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Asian Construction Boom Set to Secure Stable Cement Market Growth

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Archives, Global Trade Daily, News

Asian Construction Boom Set to Secure Stable Cement Market Growth

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IndexBox has just published a new report: ‘World – Cement – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Consistent demand from the construction sector maneuvered the global cement market through the pandemic and promoted its further expansion. The robust growth currently being seen in the Asian residential and infrastructural sector is set to become a key market driver in the near term.

Key Trends and Insights

Despite the fact that many cement plants remained idle and inactive during the Covid lockdown, 2020 figures indicate that global cement production remained consistent with 2019 output (4.2B tonnes, IndexBox estimates). The demand for cement is buoyed by construction industry growth in the USA, India, and China and building renovation works in the EU and other countries.

Vietnam (+7.6% CARG), Indonesia (+5.6% CARG), India (+5.5% CARG) and China (+4.4% CARG) indicated the most significant rate of consumption growth from 2007 to 2020.

The announcement of large-scale construction projects in the Asia-Pacific region has secured confidence regarding a stable growth in demand for cement in the near term. In June 2020, Vietnam adopted public-private partnership legislation to attract investment into the housing construction sector. The government’s five-year development plan to 2024 in Indonesia envisages the development of megacities and the construction of a new capital in Eastern Indonesia. In 2020, India launched the state initiative The Housing for All, which outlines the construction of 11M housing units for the poor by 2022. The housing construction sector in China will expand further due to the substantial increased investment seen in 2021.

In the USA, suburban construction continues to develop; it started during the pandemic, following the shift to remote working and the drive to move away from the large cities. The subsidized mortgage rates in Russia continue to buoy the construction market. IndexBox forecasts that over the 2020-2030 period, the global cement market is set to expand at an average annual rate of 1.8% CAGR, reaching 5.0B tonnes by 2030.

In 2020, many global cement manufacturers announced the expansion of their product lines, plans to use renewable sources of energy and decarbonization initiatives. Systems to capture greenhouse emissions from cement plants are seeing widespread installation in developed countries. As the ‘green’ agenda gains momentum, reducing the carbon footprint is set to become an important issue for manufacturers in terms of maintaining their competitive edge. This issue may acquire particular relevance in the EU market, where a ‘carbon tax’ is set to be introduced.

Cement Consumption by Country

China (2,375M tonnes) remains the largest cement consuming country worldwide, comprising approx. 56% of total volume. Moreover, cement consumption in China exceeded the figures recorded by the second-largest consumer, India (339M tonnes), sevenfold. The third position in this ranking was occupied by the U.S. (104M tonnes), with a 2.5% share.

In value terms, China ($184B) led the market alone. The second position in the ranking was occupied by India ($16.5B). It was followed by the U.S.

The countries with the highest levels of cement per capita consumption in 2020 were China (1,620 kg per person), Viet Nam (911 kg per person) and the U.S. (314 kg per person).

Global Cement Imports

In 2020, approx. 96M tonnes of cement were imported worldwide; waning by -4.4% compared with 2019. In value terms, cement imports stood at $7.5B in 2020.

In 2020, the U.S. (15M tonnes), distantly followed by Hong Kong SAR (4.1M tonnes), France (3.8M tonnes), Israel (3.3M tonnes), the Netherlands (3.2M tonnes), the UK (3.1M tonnes), Sri Lanka (2.2M tonnes), Afghanistan (2.1M tonnes), Kuwait (2M tonnes), Singapore (1.8M tonnes), Poland (1.7M tonnes), Cambodia (1.7M tonnes) and Hungary (1.5M tonnes) were the major importers of cement, together making up 48% of total imports. The following importers – Hong Kong SAR (4.1M tonnes), France (3.8M tonnes), Israel (3.3M tonnes), the Netherlands (3.2M tonnes), the UK (3.1M tonnes), Sri Lanka (2.2M tonnes), Afghanistan (2.1M tonnes), Kuwait (2M tonnes), Singapore (1.8M tonnes), Poland (1.7M tonnes), Cambodia (1.7M tonnes) and Hungary (1.5M tonnes) – together made up 32% of total imports.

In value terms, the U.S. ($1.3B) constitutes the largest market for imported cement worldwide, comprising 17% of global imports. The second position in the ranking was occupied by France ($372M), with a 5% share of global imports. It was followed by the UK, with a 4% share.

Source: IndexBox AI Platform

 

shipper
Archives, Global Logistics, Global Shippers 101, Global Trade Daily

Be More Than a “Shipper of Choice” to Differentiate from The Competition

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Severe truck capacity shortages mixed with high freight demand continue to plague the road transportation market for shippers in 2021. As a result, shippers are having trouble maintaining pricing power and contract rate compliance in this inflationary market. According to the latest DHL Supply Chain Pricing Power Index, road carriers will retain pricing power in the transportation market for the foreseeable future.1 One major component of the index is freight tender rejections, which have jumped to a staggering 30%, further reinforcing the magnitude of truck capacity shortages.1 To combat these unfavorable conditions, shippers cannot continue to exercise a transactional approach to supplier relationship management and expect to retain service providers and grow relationships in the future.

Shippers must differentiate from the competition and go beyond the best practices of reducing detention time, providing driver amenities, implementing favorable payment terms, and tendering steady freight volume. These “Shipper of Choice” best practices should already be standard procedures for any organization today. Instead, they need to adopt a new mindset to differentiate themselves and remain competitive.

