Is It Time to Subsidize Manufacturing?

September 18, 2017 at 8:53 AMChad Moulder

Manufacturing Plant

In 2009, the government of the United States bailed out two of America's largest automakers with a loan of around $80 billion dollars and avoided negatively impacting more than one and a half million manufacturing jobs. With more than $70.5 billion repaid already, that works out to be an incredibly efficient sixty-two hundred dollars per worker a fraction of the amount given to Wall Street (roughly $700 million). 

In August, billionaire head of Foxconn Electronics, Tony Gou announced that his company would build a $10 billion dollar manufacturing facility in Wisconsin. Promising more than three thousand employees when if it opens and another ten thousand at full operation, the deal seemed like a dream come true for many looking for evidence that manufacturing in America can return to it's pre-automation roots. Unfortunately, this deal seems (at best) a temporary solution to something that the public has been largely reticent to admit: robots and automation are killing traditional manufacturing jobs. It is unlikely that this plant will ever get to the thirteen thousand employees it has promised to bring to the state of Wisconsin and even if it manages to hire the majority of those people, most analysts agree that with the speed at which robots are replacing line workers, it is more likely that this deal will end up costing the state (and the federal government that brokered the deal) a great deal in the long run.

PHOTO CREDIT: The Cap Times

“...because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash.” - Milwaukee Journal Sentinel

With the ink on the agreement barely dry, many have begun to try to discern the true cost of deal. At a little over $3 billion dollars in incentives, subsidies, and grants many have likened it to a corporate welfare package. The deal would conservatively cost already cash-strapped Wisconsin an additional $200 million a year for the next fifteen and would require local and state governments to borrow an additional $252 million just to cover the cost to rebuild a highway and more than $150 million to subsidize building materials for the new facility. So what happens if Foxconn pulls out of the deal or only partially lives up to some of the promises it has made? 

The reason for the suspicion grows from Foxconn's record in the US. In 2013, they announced a $30 million dollar high-tech plant in Pennsylvania that has yet to materialize. And in 2014, Gou had promised to invest a billion dollars in tech manufacturing in Indonesia which that company still has not received. If one looks at these past failings in addition to the fact that the company had already replaced more than 60,000 worker with robots in its manufacturers with plans to replace more in the future. 

And this deal isn't exactly unique. As more and more politicians look for a quick feather to put in their cap before the 2018 election season really heats up, many communities are finding themselves actively pursuing manufacturing companies like Foxconn in the hopes that a quick deal will buy them time enough to pursue other industries. The problem is that administrations, policies and politics can change from day to day leaving a worrying mess for the "next guy."

PHOT CREDIT: General Motors

“The false premise that manufacturing is a free-market activity—that subsidies don’t exist or are inconsequential—should finally be put to rest, no one anywhere in the world makes steel or autos or virtually anything else in a factory without subsidies." - Louis Uchitelle, Making It

In recent years, lawmakers have seemingly come together to recognize that American manufacturing may be in need of some help. In 2012, the Obama administration pushed state and federal bodies to increase their support of domestic manufacturing and has been widely hailed by economists for keeping many companies afloat during the worst recession in US history. As globalization increasingly means that almost nothing made in the US can't be manufactured and shipped here from another country (like Mexico, for example), this kind of government involvement plays a huge part in their success.

With those manufacturing jobs goes innovations and processes that can be used to make other discoveries and improvements to design and function. By strengthening American manufacturing with carefully subsidized programs, it's not inconceivable that domestically sourced manufacturing could improve the US' already strong market share and could, with careful planning and strategy even rival Chinese manufacturing for global dominance. The biggest issue is that it has to be a coordinated, national effort. Local communities and states do a great job of wooing businesses to their locales, but nothing speaks quite like the almighty Dollar so it will take an effort by Washington to see this come to pass any time soon. 

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Subscriptions Are the New Black

August 15, 2017 at 3:29 PMChad Moulder

Subscriptions versus One-Time Purchases Image

 

Subscriptions Are the New Black

In this week's blog, we take a look at subscriptions. Although it has always been around, many companies are now looking towards subscription models and tiered pricing in order to preserve or improve their market share. Let's take a look at some reasons why that is.

 

It's so very easy to forget about the benefits offering subscriptions to your customers when looking at rolling out new or more innovative products, but as the shift in the United States has begun to skew towards longevity and multiuse, more and more companies are looking towards subscription-based services when creating goals for their company. With the rise of more and more complicated technologies and products, never has there been an opportunity to serve your customer base (not to mention yourselves and investors) by giving them exactly what they are asking for at a price you can both live with.

