Friday, October 31, 2014

From Concept to Consumer: Supply Chain Optimization

Over the last few weeks, we’ve talked about Managing or Mitigating Risk, The Value of Positive PR, and Competition, namely Supply Chain vs. Supply Chain and the importance of minimizing disruptions. As technology and other advances make the world seem smaller and smaller, it’s more important than ever to prepare in advance for potential service disruptions. As stated last week, we want to ‘remove the blindfold’ before entering the obstacle course.

The National Institute of Standards and Technology’s Manufacturing Extension Partnership (NIST-MEP), our federal sponsor, conducted research to identify the critical needs of supply chains. Through a two-phase survey process, 12 competitiveness drivers were discovered and the six most critical highlighted. 

In response, MEP experts, including MMTC's own Roger Tomlinson, are working hard to roll out a program to address these issues. MMTC has long assisted parent companies with integrated solutions for their locations. We see this as a further step, one that connects individual company improvements to supply chain benefits. Key supply chain benefits include:
Alignment      Visibility         Collaboration             Optimization

Fundamentally, Supply Chain Management (SCM) is about reducing risk, not just to manufacturing but across the entire quote-to-cash cycle.

Risk Management
A healthy supply chain is the foundation of any successful organization. Rapid and dynamic changes occur daily both inside and outside every organization. That is why it is important to plan for and have low-cost tools in place for dealing with potential disruption.
 
Supply chain decision-makers, along with senior management, must understand and utilize risk management practices to manage and control all critical points along its network. A good understanding of risk management techniques becomes the foundation that allows managers to make more informed distinctions among the competing priorities of process cost-effectiveness and risk exposure. A sufficiently robust supply chain will be able to model a good number of alternatives, to know what is feasible and what is not feasible, and to be able to present metrics on the cost to reduce the risk of possible disruptions.

Not Just Risk in Manufacturing

‘Total Cost of Ownership’ is what SCM means when it addresses risk, not just to on-time production, but to the entire cycle from purchasing to delivery. Total cost of ownership captures all pre-transaction, transaction, and post-transaction costs and also includes the total landed cost element if some or all of the materials are imported from another country.

The consequences of getting this wrong are very high. If a company does not identify all of the cost factors, it may under-quote the price to the customer. This could result in selling products below cost. Understanding the total cost of ownership also improves the company’s chance of meeting all licensing, regulatory, and logistics requirements. Non-compliance can cost an organization additional penalties and delays.

The international transportation of goods falls under the International Commercial Terms, also known as Incoterms, of which there are 11: 
  • Pickup at supplier
  • Inland transportation to a port or airport
  • Origin terminal and port fees
  • Export licensing, documentation, and duties
  • Ocean or air carriage
  • Import documentation and duties
  • Terminal and port fees at destination
  • Customs review
  • Harbor maintenance fees
  • Maritime insurance
  • Inland transportation to importer’s location. 
The Incoterm agreed on between the importer and the supplier determines the responsibilities of each party and, therefore, the division of costs. Before a buying organization can begin to calculate the total cost of ownership, it must identify the Incoterm that will be used in the transaction. That selected term will clearly define who does what and which factors should be included in the buying organization’s calculated total cost of ownership.

For a complete overview of MMTC’s Optimization program, join us on Nov 5th at 8:00 am and discuss benefits to you and your community of partners. Find out how to create a stronger base for your manufacturing processes through this half-day. An in-depth look at the Roadmap to achieving the four key benefits and the accompanying tools will help you decide whether Supply Chain Optimization is right for you.

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org

Friday, October 24, 2014

Competition: It’s Not Just for Football Any More

According to Miriam Webster, competition is “the act or process of trying to get or win something (such as a prize or a higher level of success) that someone else is also trying to get or win: the act or process of competing.”

This is something we’re all familiar with, and at the top of our minds as one of Michigan’s biggest sports rivalries of all time, the competition for the Paul Bunyan Trophy, takes place this weekend. The University of Michigan Wolverines and the Michigan State Spartans will take the field at Spartan Stadium in East Lansing this Saturday at 3:30 for their 107th meeting. The Wolverines currently lead the series, 68-33-5.