Today, manufacturers, distributors, and retailers need to be more than just a “Shipper of Choice” to grow their business and add value to their supply base. For shippers to provide real competitive value from now on, they need to address each of the following:

1. Adopt a partnership first mindset by developing a robust strategic carrier base and minimizing transactional relationships:

Shippers should continue to form deep alliances with carriers and prioritize collaboration over temporary rate cuts; it will provide a competitive advantage. In the North American truckload market, buyers often engage in transactional relationships with suppliers, operating directly from the spot market or leveraging continuous sourcing initiatives and short-term contracts. While this might temporarily raise positioning power for a shipper, it falls short as an overall approach to procurement and carrier management, ultimately harming supplier relations. Instead, strong carrier integration will provide shippers with more value opportunities such as joint ventures, cooperative savings strategies, detailed service level agreements, and optimized distribution networks. An efficient long-term partnership with a strategic carrier base nets more significant savings opportunities and helps a shipper remain innovative, profitable, and competitive.

2. Share consistent performance transparency through a voice of supplier and carrier scorecards:

Move away from a reactive approach to supplier relationship management to a strategic one by improving carrier communication and continuously refining operations. Through a “Voice of Supplier,” a carrier can provide reliable market intelligence to a shipper, including insight into how a shipper compares to the competition. Organizations should use this feedback to invest in improvement initiatives, such as internal development programs, to keep carrier turnover low and attract new service providers.

Use carrier scorecards to ensure suppliers understand where their performance ranks based on a set of key performance indicators. Then detail those metrics, especially on-time delivery and tender acceptance rate, to make immediate changes and correct recurring inefficiencies. That process helps provide a pathway to successful future interactions and strengthens a partnership. If a carrier is to remain compliant, a shipper must hold their performance accountable too. Measuring performance, such as OS&D percentage and freight allocation, will instill trust in the carrier base that a shipper will work at their improvement areas.

3. Embrace technology for improved connectivity, visibility, and communication:

Logistics companies deal with vast quantities of data simultaneously. Employing a global Transportation Management System (TMS) and Freight Bill Payment and Audit (FBP&A) program yields increased accuracy for shipment tracking, rate compliance, and freight spend visibility. They reduce rework that comes with manual process errors, allowing a shipper to streamline operations and identify more cost-saving opportunities. With the increased market volatility in the logistics industry, logistics managers must maintain real-time visibility into the flow of goods through their worldwide network. The ability to track a product’s location from the first mile to the last is now a must-do.

Application Program Interface (API) is becoming the preferred system over Electronic Data Interchange (EDI) for information exchange between shippers and carriers. Purchase orders, shipping statuses, payment confirmations, and other data sets are sent seamlessly between carrier and shipper without delay. API enhances connectivity, leverages automation, and seamlessly integrates a supply base. Carriers embrace that technology and are no longer inclined to haul for those shippers who are still reluctant to invest and adapt.

If shippers have not already, they need to begin treating carriers as core business partners. 2020 marked a year filled with uncertainty and market volatility for the logistics industry. In 2021, shippers will continue to wrestle with severe capacity constraints and will need to tackle unique challenges in the future market climate. Collaboration with suppliers makes overcoming those hurdles much easier. Employing the covenanted “Shipper of Choice” best practices is now a requirement but adopting a new supplier relationship mindset and embracing new technology will help organizations remain competitive and differentiate from the competition. 

 __________________________________________________________________

Alex Hayes is a Senior Associate at GEP, a leading provider of procurement and supply chain solutions to Fortune 500 companies.

Citations: 1https://www.freightwaves.com/news/stimulus-round-3-provides-huge-boost-to-consumer-economy-freight-volumes-are-next
employees
Archives, Commentary, Global Trade Daily

3 Tips For Leaders To Steady The Ship When Employees Lose Their Balance

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Company leaders and managers have a big responsibility in overseeing employees. But they can’t see everything, and sometimes there’s more going on in a worker’s life than meets the eye.

Employee disengagement or burnout isn’t always apparent, and some employers may be in for a surprise if and when the COVID-19 pandemic winds down. One study shows that 57% of U.S. employees say they are burnt out, with many likely to leave their job after the pandemic is over. And a Gallup survey reveals that the percentage of engaged employees – those enthusiastic about their workplace – is under 40%.

What the numbers mean is leaders need to learn how to spot and help out-of-balance employees, says Mark McClain, CEO and co-founder of SailPoint and the ForbesBooks author of Joy and Success at Work: Building Organizations that Don’t Suck (the Life Out of People).

“One challenge leaders and managers routinely face is to recognize when the people around them – peers, colleagues, but especially subordinates – are out of balance or are heading in the wrong direction,” McClain says. “Beyond the potential impacts on their personal lives, you want to try to head off the negative effects such imbalances can have on their roles in the company.

“This may seem imposing, but you have to pay attention as a leader. No employee can run at a crazy pace forever, yet some companies let people run themselves right out of the building. Other workers who are disengaged can be harder to spot initially.”

McClain offers these tips for leaders to spot, address, and help out-of-balance employees:

Make work-life balance part of your culture. “You can expect much from your employees, but you don’t want them to fry themselves,” McClain says. “You don’t want them to harm their health, their family, or their relationships. If you have good people, ideally you’ll grow them and help them work toward their vision of a healthy work-life balance. The sooner leaders confront imbalance in the equation, the more meat they put on the bones of company culture.”

Screen out for potential burnout. Some companies hire knowing they will overwork people or take advantage of their ambition to work extra hard and advance up the corporate ladder, McClain says. But that approach can lead to burnout and departure, which costs companies in terms of replacing them. “There are always going to be ultra-motivated climbers,” McClain says. “But exploiting them is beyond bad. Those who can’t stand it get out, and the HR departments plan on the fact that every four or five years, only 15 to 20 percent of those hires will be able to move up the ranks. These types of organizations instead should invest in pre-hiring assessments to screen out those who value a life outside of work. Doing so would save the companies money and turnover.”

Be a counselor. It’s not an invasion of privacy for a manager to show concern in an employee, McClain says, and probing is necessary to help the employee. “Like it or not,” he says, “being a counselor of sorts is part of managing people. Getting to know them as people, and their work styles, is what makes spotting imbalances possible. It’s why good managers pull employees aside and say, ‘Hey, you’re here, but you’re not engaged. Is something going on?’ Managers who take that step are able to uncover issues and steer their employees to the help they need.”