Value to Clients and Customers

Not very long ago, one of my favorite products went from version-based purchasing to a subscription model. To say that I was unimpressed really would have been an understatement, but as the months have ticked by I've noticed a few things that have completely turned me (as a consumer) on the notion of a subscription service. Firstly, there's the stupid simple convenience of putting ten bucks a month on autopilot to ensure that I always have the latest and greatest version of the software that I am using. As a certifiable type A personality, I cannot explain the peace of mind it gives me to know that the services or product I need to my work are prepped and ready for me--always.

Another value I get from my subscriptions (it always starts with just one) is that it allows me greater flexibility with my personal budget. I have personally found it easier to meet financial goals and save for big ticket items because what was once considered a big ticket purchase for me has now turned into a palatable monthly fee. In face, there are now services that allow you to skip months or pause your subscription if you find that you don't need certain tools while you are on vacation, for example.

Lastly, I have found that most companies offering some type of subscription service will often bundle additional products or services at little or no additional cost. This is a huge deal for a growing number of consumers that are looking to squeeze as much value from their purchases. For example, once upon a time, I was resigned to spend hundreds of dollars on Adobe products. Then they began bundling them, which helped with some of that burden, but now I instead pay a fraction of what I used to for more programs than I can shake a stick at...all for a fraction of what I used to pay.

Value for Businesses

"Because a high percentage of the revenue of a subscription-based business is recurring, it's value will be up to eight times that of a comparable business with very little recurring revenue." John Warrilow, The Value Builder System

Possibly one of the best benefits one can hope to expect from adopting a subscription model is a newfound ability to accurately predict revenue from recurring sales. A lot of what goes into keeping your business successful revolves around having accurate business data. Being able to track and forecast revenue can provide a clear idea of how to manage inventory as well as providing points of reference for reordering. 

Another key benefit for businesses looking to switch to subscriptions is that it allows a company to provide laser-focused services and products to their customers. One of the easiest ways to turn off a customer is to overwhelm them with choices. Subscription services don't normally have that problem because the consumer is typically getting exactly what they want. This may mean that a company can trim underperforming services and products allowing for a simpler backend while simultaneously providing your customers with a focused, efficient transaction. 

This can of course, extend to simplifying other parts of a business. For example, a benefit that some companies bank upon when considering the switch is the simplicity of it all. For the business, they only need to sell what their customers are interested in, but in addition it may also make shipping easier as you will always be able to predict and order only what is needed for your business. Additionally, since most of the work is done prior or at the onset of a subscription service, the majority of the process from interest to sale is automated, freeing up valuable resources to concentrate on other aspects of the business.

Any way that one wants to look at it, subscription-based models offer many tantalizing benefits that companies should be seriously looking at. We've only just begun to look at some of the possible benefits, but by and large, consumer are beginning to show a willingness and desire for subscription services and products and many businesses on this model report that customer engagement, conversion, and retention have grown explosively after a switch.

Subscriptions Can Work

Many suggest that subscription models are a means to quickly shuttle between clients or customers, but I think that the opposite may in fact be true. Once the initial work has been completed, the service-provider then may then be able to strengthen that relationship by offering what feels to them like a catered and personalized experience. It encourages trust as service providers must now ensure that they can consistently provide those services at any time for the client. Clients with project based relationships with their service providers are an avoidable loss; by switching a customer's focus from completion of a project to one that focuses instead on ongoing objectives, a company can more easily innovate and explore ways to provide a better product or service to their customers. 

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Inconsistent Manufacturing Suspected Cause of Homer-Happy MLB Season

August 15, 2017 at 12:47 PMChad Moulder

Night Game

Inconsistent Manufacturing Suspected Cause of Homer-Happy MLB Season

Without a doubt, the 2017 Major League Baseball season has been one for the record books. Currently, the leagues is poised to shatter the average home runs per game average of 1.17 by almost a tenth of a point (MLB average stands at 1.26 home runs per game at the moment). What this means is that if the league continues this pace, they will effectively destroy the previous single season home run record from 2000 by an impressively mystifying 350 additional homers (roughly 6400 homeruns). And although layman's logic would point towards advances in science or athlete training as the culprit, what many researchers are now finding is almost equally amazing: the baseballs themselves are at least partially responsible for the increase and it's due to inconsistent manufacturing.

