In an increasingly volatile global trade environment, with trade wars and protectionist tariffs hitting businesses like curve-balls, it is critical for supply chain managers to be proactive in protecting their sources of supply and insuring business continuity.

Without the benefit of assurance on what shape future changes and tariffs will take, it is more important than ever before for procurement professionals to consider dual- or multi-sourcing strategies to protect their supply chains.

Dual sourcing has long been a part of many supply chain managers’ toolsets. The impetus to find two, or more, sources for a certain product or service can stem from a series of motivations:

• Capacity based. A chosen supplier does not have enough capacity to supply a customer’s demand, and so parallel alternative suppliers are required to meet requirements
• Competition based. Production volume is spread across two or more suppliers, with the opportunity to win further volume if superior delivery, quality and cost goals are met
• Risk based. Where components and/or services are especially critical for customer protection, dual sourcing is engaged to mitigate risk (internal supplier risk, geographic risk, exchange rate risks etc.)

The risk based incentives are becoming especially critical for sourcing managers to consider in the current environment, particularly if critical supply points are located in countries with tariff and political volatility.

Want to act but don’t know where to start?  Let KickStage Consulting help . We provide a free supply chain risk analysis consultation and, with many international sourcing specialists located around the world, can help swiftly and effectively design strong, competent multi-source supply chains for your industry.

One of our start-up projects, Lift.Works, is proud to be an exhibitor at the 2019 Miramar Airshow, taking place at MCAS Miramar on September 27th – 29th 2019!

We will be showcasing our latest innovation – The PowerBlock Model LW3 hybrid power unit system, adaptable to a wide portfolio of single-rotor, multi-rotor and fixed-wing UAV applications, which unlocks unparalleled range and application for industrial drones.

Our booth is located near the Drone Dome flying cage at the AUVSI exhibitors area. We’d love to see you there! Please reach out to Zacheriah.Cole@KickStageConsulting.com  and let us know if we’ll see you!

2019 Miramar Airshow 

The KickStage Consulting team is delighted to be attending WESTEC, the leading California manufacturing trade show, on September 24th 2019.

We look forward to connecting with thousands of leading manufacturers and learning about the newest advanced technologies available to ourselves and our clients to increase their productivity and profitability.

Please reach out to Angela.Whiteside@KickStageConsulting.com if you will be attending – let’s discuss our favorite findings over coffee!

2019 WESTEC Registration and Information 

Despite the global focus on renewable energy, the gas turbine power generation market has seen considerable growth in the 2014 to 2019 period, and experts predict the same industry health in the 2019 to 2024 forecast period. This growth has been facilitated by technological advancements and innovation, raw material availability and an increased demand for electrical power that has allowed growth in the non-renewable as well as renewable sectors combined.
 
The KickStage team has been experiencing the unique dynamics of this industry with their latest major customer. They are transitioning from a broad gas turbine engine portfolio to a focused manufacturing line for ‘peaker’ engines. ‘Peaker’ engines are units that specialize in low-utilization, high-variability power generation. Such engines typically sit alongside renewable energy farms – such as wind and solar farms – and provide back up power when the renewable source is unavailable. So the growth for this category of power generation is, understandably, shooting up right alongside the popularity for renewables.
 
15 members of the KickStage team are enjoying getting their hands and minds busy in helping this client transition from high-variability, low-volume production to a Lean, focused production line. One interesting contrast from that of aerospace engines (and thus not having to create a flight-conformant product) is the increased flexibility in material choices, tolerances and performance vs. cost design decisions.
 
From factory design, manufacturing capability management and supply chain establishment, we are excited to see the growth of our client and privileged to be an integral part of their development process!

Opportunity

You have probably heard all the buzz about “IoT”, “Smart Manufacturing”, “The Internet of Things”, and “Industry 4.0”. Well there is a really good reason for all the buzz because things are getting really interesting now. 

But you may be asking, “What is IoT?” or “What is Smart Manufacturing?”.