While the outcome is of interest to hundreds of thousands of fans and the winner will receive bragging rights for the next year, at the end of the day not much will change. [No offense intended to football fans everywhere. Indeed, this author is a huge fan of the game, but football rivalries pale in comparison to weightier issues.]

In business, competition is a little more serious, and the fallout from failures is more far-reaching. Particularly in manufacturing, competition is no longer limited to the U.S. vs. Low Wage Nations, Nation vs. Nation, Industry vs. Industry, or even Company A vs. Company B. More and more, it’s becoming Supply Chain vs. Supply Chain. How strong you are is dependent upon the weakest link in the network of companies that support your ability to purchase raw materials, process your parts, and move them along to your end user.


As part of the National Institute for Standards and Technology’s (NIST) Manufacturing Extension Partnership (MEP), MMTC is excited about a robust new program for Supply Chain Optimization that is being developed. We’ll provide more on the program next week. For now, one of the most important questions you can ask is, what do you do with a broken supply chain? Thankfully, Anthony Cerilli, Engagement Manager at our sister center, Genedge Alliance in Virginia has an excellent response. We include it below, in its entirety:

Fix it, of course. Though that’s never as easy as it sounds.
Supply chain disruptions are not a matter of if, but when. High-impact events that were once considered very low probability — “black swan” events — sometimes seem to be almost regular occurrences. While not all such events reach the magnitude of the 2011 Tōhoku earthquake and tsunami, over 200 natural disasters occur annually across our globe. With our globally interconnected business environment, problems that used to remain isolated now have far-reaching impacts.
If we accept that disruptions will happen, the question then becomes, how disruptive must they be? Organizations can mitigate the effects of supply chain disruptions by applying the principles of supply chain Risk Management and Visibility.
According to the Supply Chain Resilience 2013 survey by the Business Continuity Institute, 75% of respondents experienced at least one incident that caused significant disruption, with 42% of disruptions originating below the Tier 1 supplier. Unfortunately, however, over 50% of organizations have no visibility beyond Tier 1 (according to the 2013 KPMG study, Global Manufacturing Outlook). Is it any wonder why, in the same survey, nearly 20 percent of organizations said it takes 3 weeks or longer to assess the impact of unplanned disruptions?

Managing — let alone trying to minimize the risk in — a supply chain without visibility into all of the supplier relationships and processes is like trying to navigate an obstacle course blindfolded. You might make it through, but not quickly, and probably not without injury. The lack of visibility actually increases the risk that you will get injured, and a lack of visibility into a supply chain increases the risk that snags will become snarls and disruptions will become disasters. To effectively deal with supply chain risks in our global environment, an organization must look deep into the supply chain and work as hard as possible to predict potential problems and then, in true risk management style, develop ways to prevent the problems — if possible — or if they can’t be prevented develop plans to deal with them before they happen. An effective Risk Management program will anticipate and react to triggers as deep in the supply chain as possible.
The world is not going to get any less chaotic in the near future. Are you prepared for the disruptions that are almost sure to come your way?
Check out the MEP Network’s Supply Chain Management program website to find a Supply Chain Management Overview session near you, or complete the initial Supply Chain Vitality Quiz and get connected to your MEP Center. 

MMTC is hosting just such an event on Wednesday Nov. 5th, at our Plymouth office, from 8:00 am to noon. We’d love to see you there.


Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org

Friday, October 17, 2014

The Importance of a Public Relations Program

Pick up the newspaper and read an article. Or, go to your favorite online news outlet and skim through an entry. No matter the source of your information, you’ll notice that virtually every story includes quotes from an industry expert. Have you ever wondered to yourself, “Why is this person or company being quoted?” or “What makes this person or company the authority to speak out on this issue?” More important, have you ever thought to yourself, “You know… I would like to gain some publicity and get quoted in the paper…”?

Here’s the difference between the companies who are featured in news articles and you: those companies have a public relations (PR) program.