“Many companies talk about caring for workers until they’re blue in the face,” McClain says. “But when you put in place the pieces to help them succeed, leaders walk the walk – and everybody wins.”

___________________________________________________________________

Mark McClain (www.markmcclain.me), ForbesBooks author of Joy and Success at Work: Building Organizations that Don’t Suck (the Life Out of People), is CEO of SailPoint, a leader in the enterprise identity management market. McClain has led the company from its beginnings in 2005, when it started as a three-person team, to today where SailPoint has grown to more than 1,200 employees who serve customers in 35 countries.

inventory
Archives, Global Logistics, Global Trade Daily

10 Inventory Must Do’s for Small-to-Medium-Sized Manufacturers 

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Cash is king for manufacturers – from the owner down to the machine operators.

If you visit any manufacturer, you will see most have a keen eye on how everything is being used. Machines are generally only running if they are making parts; employees are typically only working if orders are coming in, and scrap is examined carefully to determine “How did this happen? How can we prevent it from happening again? What else can we do with this?”

Even the Best Manufacturing Owners Make Mistakes.

But rarely, do they make the same mistake twice. If you ask them what some of their biggest mistakes have been, they are often tied to how their inventory was managed. Meaning, that was in the past and today they are doing something different.

What is different?

After speaking with many manufacturing owners and many subject matter experts, the “different” is their business is choosing to live and die by the following 10 inventory must-do’s with the help of ERP software.

1.  Clear Out The Inventory Garbage.

What does this mean? It means you must process your
inventory correctly and consistently with no exceptions.

Your inventory processes should be documented and employees trained, retrained, and trained some more; and you should have absolute consistency in your product lines, units of measure, etc. Documenting your process also means knowing explicitly who owns what including inventory master, inventory costing, and inventory quantity. Everyone should know what they are doing, when, why, and the consequences of it being done incorrectly.

And don’t let the fox guard the henhouse. The employee responsible for transaction processing cannot have access to inventory adjustments. A few hours spent training employees will save you money and heartache (and maybe even a lost customer) when you try to make a part with inventory you don’t have. Clear the garbage out of your inventory process, and you will be left with a much better result.

2. Regulate Your Inventory Counts.

Physical inventory or cycle counts should always be performed
on a regular basis and produce accurate numbers.

By implementing regular inventory counts, this allows you to consistently ensure inventory accuracy throughout the year. We’ve found that our customers complete this in one of two ways.

The first being they cycle count daily or weekly, which means they count arts based on usage or dollar amount to verify their inventory is correct. If their numbers are getting adjusted, that means their inventory is off, and they must figure out what inventory transactions are causing the issue.

The second way our customers regulate inventory is by doing physical inventory, which calls for shutting down the shop floor and counting the inventory one weekend a year, sometimes two. To learn more about this, download subject matter expert Brady Steven’s whitepaper titled “How to Achieve Perfect Physical Inventory in 10 Easy Steps.” It is a great, superfast read that is likely to save you thousands of dollars a year.

3. Evaluate Unused Inventory.

Just like clutter in your home, obsolete inventory or low turn
inventory should be evaluated on a regular basis, not just once
a year.

Inventory takes up space and space is money. If something is taking up space and not moving, that is taking away an opportunity for something that you could be selling and bringing in more revenue for your company.

4. Know Your Business’ Trends.

Keeping your inventory labeled is an important step in
controlling your inventory between physical inventories. Be “hip”
with your business.

Reorder, lead time, and order quantity should be reasonably accurate and should be evaluated on a regular basis (and again, this doesn’t mean once a year). You know your business better than anyone and knowing when spikes occur throughout the year allows you to better plan on seasonal changes in your inventory. If your business is seasonal, you may need to adjust your min/ max quantities throughout the year as well. A great way to evaluate this data is to be using Key Performance Indicators for your business.

5. Research Your Vendor’s Competition.

Your vendors win when you get lazy. So it’s okay to pick-up
those pesky sales calls every once in a while.

Listen to the vendor’s sales pitch and what they have to offer as far as pricing and quality rating. You may be surprised by what they have to offer. If you stick with the same vendor year after year, you may not receive the best bang for your buck. Prices slowly and steadily creep up, and your discounts suddenly vanish. Evaluate cost regularly and do not ignore savings on buying items in bulk when appropriate. This can be an opportunity for blanket orders to come into play with your vendors, and you will receive a discount by planning ahead. But remember, this requires you to know your business trends and when those seasonal spikes occur.

6. Automate As Much As Possible.

If job costing is a full-time job, then you probably have
inventory issues.

By automating with our Job Costing Accounting application, you can spend less time worrying about what your finished goods cost and more time on creating a quality product. Good job costing leads to accurate inventory cost and quantity, providing you with an opportunity to automate part or all of this process every year.

7. Record Your Inventory Flow.

You are what you eat.

As inventory is consumed or shipped, it needs to be recorded. Some of our customers manage this process with one person, a team of people, or they let their machinist move the parts. It’s entirely up to you, and you can decide who manages that process based on how skilled your employees are and the type of material.

THE INVENTORY FLOW PROCESS IS AS FOLLOWS:
1. Issue Material to Work Order
2. Bin-to-Bin Transfer
3. PO Receipts
4. WIP (Work in Progress) to Finished Goods
5. Location Transfers

You also have the option of backflushing and Auto WIP should you choose. If you make it to the last step and you have 10 good parts, then 10 parts are WIPed into inventory (finished goods). Spend a few minutes every time and record inventory flow immediately, and you’ll save yourself hours in the long run.

8. Listen To Your Business With ERP.

Hearing is the act of perceiving sound, but listening is something you choose to do. Move beyond “hearing” with your fully-
integrated ERP system with MRP functionality and “listen.”