What we are talking about is the application of new technology to make operations intelligence CHEAP and RAPID. With recent advances, the full Technology Pipeline is now available ‘off the shelf’.

The costs and initial implementation are very affordable for small businesses.

That is, the connected sensors, data farms, automated analytics, and dashboard tools & devices are now available with multiple competitive choices, ease of integration, and with very little development required. And better yet, the costs and initial implementation are very affordable – even to smaller businesses.

Implementing Smart Manufacturing through IoT brings real-time awareness of the most important indicators of performance and where the pain points are…or opportunities for the biggest improvement. And, the cost is so reasonable that the payback can be as little as one month, or even less. Not least of all, it’s really fun. The world of IoT is exciting. It is exciting because of what is possible for so little. 

Challenges

There are still challenges of course. It has not yet become quite as easy in the manufacturing world as pairing your smart phone to your smart watch and watching your fitness stats suddenly appear on your app’s dashboard. The challenges are, among others:

– Deciding on the most valuable thing to measure and how
– Making choices from a wide range of options for the critical pipeline features
– Which data farm to select – internal data server or a cloud data farm service? And how to pick the specific solution?
– Mapping out the data and analysis stream to convert what is measured to the indicators that matter most
– Acquiring the skills to put a system together and to set up the dashboard that informs the CEO or operations manager of what’s important.

Good News

We have been long-time advocates and pioneers in IoT and Smart Manufacturing. Now things are getting really exciting with how easy it has become to put the whole pipeline together, applying intelligence in what matters to an operation, and achieving huge benefit. There is so much more possibility than there used to be. It is truly now a situation of industry catching up with what is available, rather than the other way around. We celebrate that recent turning point.

If you are interested in what IoT and Smart Manufacturing can do, we would love to chat.

Set up an appointment with Zacheriah Cole!

Zacheriah Cole
Vice President – KickStage Consulting Inc. – Zacheriah.Cole@KickStageConsulting.com 

+1812-797-0479

It’s been a busy few months for the KickStage team, with our fingers in many ‘supply chain pies’!

Our President, Angela Whiteside, is undertaking her Doctorate degree and researching some of the more cultural and team-based enablers that can predict successful supply chain and outsourcing initiatives.

The investigation and publication of this research has led to some exciting and diverse clients, including the authoring of a White Paper for the In-Plant Printing and Mailing Association, sponsored by Canon! This paper provides an industry-customized framework to make agile and profitable sourcing decisions in the printing and mailing industry.

The ongoing research and industrial engagements reveal the same thing time and time again – a disproportionate focus on cost over other critical service provisions such as quality and responsiveness. This pattern is consistent across clients and industries, and can lead to lackluster supply chain performance and significant customer disruptions.

The KickStage team, in assisting our clients with their supply chain performance, take a dual-perspective approach to defining the optimal supply chain configuration – analyzing the capabilities of the supply chain whilst at the same time understanding from the end customer what their service priorities actually are from their suppliers. This allows the optimal supply chain to be designed, and provides rewards and satisfaction to both sides of the table.

The commercial drone market is ‘taking off’ at a rapid speed, and predicted to reach $1.8bn by 2020.  Until recently, the industry has been dominated primarily by military unmanned aircraft systems (UAS) and those operated solely for hobbyist purposes by enthusiasts.  The shift in focus and soaring interest in drones for commercial purpose has been incentivized by several factors which include; lower prices, growing demand for air surveillance, remote sensing, superior aerial imagery, and the Federal Aviation Authority’s (FAA) August 2016 regulatory relaxation around their operation. 

Amidst the anticipated growth comes the expectation that they will revolutionize industries globally; from agriculture to engineering, and beyond. Their potential for optimization is staggering and will redefine how organizations do business.

As an emerging market with increased utilization in many industries adapting technologically to remain competitive, funding opportunities for commercial drone development are abundant, from private and government sources alike. 