Baseball-Reference.com via 538

The baseball wasn't initially expected as the source behind the recent spate of homers in the Major League. Last year, Ben Lindbergh and Rob Arthur began looking at the data to understand the sudden spike in home runs around the league. Beginning in the '09 season, the average runs per game inning to decline, from 4.7 runs per inning in '08 and eventually falling to 3.9 by the end of 2014. Something strange was happening in 2014, however. At the end of the season and into the postseason, teams that were still alive saw their runs spike from 4.06 at the beginning of the season to an average of 4.25 by the end of the season. Then in 2015, things got more interesting.

Pitcher on the Mound

Initially, 2010 was thought to be the "Year of the Pitcher", with many observers and commentators praising the explosion of talent at the mound for producing runs at a much lower rate than they had in any full season prior to 2010. So when the 2010 season kicked off and we witnessed an explosion of home runs that couldn't be attributed to anything like an increased strike zone or increased percentage of contact (at-bats minus strikeouts). What turned out to be the actual cause would take insiders and observers almost four more years to understand.

The culprit, as it turns out, was the ball itself. In June, Mitchel Lichtman and Ben Lindbergh started studying the official game ball in an attempt to understand what may be contributing to the spike in homers. Through experimentation on more than three dozen baseballs, they found what they had begun to suspect: the baseballs from 2015 were "bouncier" than previously. As they continued to look at historically used game balls and evaluate newer game balls, they noticed that the physical makeup of the ball had seemingly changed. The new balls were now smoother and the seams smaller, subjecting the ball to less air resistance. Additionally, the team found that the balls had begun to become "harder" providing for a better energy return when struck with a bat. The "problem" was that there was no announcement of changes being made to the official ball. 

The MLB for their part have denied that any such changes were made to the official game ball and that all materials currently in use are identical to previous generations. They also note that all game balls must fall within the league standard, which may have been left purposely wide so as to retain some unpredictability to the game. Anecdotally, players and coaches also seem to believe that a change has been made to the ball. In a recent interview with the Orange County Register, New York Mets manager Terry Collins said "The seams of the ball are definitely lower...and there is no question that the ball is harder." His voice joins that of Jake Arrieta ("I'll get a ball hit back that is oblong shaped and that never happened until this year"), Andrew McCutchen and pitcher Justin Verlander who have all mentioned changes to the official ball in recent months.

So what does this have to do with inventory solutions? Well in a nutshell, this is a pretty low-stakes example of the importance of consistency in your products. Small changes can have large impacts and in other cases could open your business up to unwelcome or unexpected attention. Having solid, reliable, and well-documented bills of material and assembly instructions could mean a world of difference and might help as a source of information if you are just now beginning to establish standardization across your products. 

What the moneyball data seems to suggest now is that after years of fluctuation, the performance of game balls is beginning to become consistent. By evaluating the standard of deviation in drag over the last few years, the trend is that the balls used across the league have become much more homogenous in their performance. One could suppose that with the league disavowing any knowledge of changes to the ball or the standards by which they are evaluated, the entire incident could be chalked up to a decade-long trend to bring standardization to baseball with an acceleration within the past two years pointing towards a game ball that would perform predictably game after game. 

And for those that are curious, here's a video from How It's Made detailing the process:

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Interesting Trends in the Food and Beverage Industry

July 13, 2017 at 8:10 AMChad Moulder

Interesting trends in the Food and Beverage Industry

This week, we take a look at some emerging trends that have begun affecting the Food and Beverage industry. Ranging from packaging to promotion, these are some of the most interesting trends in the industry today.

 

1. Targeting Millennials: While Millennials may seem like a broad and amorphous target, numerous studies show there are some commonalities. Millennials like fresh, less processed foods, as demonstrated by their preference for "fast casual restaurants that offer freshly prepared foods, and shopping the perimeter of grocery stores where fresh and non-packaged foods can be found".


2. Smaller Packages are a Big Trend in Packaging: With one- or two-person households representing 61% of all U.S. households, packages sized to serve one or two people have become a big trend in packaging. Such formats include single-serve packaging, meals for two, multi-packs of individual portions, and resealable packaging. The rise in smaller-footprint stores is also influencing this trend.


3. Packaging for Convenience: Convenience is a major selling point for food and beverage packaging. Features such as ease of opening, resealability, portability, lighter weight, and no-mess dispensing are packaging benefits that influence consumers' purchasing decisions positively.