Manufacturers that are using an ERP system correctly are faster,
smarter, and more profitable than those who don’t. It isn’t a
question; it is truth, and we have 150 case studies to prove it.

Listen to your business by viewing and analyzing the data your ERP system provides to see trends, view roadblocks, and make better business decisions. Utilizing your Business Intelligence application, KPI application, and Dashboards, you can see inventory detail in real-time and allow you to listen to your inventory.

9. Correct Employee Mistakes Immediately.

In manufacturing, loose lips don’t sink ships. They save them.
Employee attitude and participation is the icing on the cake,
and if an employee or machine isn’t doing something correctly,
don’t let the ship sink.

For example, if you see Jane Doe routinely recording inventory, but she always misses a few parts, your inventory counts will continuously be off and you will be spending more money purchasing inventory you don’t need. Speak to a manager or superior and let them know your concerns about the issues you’re witnessing. Speak up and refer to Must Do #1.

Honesty is the best policy when it comes to business, especially with money being involved. By addressing inventory mistakes early on, you reduce the risk of losing money, inventory and production time.

10. Always Ask Questions.

Don’t guess how to do it – ask someone. There are unlimited
resources available to you at Global Shop Solutions.

If you’re a customer connect with your Customer Success Manager, schedule a Virtual Training with a member of our Consulting department, or attend one of our 80+ training events a year. If you’re in the market for ERP software, see the software for yourself. We can connect you to some great customers if you have any questions. Don’t let the fear of asking a “dumb” question keep you from managing your inventory the correct way and making money for your business.

_______________________________________________________________

Adam Grabowski is the Director of Marketing at Global Shop Solutions. He is responsible for translating the company’s business objectives into successful brand, marketing, and communication strategies to drive awareness, revenue, and loyalty.

To learn more about the 10 inventory must do’s for small- to medium-sized manufacturers, call 1.800.364.5958 or visit www.globalshopsolutions.com.

taylor machine works
Archives, Global Trade Daily, Native Content

Made in Mississippi: Taylor Machine Works

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‘Made in Mississippi’ is known around the world as a stamp of quality. Some of the most sought-after and recognized products are produced in Mississippi by the state’s skilled workforce. Companies like Toyota, Northrop Grumman and Ingalls Shipbuilding are among Mississippi’s most notable employers, manufacturing some of the strongest, most reliable products for consumers in domestic and international markets. 

Many of the state’s largest exporters, however, are homegrown Mississippi companies – companies that started small, planting roots in small towns and working hard to make a name for themselves in international markets and maintain their competitive edge. These are the companies that have globalized the state’s economy and let the world know Mississippi means business. 

Taylor Machine Works, based in Louisville, Miss., is a prime example of one such company exporting to markets around the world. Taylor was started nearly a century ago as a mom-and-pop small automotive repair shop. Over the years, the company has evolved and today is one of the largest privately held manufacturers of industrial lift trucks in the U.S. In fact, Taylor is now a major progressive force in the worldwide materials handling equipment industry, with its “Big Red” line of forklifts, log stackers, container handlers and reach stackers on the job around the globe. 

“It is a great honor to design and manufacture world-class products here in Mississippi by Mississippi people and send them around the world in so many countries,” said Taylor President and COO Robert Taylor.

The Taylor Group of Companies, through Taylor International, opened its first factory-direct office in Monterrey, Mexico in 2019. In 2020, Taylor opened its second and third international factory-direct offices in Manzanillo, Mexico and Barranquilla, Colombia, respectively. The recent openings of these offices are a result of how respected and preferred Taylor-made products have become internationally. During a recent trip to Mexico, Taylor team members met with several operators of Taylor container handlers and forklifts – equipment still in use today that was manufactured in the company’s Louisville, Miss., flagship factory in the 1970s and 1980s.

While international sales and exports are not new to Taylor, the company has a renewed focus on its international efforts, including the development of a worldwide dealer network. New dealers of Taylor equipment are located in Guam, Panama, Costa Rica, Guyana and Suriname, with more planned in the near future in Latin America and the Caribbean. Taylor-made equipment also can be found in countries such as Tanzania, Papua New Guinea, Chile, Malaysia and Saudi Arabia. 

“At Taylor, we are fortunate to have a tremendous wealth of talented and hardworking people in Mississippi that help Taylor remain competitive in the global marketplace,” said Taylor Machine Works Director of Sales Hal Nowell. “Despite the impact of COVID-19 in the U.S.A. and the world, our international sales have been stronger than ever. We have also stayed committed to our international efforts by opening our second subsidiary in Mexico and our third one in Colombia, South America this year. These subsidiaries along with our new established dealers allow us to export more equipment and parts made in Mississippi to various parts of the globe.”

The Taylor Machine Works success story is echoed among countless other Mississippi companies making a name for themselves in countries throughout the world. In 2019, Mississippi exported nearly $12 billion in goods and services to 206 countries. From 2018-2019, the state’s exports increased by 2.34 percent. In addition to Taylor, companies contributing to that growth were Tupelo, Miss.-based Hyperion Technology, an engineering services company that provides technology and development support to governments and industry; and Philadelphia, Miss.-based Thomasson Lumber, a leader in the agribusiness industry that pressure-treated utility poles and quality pressure-treated piling products to consumers. 

While these companies are led by the ingenuity and innovation of their founders and employees, they are supplemented by Mississippi’s strong portfolio of advantages, which provides the right formula to ensure they find lasting and sustainable growth and success in the state.

Mississippi offers companies a well-trained, productive pipeline of workers; exceptional workforce training opportunities to ensure that as companies evolve, their employees do, as well; and research universities with strong reputations for partnering with industry to move manufacturing ideas from concept to reality. 

Additionally, Mississippi’s prime location in the Southeast U.S. and exceptional transportation network are strong advantages for the state’s exporters. Centrally located between the East and West coasts, Mississippi provides easy access to major U.S. markets, the majority of which are within a day’s drive.  