In August last year the White House  slated $35 million for National Science Foundation funding toward drone technology research. Kickstage Consulting recently led a commercial drone start-up company’s application for the National Science Foundation’s Small Business Innovation Research (SBIR) fund, in anticipation of exploiting this opportunity and becoming one of the early market leaders.

Funding Opportunities 

The  SBIR program, funded by the US government, endeavours to transform scientific discovery into US societal and economic benefit by virtue of technological innovation; enabling start-ups and small businesses to undertake high quality research and development.  If successful, it provides a Phase I grant of up to $225,000 over 6-12 months, and Phase II funding of a further $750,000 over 2 years. 

The application process can be lengthy and requires early engagement, with deadlines around December and June annually. The proposal requires information on the company, its management team, competitor analysis, overall structure, financing and projections.

The Commercial Drone Fund  has also been established to support businesses seeking investment to invent and progress technologies that are crucial for the sustainability of the commercial market.  The fund calls for solicitations from businesses seeking investment to develop and grow operations in; sensor hardware, software applications, data analytics, services and industry-specific solutions. 

The extensive funding options coupled with the US Department of Transportation’s prediction that by 2035 the number of unmanned aerial systems will surpass that of manned aircraft operations, creates unprecedented scope to impact the future of the commercial drone industry, and technological innovation and advancement more broadly.  The time is now!

With the increasing globalization of business and supply chains in recent decades, the concept of outsourcing has become well known and widely used across many diverse industries.

Yet, for many companies outsourcing fails to fully realize initial expectations. According to Forbes, since the year 2000, over 30% of large US-based FTSE 100 companies have reversed their outsourcing initiatives and moved supply chain, production and services back into the US. 

What is the explanation for this trend? Have rising external costs and risks decreased the lure of outsourcing, or are company decision makers simply not informed on the process of effectively designing and optimizing an outsourced supply chain?

The KickStage Consulting team, with over 20 years of experience leading both outsourcing and insourcing initiatives, would argue that the cause is in fact due in part to both factors. However, there is still massive untouched strategic potential offered by competitive outsourcing, so long as a broad sighted, data-driven approach is utilized.

Let’s explore further, starting with some basic definitions and terminology. 

Outsourcing involves a business utilizing external companies and services to provide its non-core functions/components/services (from company accounting and customer service functions through to product sub-components and materials), allowing it to reduce costs and better focus on its competitive, core competencies. Whilst the process is commonly associated with a movement to low-cost countries with cheaper labor and skill rates (‘offshoring’), it is not limited to such and is commonly used at a local level, soliciting specialized firms to undertake the tasks that are not core business proficiencies. Insourcing is a more recent concept that is essentially the reverse of the above, the act of ‘re-integrating’ products and services back under internal business operation from the external value chain.

Why outsource?

If you ask most business leaders their motivation for outsourcing, the majority if not all will indicate that cost reduction is their primary incentive. This is a valid and justifiable reason to pursue such opportunities, but jumping in whilst only focused on the cost dimension can be fatal to business and is often the reason for failed outsourcing initiatives.

The most important lesson to learn in sourcing decisions is that the choice to outsource not only impacts costs and profit of the business, but also product/service quality, risk, responsiveness and a myriad of other aspects. A full comparison matrix of supply options needs to be analyzed by a multi-functional decision making team to assess every facet of the decision at hand, and to weed out any unforeseen costs/risks, prior to a path being implemented.

Basing a decision only on the ‘sticker price’ of a solution can create massive problems for a business. Consider choosing from 3 suppliers of widgets only by cost. What if the cheapest component has a 50% scrap rate vs. a negligible scrap rate of the other suppliers? What if, because one supplier is in China, the company has to order and hold 3 times the inventory to offset the transit lead-time?

Now, imagine choosing between a US-based and India-based call center for your customer service needs. An Indian center may be much more cost-effective from a labor rate perspective, but what if, due to accent and language challenges, each customer interaction takes 50% longer than the US center? What if, as a result, customer retention levels drop due to dissatisfaction with the service? 