In case you are unfamiliar with the concept, let’s go to everyone’s favorite online dictionary, Wikipedia, for a definition: “Public Relations (PR) is the practice of managing the spread of information between an individual or an organization and the public.”  A lot of things can go under the umbrella of PR, so we’ll be more specific for our manufacturing readers.

the importance of a public relations program
A PR program would include developing relationships with journalists and writers for news publications. By creating these connections, reporters will quote you in their articles and go to you as a resource when they’re looking for subject matter experts. That way, when your target audience members read stories, they’ll see your name. This can help you gain exposure and establish credibility!

Here are some steps to help you get started:

1)     Research Publications: What news outlets do your target audience members read? Is it the local newspaper? Is it an industry trade journal, or scholarly publication? Is it a blog? Create a list of the outlets you want to get published in.

2)     Create a List of Reporters: Publications have numerous reporters. Read through the publications for stories about manufacturing or related business news. These are the reporters that you want to target. A potential place to start is the Michigan Press Association.

3)     Send Your Pitch / Press Release: To be clear, PR isn’t advertising. No journalist is ever going to publish a story that says “this company is the best!’ If that’s your expectation, then change your expectation. When you contact reporters, you aren’t asking them to write an article about your company and what it does. You’re providing them with something newsworthy for them to include in their articles. You can do this through the form of a pitch letter and/or press release. Here are some suggestions:

a.     Industry Trends: Conduct an interesting study or survey about your target audience and share the results with reporters.
b.     Host a Tour: Arrange a tour for students and educators to learn about manufacturing. Invite your local journalists to participate. This was a very popular arrangement for National Manufacturing Day.
c.     Major Milestones: If your company achieved something newsworthy, discuss it with reporters, but put it in perspective for the local community. Example: don't just say that your company hit its 25th anniversary. Share that your company hit its 25th anniversary, and in that time it created 500 local jobs for the community.

If a reporter mentions you in a story, don’t forget to thank him/her! Remember, it’s about building relationships with reporters. By embracing a PR program, you can ultimately gain more exposure and develop new business by getting consistently quoted in the paper!

For more information on how you can develop new business, click here.


Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org

Friday, October 10, 2014

Manage or Mitigate: Why Risk can’t be Avoided

No one likes being vulnerable. It involves risk, and risks are scary. In business, innovation or trying new things is often seen as a risk. There are entire service industries that revolve entirely around the concept of managing or mitigating risk, have you talked to your insurance agent recently?

David Brown, in an article titled “Managing Risk and Innovation: the Challenge for Smaller Businesses,” discusses the concept of innovation for small businesses and the unique challenges faced by SMEs. At one point he states:

“Small and medium sized enterprises (SMEs) are caught in a double bind. As competitive pressures mount and customers press for higher quality standards, tighter cost control and faster response times from suppliers, SMEs find it increasingly vital to accelerate process and product innovation. At the same time, the attendant risks of innovation are higher for a small firm than a large one: usually, the smaller firm will have fewer technical and managerial competences, more limited finance, and more limited access to information than a larger organisation. The risk of getting it wrong comes into sharp focus for those firms where one major unsuccessful product or process development may threaten the survival of the enterprise and possibly the entrepreneur's personal assets. The consequence is a characteristic and understandable risk aversion.”

Based on that, is it no wonder that R & D investments in product designs concepts and new product launches are such a scary concept for manufacturers? Many manufacturers choose to ‘play it safe’ and stick to what they know . . . but this raises another issue mentioned in the above article . . . something he calls the “tomorrow as well as today” problem. The need for companies to continue to demonstrate to end users, be it suppliers or consumers,  that they are not only capable of providing a competitively priced, quality product now, but committed to maintain market relevancy and offer product improvements in the future.

This is especially important as technology changes at an ever rapid pace. What’s a company to do? There are risks either way. If you move ahead too fast, you need to be able to fail quickly and fail cheaply or you’ll fail yourself right out of business. If you wait too long, you’ll be the one making products when consumers and customers have moved on to the next item on their technology menu.  VHS tapes anyone? 