The state boasts six interstate highways, 76 airports, 30 rail systems covering 2,500 miles of track and three navigable waterways: the Mississippi River to the west, the Tennessee-Tombigbee River to the east and the Gulf of Mexico to the south. Mississippi also is home to 15 ports, including two deepwater ports on the Gulf of Mexico, which provide quick, convenient access to international markets.

The world depends on Mississippi. Mississippi delivers. To learn more, call 800.360.3323 or go to mississippi.org. 

procurement
Archives, Global Logistics, Global Trade Daily

4 Procurement Analysis Issues Facing Manufacturing Companies

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The procurement process at manufacturing companies such as consumer products (CP), food and beverage, and industrial can be very complex. It involves the sourcing of hundreds, if not thousands, of commodities and raw material ingredients from many different suppliers worldwide. Budgets, standards-setting, and forecasting need to be completed up to 12-18 months in advance. Often there are several systems in place to manage this process including ERP, MRP, and siloed spreadsheets, making it challenging to track coverage and spending.

Let’s explore 4 common issues in procurement as well as the business benefits of implementing an advanced analytics solution built specifically for managing the procurement process in manufacturing companies.

Issue #1: Managing commodity price risk

Business Challenges

Companies that are procuring commodities, raw materials, energy, or packaging to produce finished goods are exposed to increasingly volatile commodity prices. With market prices constantly changing, it is difficult for buyers to plan and budget, and is impossible to know the future spend for any given commodity. Often procurement groups are required to budget and forecast costs for thousands of items at a time, for months or years in advance. Without a commodity procurement system in place, this is a time consuming, manual process and there is no way to get a comprehensive view of price risk.

The Solution

Manufacturing companies need a system that automates and consolidates procurement data into one central location that allows you to track, monitor, and manage commodity price risk. The solution should integrate market price curves with data from ERP, MRP, accounting, spreadsheets, and other systems to provide accurate forecasting and budgeting capabilities.

Business Benefits

Procurement solution leverages predictive analytics to react to the market faster and gain a competitive advantage. The solution enables business users to view real-time coverage as well as the plan and maintain coverage within corporate governance policies. Users can also create additional insights that address specific questions without the help of IT, leading to better, faster decision making.

Issue #2: Lack of real-time information

Business Challenges

It is difficult for manufacturers to get true visibility into their exposures and risk when data is being stored in multiple systems. Coverage and pricing are usually managed in individual buyers’ spreadsheets and is time-consuming to manually combine the impact of physicals, futures, and FX.

The Solution

Manufacturers need a solution that manages planning, coverage, financial hedges, and risk in a single platform. They need to be able to manage cost models, consolidate exposure, have integrated derivatives and FX modules, and run complex forecasting scenarios.

Business Benefits

Procurement solution allows you to uncover hidden risks, make better, more informed decisions, and promptly take corrective actions. With the ability to run advanced simulations on market changes, coverage, spend, and variance, you can better evaluate how projected changes will affect the bottom line, as well as predict the impact to coverage before taking action.

Issue #3: The “spread out” spreadsheet

Business Challenges

It is widely known that spreadsheets are prone to manual errors and significantly increase operational work, yet most manufacturing firms still use a large number of custom spreadsheets to manage commodity risk and procurement. It can take weeks of effort to consolidate plans, monitor rates, and check for anomalies every time new forecasts come in.

Additionally, spreadsheet usage in procurement creates a lot of risk to the business due to the inevitable lack of data integration, auditability, and process controls. They provide no history of why changes were made and are dependent on the individuals who own the spreadsheets and write their own macros. This makes it very challenging to consolidate information for accurate forecasting and planning while also keeping the company’s data secure.

The Solution

These companies require a solution that maintains data in a structured form with the ability to trace and audit every transaction within the system. Role-based access should be set up as well as alerts, warnings, and exception tracking to highlight discrepancies in real-time. Workflows in the system will help create more process efficiencies and increased collaboration.

Business Benefits

Procurement Analysis solution enables procurement teams to reduce the time spent on operational tasks by up to 50%. This frees up valuable time to focus more on business strategy instead of collecting data and preparing reports. Updated volume forecasts can be accessed on-demand, rather than having to wait for a monthly or quarterly update, enabling teams to take corrective actions immediately.

Issue #4: No standards for cost models

Business Challenges

Manufacturers that have multiple business units within the procurement department usually do not have standardized cost models across buyers. Individual buyers will maintain their own spreadsheets, making it impossible to derive any insights or analysis. Because of the sheer volume and complexity of the models, maintaining and updating them takes a significant amount of time. Even with this manual effort, spreadsheets do not provide any visibility on the secondary cost components that make up total costs. These cost components may have a huge impact on spend and play a key role when negotiating contracts with suppliers.

The Solution

These companies need a flexible cost model framework that makes it easy to standardize and capture information in a structured manner to enable deeper analysis. The system should automatically update the components of each cost model and take minimal effort to maintain.

Business Benefits

Procurement solution allows you to establish organization-wide standards to enable the use of cost models to set budgets, learn individual cost contributors, and make automatic corrections to coverage. It also provides the ability to analyze how individual components of a cost model have performed relative to each other or to the market.

Start making the most profitable business decisions

Today’s modern manufacturing companies are benefiting from advanced analytics software. By integrating all of your procurement data and performing real-time analysis, you can start making the most profitable, fact-based business decisions.

Eka Software Solutions is a global leader in providing digital commodity management solutions, driven by cloud, blockchain, machine learning and analytics.

To talk to Eka experts please write to info@eka1.com

platforms
3pls, Archives, Global Logistics, Global Trade Daily

Collaborative Supply Chain Platforms: Vectors of Customer Satisfaction?