Whilst the issues encountered may well be fixable, doing so after selection can involve many unforeseen costs to the business that render the choice less competitive. These scenarios serve to demonstrate the criticality of using a methodical and cross-functional assessment process prior to the launch of an outsourcing initiative.

There are also many other dimensions to consider that help determine whether outsourcing or insourcing is best for your business:

• Corporate Image – Outsourcing, especially overseas, can bring emotive and often negative publicity when local jobs are affected

• Intellectual Property – While IP can be still be contractually protected for outsourced work packages, the level and criticality of a company’s IP should be factored into sourcing decision-making frameworks alongside the associated risks of widening its use

• Market risk and volatility – Global wage rates, material prices and exchange rates are continuously fluctuating. These factors will continuously affect the business case on which a sourcing decision is based

• Agility – The decisions to out- or in-source will affect the responsiveness and agility of the company to respond to changes in market behaviors or strategic changes

• In-house expertise – If a company’s strategic roadmap includes developing a function as one of its core competences, then it should remain or be brought back in-house

For further information and for expert assistance developing your company’s sourcing strategy, drop us a line!

The ‘Internet of Things’ (IoT) will definitely go down as one of the ‘buzz’ topics of 2015.  Global business is rapidly realizing the importance and usefulness of data collection and increased connectivity across the myriad of physical objects present in our daily lives. However, we are only just skimming the surface of IoT’s potential reach in optimizing our lives and business competitiveness. Procurement professionals are now asking, in a world of increasingly globalized supply chains; What can the IoT do for MY business?

Firstly, what does the ‘Internet of Things’ even mean? The term, originally coined by British RFID entrepreneur Kevin Aston, describes the potential for interconnectivity and data exchange across existing network infrastructure between almost all physical objects through the embedding of software and sensors. Internet connectivity is getting faster and cheaper and, combined with the increased affordability and performance of sensor technology, Cisco Internet Business Solutions Group estimates that, by 2020, the IoT will consist of more than 50 billion objects (over 6 for every person on the earth). The capability has already hugely augmented product and service performance across numerous industries; from artificial heart valves that collect and relay patients vital statistics, selective irrigation of dry crop zones and the monitoring of vibrations and material conditions in buildings, bridges and historical monuments, to name just a few.

The IoT revolution has specific opportunities and implications for global supply chain management. With logistics and supplier networks increasing in complexity as companies compete to find the cheapest quality sources worldwide, the revolution is extremely timely.

Item location and product tracking

The development of ERP software has aided companies tremendously in recording inventory levels and locations, but before RFID and IoT came along, inventory management was still a very inexact science. With inexpensive tracking technology, companies can know the reality, not just the theory, of where their entire inventory is located at any one time. This drastically reduces uncertainly in stock level and location, allowing for a reduction in ‘safety/buffer’ stock that flows directly to the bottom line, in addition to immediate, real-time feedback on supplier and logistic performance.

Shipment and storage condition monitoring 

Particularly for perishable goods, transit and storage condition is paramount in the successful delivery of a quality product. The exploitation of sensor connectivity to closely monitor environmental conditions not only provides an endless level of real-time, accurate data, but proves significantly cheaper to logistics companies than the traditional, more manual methods of environmental control. External factor monitoring would also permit tracking of weather and travel patterns, optimizing transit routes.

Product condition evaluation

According to a study by the University of Florida, inventory ‘shrinkage’ translates to an annual loss of over $35 billion annually in the US retail sector alone. The UN Food and Agriculture Organization states that a staggering one third of food supplies perish in transit every year. Transit damage and perishing are dominant factors in inventory loss, and again the IoT can prove invaluable in preventing a large proportion of this damage through real-time condition monitoring, critical for a fast response and correction. This is an especially valuable tool to have during a major supply chain disruption or natural disaster.

These are just a few examples of the huge competitive impact that the IoT is having on supply chain management. The speed of which companies exploit these technologies is set to be a key differentiator in 2016 and beyond.