this strategy fell out of favor as companies focused on their core competencies. Today companies outsource their castings, machining and assembly process. The reason that manufacturing labor doesn’t appear to cost much is because their suppliers do all the manufacturing. The labor content of their product is essentially hidden in their material costs.

Take for example a product that incorporates a $20 sheet metal part. This cost will be accounted for in the materials line in the cost of goods. In reality, the material cost of the part is only $8; the rest of the cost is a supplier’s labor and overhead.  A complex electro-mechanical product that appears to have only 8% labor content; might really be have more than 18% of stacked labor costs. This is not simply an interesting accounting point; it is essential that engineers understand the true cost drivers of their designs. As companies have outsourced more of their manufacturing, engineers have lost sight of the manufacturing processes that turn their computer models into parts.

 The strategy to combat hidden labor is to analyze the real cost drivers of a product. Trace the cost of product-developmenta product back to its base commodities like labor, oil, and metal. This analysis can help guide the product development team in reducing cost and assist operations with optimizing their manufacturing strategy. Identifying hidden costs like labor can enable companies to design cost out from the start thus gaining a competitive advantage in the market place. 

 

About ThreeCore

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in BevTom Petersenerly, Massachusetts.  Tom consults for multinational companies engaged in the design and manufacture of high-tech products. His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.com or follow Tom on twitter @3CoreConsulting.

 

 

Tags: product development, manufacturing strategy, high tech manufacturing