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By providing visibility into the operations of the company, suppliers, and providers, a collaborative platform applied to the Supply Chain enables different stakeholders along the supply chain to better work together. It’s a great asset to control costs, but also to improve customer satisfaction. To what extent is this possible? How can collaborative platforms improve the company’s mission? Generix Group takes stock of the strengths in collaborating to better meet customer expectations.

 

An optimal shopping experience

With the rise of digital commerce, consumers have increased their demands for products and services. To meet these new needs, distributors and online retailers are now required to adapt in terms of SEO and logistics services. Faced with this challenge, collaborative platforms are the solution to help companies to keep the promise made to their customers.

 

Meet needs with a wide variety of options

Accustomed to having diverse and competitive offers, customers today want to be able to choose between multiple products that meet their needs. The logistical challenge for businesses is to offer an extensive product catalog, based on a wide range of suppliers. What is the final goal? – Responding in a diversified way to customer requests and retaining the customer by offering a large selection of products.

Supplier repositories can double or triple, while product choices may grow to five or ten times the number of references. The collaborative portal will therefore automate a large number of operations to avoid a significant increase in management costs.

Most products will never go into storage but will need to be delivered directly by the supplier. Logistics collaboration portals will enable this type of process to be implemented at a lower cost while coordinating cooperation between stakeholders such as customers, suppliers, logisticians, carriers, and service providers.

 

Share product availability

To have an optimal shopping experience, customers need to be reassured at all stages of their order and, if necessary, be able to return a product easily. Faced with these requirements, customer information is a real asset for retailers who must be able to track all logistics operations related to the supply and return of goods. What is the goal here? – To inform consumers in real-time about the stock of available or returned products. With the collaborative platform, collecting stock data throughout the distribution process is made simpler.

 

Describe product features extensively

To be sure that products meet their needs, consumers need to know specific characteristics such as dimensions, composition, features, etc. With a collaborative platform, vendors can collect this data from suppliers more easily and make it available to consumers.

 

Improved visibility of B2B and B2C logistics operations

 

With a collaborative portal, companies can get a consolidated view of the logistics operations carried out at every stage of the Supply Chain including providers, warehouses, and carriers. The collaborative portal ensures the traceability of all operations conducted by each step in the process. Once available, this information can be sent to the final customer to inform them of their order processing (preparation, delivery tracking, etc.).

A B2B customer can benefit similarly from reliable information about their purchases. Informed throughout the supply process, they can improve operations planning and task management.

 

Introducing value-added services

 

Product customization

Through this consumer-friendly mode of consumption, brands can satisfy the need to customize products requested by their customers, while maintaining originality.

 

Delivery scheduling

Through this innovative service, consumers are given the opportunity to select a delivery date and time from a calendar based on their availability. Flexibility and comfort are key.

 

Returning goods

The return of goods is critical in an online purchase and has become an undeniable method of attaining customer loyalty. It contributes to a positive customer experience and can generate upsell when returning to a physical store. For delivery drivers, it’s also a great opportunity to increase the volume of services.

 

By granting further visibility of all logistics operations, collaborative platforms provide numerous advantages for the various Supply Chain stakeholders. These include reducing costs, improving service quality, enhancing general performance, and increasing customer satisfaction. Want to know more? Download our e-book “How and why collaborative platforms have become essential to the Collaborative Supply Chain.”

 

DOWNLOAD THE E-BOOK

 

This article originally appeared on GenerixGroup.com. Republished with permission.

IMMEX
Archives, Global Trade Daily, Imports/Exports, International Trade

How Manufacturers Save Money Through Mexico’s IMMEX Program

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The IMMEX maquiladora program combined with the available VAT certification offers one of the top cost-savings benefits for companies that implement nearshore manufacturing in Mexico. It offers a 16 percent VAT tax exemption for all temporary imported materials, equipment, and tools. Manufacturers that have previously expanded operations internationally may compare this benefit to what’s normally referred to as a “free trade zone.” Although tax-wise the IMMEX program is similar, the extra advantage is that it’s not centric to any one geographical location.

When added to access to a competitive, cost-effective workforce, close proximity to the U.S., and favorable trade relations through the USMCA, an operational transition from China to Mexico is a viable option for a growing number of manufacturers. Numerous global brands across multiple sectors have already experienced success over the years through Mexico manufacturing, and the benefits continue to entice new companies to explore their options closer to home.

Working with Mexico Shelter Companies to Ensure VAT Tax Exemption

To receive tax benefits through the IMMEX maquiladora program, manufacturers can either apply and become IMMEX program approved and then get their VAT certification on their own or operate under a shelter umbrella that already has both permits in place.

The timeline of being accepted into the IMMEX maquiladora program often takes several months due to the complexity of what’s necessary to meet the criteria. Plus, if there are any discrepancies in the application and a company is denied, they must start the process again. This impacts Mexico manufacturing costs since companies can’t import any components, materials, or equipment without having their IMMEX program.

Once they have it or work with a shelter to use the shelter’s program, manufacturers are able to initiate their equipment and materials imports and start the setup process on their current Mexico facility. As you can imagine, not doing this right and as fast as possible will present delays on your project. Mexico shelter companies allow manufacturers to receive VAT tax benefits automatically when working under the shelter’s IMMEX licenses since a VAT certification is already in place.

This is in addition to other advantages, such as lower customs broker fees and the use of special compliance software that tracks the timeframe of all temporary imported materials that exempt VAT payment at customs. Companies that wish to apply for the program on their own must hire a U.S. and a Mexico customs broker, since these are the representatives that process and transmit to customs all the documentation required to move materials and finish goods
through the US / Mexico border. Also if you select this operating option, you must absorb all compliance software fees.

Additionally, once approved, a manufacturer can lose VAT certification at any time if criteria is not met at the time of renewal or during an inspection from the Ministry of the Economy. Manufacturers who partner with a shelter company often benefit from decades of expertise, experience minimizing red lights at customs, and a history of optimizing operations.