There are ways, of course, to make technology work for you. The Digital Manufacturing Revolution held an invitation only kick-off meeting on October 1 & 2 with the opening of the GE Advanced Manufacturing and Software Technology Center. The goal of this new initiative is to connect 21st Century digital manufacturing tools with American industry. This will leverage the power of big data, predictive simulations, and high-performance computing in a community-driven virtual world. Copies of some of the keynote presentations are available online.  

Sometimes the best thing to do is to hear how others have done it. We invite you to attend an upcoming Leadership Best Practice Series at no cost to you. On October 30th, from 7:30 am to 10:30 am, attend our New Product Launch panel and interact with company representatives from Morbark, Inc. and Roll-Rite, LLC that have been involved with successful product launches. 

From there you can explore MMTCs services on the Product Preparation Process (3P) or take a look through out Business Development offerings and design your own strategy for growth.

As a side note, just in case you think this is a new concept, the above article was written in 1997. While technology has changed, the issues facing SMEs are still the same. It’s not if you face risk, but what you choose to risk and how you manage it, that matters.

We look forward to seeing you later this month.  

Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org

Friday, October 3, 2014

National Manufacturing Day: The Perfect Time to Reflect on Michigan’s Progress


manufacturing day 2014
It’s finally here! Break out the champagne and blow your kazoos in New Year’s Eve style… today is the third annual National Manufacturing Day!  National Manufacturing Day is our industry’s nationwide effort to accomplish two key objectives:

  1. Change our country’s perception of manufacturing careers by spreading awareness about the diverse careers and benefits that manufacturing has to offer.
  2. Convey the message that U.S. manufacturing is vital to our economy.

Our recent blog entries have  discussed the importance of the celebration, various events going on around Michigan and the country, and some highlights from our sponsors. This time around, we feel that today is the perfect time to reflect on the progress that Michigan manufacturing has made and look forward to a brighter future!

A recent article titled, “Manufacturing Rebound Puts Michigan Back in the Ball Game,” by Jack Spencer, shares data from the Bureau of Labor Statistics and information from the Michigan Manufacturing Association to  cumulatively paint the picture of our comeback.

We don’t need to relive the economic downturn, but Michigan was hit during the crash of 2008 and manufacturing jobs fell below the 500,000-level. While of course unfortunate, we’re working hard (and succeeding) at creating a happy ending to the story. Take these facts into consideration:

  • We’re outperforming the entire U.S. in manufacturing job growth.
  • Since 2009, we’ve added more than 110,000 new manufacturing positions.
  • Between May 2012 and May 2014, our state was ranked first in the country for gross manufacturing jobs. Our net gain of 25,000 jobs exceeded second-place Texas, which gained a net of 22,000 jobs…and we’re a lot smaller!
  • Total manufacturing production has recovered and come back to our state’s level in 2007.
  • Michigan currently ranks #4 in manufacturing, with over $70 billion in annual output.
  • Michigan manufacturing accounts for 16.5% of our total gross state product, up from less 14% in 2009.
  • Manufacturing accounts for 94% of Michigan’s’ exports.
  • Since 2009, Michigan’s manufactured exports have grown 78%, compared to 47% for the U.S. as a whole.
  • The creation of the American Lightweight Materials Manufacturing Innovation Institute is projected to bring 10,000 jobs to Michigan over the next five years.

The success of our industry also creates a ripple effect for the rest of our state. This quote from Chuck Hadden, President and CEO of the Michigan Manufacturing Association, captures the impact: “Michigan employs more than 565,000 men and women directly in manufacturing. This does not even take into account the hundreds of thousands, millions even, of jobs that are available in communities because they have a manufacturer nearby. The incredible thing about manufacturing in Michigan is that it is an industry that shares its successes with every community and every person in the state.”

Today on National Manufacturing Day, let’s celebrate our progress and remember why we’re experiencing growth: the resilience and innovation of Michigan’s manufacturers.

On behalf of MMTC, Happy National Manufacturing Day everyone!


Since 1991, MMTC has assisted Michigan’s small and medium-sized businesses compete and grow. Through personalized services fitted to meet the needs of clients, we develop more effective business leaders, drive product and process innovation, promote company-wide operational excellence and foster creative strategies for business growth and greater profitability. Find us at www.mmtc.org.