Explore Cost-Saving Solutions When Manufacturing in Mexico

The fiscal benefit of Mexico’s IMMEX maquiladora program is significant but comes with strict guidelines and great responsibility. Although starting from scratch is an option when nearshore manufacturing in Mexico, it increases costs and extends operational set up times that can lead to bigger challenges down the road.

In addition to working under a shelter’s IMMEX license, a shelter provider can create a customized cost analysis that explores additional ways to save money and get operations up and running efficiently and on schedule.

Overall, the IMMEX maquiladora program provides a good avenue for manufacturers looking to get operations up and running quickly and smoothly.

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Sergio Tagliapietra has spent his entire career pioneering administrative service solutions in Mexico. He works with government in all parts of Mexico and he is one of the country’s most respected business leaders in the field. He is president and founder of IVEMSA, a full shelter services provider and partner to manufacturing companies expanding to Mexico.

manufacturing
3pls, Archives, Global Logistics, Global Trade Daily, Special Reports, Warehousing

How to Gain an Advantage in Manufacturing Facilities During Post-Crisis Times

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In the United States today, as many manufacturers have entered post-crisis phases in their facilities, some have a much different business model than they did entering 2020. Others, such as those who manufacture medical supplies, craft supplies, and pet supplies, don’t look much different than they did at the beginning of the year, outside of a backlog of orders that they are doing their best to fill in a timely fashion. 

Some manufacturers were surprised at how well their products did during crisis times earlier in the year. For example, LumenAID, a manufacturer of portable, solar-powered lanterns that double as a phone charger, has seen a huge uptick in sales. It seems with people preparing for times unknown, emergency supply manufacturers of this type can’t fill the shelves quickly enough. Other manufacturers were well aware of the need for their products, like office chairs, school supplies, and pet training products. The comforts of home for those stuck at home became the quick front-runners in sales, and suppliers with stored inventories were pleasantly surprised with their sales numbers. 

Yet, for some manufacturing facilities, especially in the hardest-hit areas of the country, it wasn’t a lack of demand that shut down the product lines. It was the lack of production associates able to make it to the facility. Quarantine, public transportation being shut down, mandatory stay at home orders, and a lack of child care left some facilities looking much like a part of a ghost town. The most prepared of those production facilities put that time in the hands of their plant engineers and maintenance managers, and for good reason. 

In an industry where it is often common for machines to run in 72-hour cycles or longer to meet production needs, the downtime came as a blessing in disguise to many engineers and mechanics. They strapped on their tool belts and began performing preventative maintenance that had been put off, in some cases, until the machinery refused to operate any longer. While many production associates were home by no choice of their own, skeleton crews of mechanics and engineers quietly worked behind the scenes to ensure that the production lines that these associates returned to were repaired, lubed, and ready to run for another 100,000 rotations. 

While You Were Out…

Although we’re not positive what the “new” normal will look like, manufacturers are doing their best to get back to business as usual.  One key element is ensuring that their facility can handle the workload, and well-maintained production lines are a fundamental part of that process. Even those production facilities that did not have to implement the Emergency Contingency Plan and were still able to run socially distanced production shifts were finding difficulty in getting the parts necessary to perform preventative maintenance on their production machinery. 

Facilities with CMMS systems that handled their maintenance parts rooms were seeing just how much those systems did for them, possibly for the first time ever. These manufacturing facilities were able to perform preventative maintenance as normal, because of the reorder point set in the CMMS, ensuring that the parts to perform the maintenance were, indeed, stocked in the parts room. Due to the human element being removed by CMMS, the moment the last technician performed the PM and took the part off of the shelf, the system already issued a purchase order and had a replacement on the way. 

Full Speed Ahead

As manufacturers are getting back into the swing of things, especially those fortunate enough to have orders that they need to fill, the appreciation for well-maintained machines is at an all-time high. With most of the country able to return to work, and production lines full of associates thankful to be back on the line, returning to a facility with newly maintained machinery is just another day in manufacturing. However, from the mechanics and engineers who worked solo overnight shifts to prepare for firing the production lines back up, there is a nearly audible sigh of relief when the conveyor belts start running. 

Preventative maintenance was, in some facilities, the only items that could be completed during the height of the crisis, and production managers are reaping the benefits of those overhauls at the moment. In notoriously under-maintained facilities, the quietly operating, well-oiled machinery that is producing post-pandemic inventory is a sign of moving into stronger financial times. 

As A Post-Crisis Model

If your production facility is running at a pre-pandemic rate, you’ve more than likely gotten back into the normal preventative maintenance schedule, less a few adjustments. For those facilities that don’t have the need to run full production shifts at this point, investing labor dollars into machine maintenance is a smart move. Although the need may not be there at the moment, when the orders do come in, the ability to perform full production runs without stopping because of unperformed routine maintenance will be one more way to stay competitive. 

Well maintained machinery produces to specification, which reduces scrap and reworks exponentially. By producing a consistent and reliable product, your facility develops a reputation for quality, and that is priceless in post-crisis America. By ensuring that your production facility is adhering to a preventative maintenance schedule, you’re committing to running products that are manufactured to strict standards at a time when they’re more valued than ever. A CMMS is another tool in a manufacturer’s facility to ensure that they’re producing items that meet or exceed the expectations of their customers. 

In addition, maintenance costs are decreased by 5-10 percent by having a preventative maintenance program in place in a manufacturing facility. It also decreases the time spent repairing machinery by 20-50 percent. In terms of looking out for the bottom line as manufacturing facilities try to push forward in uncertain economic times, a strong preventative maintenance program makes sense. In saving both time and money long term for manufacturing facilities, preventative maintenance can help manufacturers get a leg up in the post-crisis American economy. 

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Co-Founder and CEO of Redlist. Raised in a construction environment, Talmage has been involved in heavy equipment since he was a toddler. He has degrees and extensive experience in civil, mechanical and industrial engineering. Talmage worked for several years as a field engineer with ExxonMobil servicing many of the largest industrial production facilities in the Country.

risk
Archives, Global Logistics, Global Trade Daily, Stories

New Manufacturing Priorities: Increasing Agility and Understanding Systemic Risk

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COVID-19 dealt an unprecedented blow to the global supply chain. Almost overnight, demand skyrocketed in some sectors and plummeted in others, forcing manufacturers and their suppliers to adapt on the fly.

As many as 94% of the companies in the Fortune 1000 have experienced supply chain disruptions since the start of the pandemic, including global manufacturing titans like Apple. The fact that the world’s largest companies haven’t been immune suggests that abundant resources and relationships aren’t enough to help supply chain partners survive in times like these.

It also suggests that the traditional playbook for dealing with supply chain problems is no longer quite as effective as it used to be. The old methods of responding to crisis demand and supply are no longer enough to withstand these events — this pandemic, as one example, has led to shortages of everything from toilet paper to car parts.

Shifting Focus From Efficiency to Manufacturing Agility

If manufacturers want to withstand the next crisis, they’ll need a new approach. COVID-19 has highlighted the need to move from focusing on efficiency to adapting for flexibility, resilience, and agility.

Arguably, the focus on efficiency — on doing the most with the least — even exacerbated recent supply chain disruptions by leaving producers and suppliers under-resourced and locked into one way of doing things.

Even as the pandemic rages on, the takeaway is clear: Manufacturing agility is more important than operational efficiency. Efficiency strives to make incremental improvements, but reality calls for manufacturers to make sudden, sweeping changes in the face of unprecedented challenges.

Understanding Systemic Risk

The challenges the pandemic brings to the supply chain represent nonsystemic risks — or risks that are out of manufacturers’ control. Problems that manufacturers can control with the right tools and processes, on the other hand, are systemic risks — specifically, problems that start on the ground floor when machines break, then disrupt production lines, then cause issues all the way downstream in the supply chain. It’s like one domino toppling down the rest.

Nonsystemic risk puts additional pressure on manufacturers to ensure that their facilities are as systemically risk-free as possible to remain flexible around dramatic swings, either up or down, in demand.

Now that COVID-19 has proven anything is possible when it comes to nonsystemic risk, manufacturers must turn their focus toward creating agile operations to contain supply chain issues in whatever form they arrive. For example, when a nonsystemic risk like the pandemic forces a manufacturer to shut down 80% of its production lines in a low-demand environment, the lines that are still operating will need to function at maximum productivity.

If the remaining lines aren’t up to par, the company will become vulnerable to slowdowns that could turn away what few buyers still exist, or the company may, once again, have to go through the time-consuming and costly process of shifting production to different facilities.

Nonsystemic risk highlights the need for organizations to uncover and manage systemic risks, taking control over whatever factors they can to keep bad situations from getting much worse.

Finding Opportunities in Manufacturing Agility

Managing systemic risks starts by understanding on-the-ground conditions, particularly when it comes to machines. When the unexpected happens, machinery bears the brunt of the consequences. As it ramps up or down in response to sudden changes in production, it must continue to operate efficiently, productively, and without downtime.

When manufacturers can gather insights on machines at the ground level, regional leaders can view those insights collectively to uncover companywide opportunities to manage systemic risk at large.

By de-risking operations in this way, these companies stand to gain substantial predictability and flexibility around their machines, which opens up opportunities for greater productivity and more effective, efficient asset planning at the corporate level. Focusing on the following three areas can help you uncover systemic risk and opportunities for more agile production lines:

1. Create redundancy in your production lines.

As a first step, you should have multiple lines running at the same time. This way, if one does fail, you’ll have a backup plan. That strategy itself should be viewed as the first step in a much larger strategy — as it really just serves as a crutch approach to mitigating systemic risk. Running many lines that are susceptible to machine failure and downtime can actually become a significant financial risk in manufacturing.

The eventual goal should be to have every line be your best line — which means no machine downtime. To create that kind of system, you need to understand the details about why your best line operates at maximum productivity and why your other lines pale in comparison. The real value of creating redundancy in your production lines will come from the insights you gather on your machines to optimize every machine companywide, making each production line your strongest one.

2. Leverage machine health data.

So how do you gain insights on individual machines in your production lines and view that machine health data collectively to reduce risk along every production line? It’s easier than you might think. In fact, sensors and IIoT networks combined with AI algorithms can do most of the work for you, showing you where risk and opportunity exist in manufacturing operations across entire asset classes.

When these tools give you insights into the health of all the components of your supply chain, you can both replicate what’s working best and predict what might fail in the future, removing the weakest parts and replacing them with stronger ones. Machine health data can help you find your best configurations so that you can replicate these practices across all your facilities.

3. Facilitate remote collaboration.

The factory floor as we’ve long known it is changing. That was true even before the pandemic, but COVID-19 sped up the transformation. Social distancing practices have meant that up to half of manufacturing employees have been unable to work on-site. Digital collaboration and remote work are the new normal everywhere, and the manufacturing industry is no different.

The good news is that by utilizing digital collaboration platforms, you can bring a lot more opportunity for flexibility and agility into your company. When your teams can collaborate from anywhere, you can draw on the institutional knowledge of your entire organization. Cloud-based software that identifies machine health problems and allows for remote collaboration to address them lets your teams work better together, even from farther away.

The pandemic forced everyone to adapt fast, but it should also force everyone to question their assumptions about what manufacturing looks like in 2020 and beyond. Surviving isn’t about becoming as lean as possible — it’s about being agile enough to stay in front of the waves of change, even the ones you’ll never see coming.

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Artem Kroupenev is VP Strategy at Augury, where he oversees Augury’s AI-based machine health, performance, and digital transformation solutions. He has over a decade of experience in building products and ecosystems and bringing technological innovation to market in the U.S., Israel, and Africa.