4. See-Thru Packaging Can Boost Sales: More and more marketers are putting their products in packages that are see-thru or have see-thru windows. Transparency in packaging taps into consumer desire for transparency about how food and beverages are produced, both figuratively and literally. Companies that are transparent about their ingredients, sourcing, and business practices are reaping the benefits in consumer goodwill and trust.


Eco Friendly Packaging Illustration5. Eco-Friendly Packaging Growing: In the past few years, single-serve bottled water has come under attack by environmentalists as epitomizing the wasteful nature of modern society. As a result, some marketers of bottled water have stepped up their introductions of more sustainable packaging. Likewise,  Packaged Facts believes that improved recyclability and sustainability will become ever more important to the success of the single-cup brew market—if not a cost of entry—as this business matures. In the past two years, several American and Canadian marketers have introduced more environmentally friendly designs for use in K-Cup brewers

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Five More Surprising Facts About Manufacturing

July 13, 2017 at 8:06 AMChad Moulder

5 Surprising facts about Manufacturing

Last week we looked at some of the impact that the Manufacturing industry had on the US economy, this week we look  at some additional facts that you may not have considered. American manufacturing has long been the backbone of US prosperity, but with the rise in automation and advances in efficiency and practices, some may be wondering if it still deserves that distinction. In this week's blog we look at 5 surprising facts about the state of manufacturing.

 

1.The manufacturing industry employs more than 12.3 million Americans, accounting for about 9% of the total workforce. Since the end of the Great Recession, manufacturers have hired more than 800,000 workers. There are 7.7 million and 4.6 million workers in durable and nondurable goods manufacturing, respectively. (Source: Bureau of Labor Statistics)

2. Manufacturers have become more competitive globally over the past two decades. Overall the manufacturing industry has seen a revolution in efficiencyOutput per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling its labor productivity over that time frame.

To help illustrate the impact to the bottom line of this growth, unit labor costs in the manufacturing sector have fallen 8.4 percent since the end of the Great Recession, with even larger declines for durable goods firms. (Source: Bureau of Labor Statistics, Board of Governors of the Federal Reserve System

3. Over the past 25 years, U.S.-manufactured goods exports have quadrupled. In 1990, for example, U.S. manufacturers exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2014, it reached an all-time high, for the fifth consecutive year, of $1.403 trillion, despite slowing global growth. With that said, a number of economic headwinds have dampened export demand since then, with U.S.-manufactured goods exports down 6.1 percent in 2015 to $1.317 trillion. (Source: National Association of Manufacturers

4. For every $1 spent in manufacturing, $1.81 is added to the US economy. This is the greatest multiplier effect of any economic sector. Additionally, for every worker in manufacturing, another four are hired elsewhere. (NAM calculations using economic impact modeling)

5. The cost of federal regulations fall disproportionately on manufacturers, particularly those that are smaller.Manufacturers pay $19,564 per employee on average to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole. In addition, small manufacturers with less than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90 percent of the difference in compliance costs between manufacturers and the average firm. (Source: Crain and Crain (2014))

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5 Surprising Facts about U.S. Manufacturing

July 12, 2017 at 12:54 PMChad Moulder

 5 Surprising Facts About U.S. Manufacturing

American Welder in Action

In this week's post, we look at five surprising (and frankly, amazing) facts about the current state of the United States manufacturing industry. 


The Manufacturing Industry is the largest and most dynamic sector of the U.S. economy.

MarketWatch estimates that the gross output of US manufacturing accounts for roughly 36% of the nation's GDP or about $6.2 trillion dollars annually. This is nearly double any other sector such as government, real estate, and professional and business services. Even more surprising when one looks at the fact that the manufacturing industry accounts for only one out of every 11 jobs in the US.

 

U.S. Manufacturing is the world's 3rd largest economy on the planet.

 

US Manufacturing VS the World (chart)

According to the Manufacturing Institute, in the 20 years ending in 2012, manufacturing output increased more than 83 percent. This feat is even more impressive when one considers that the United states suffered not one but three major recessions including the "Great Recession" which lasted more than six years and a decline in US GDP of 5.1%. 

 

The Manufacturing Industry is leading the way on renewable energy.

Solar Array Mountain background

According to the U.S. Energy Information Administration, the manufacturing industry used 2,269 BTUs of renewable energy, more than the three other sectors combined. Additionally, of all the sectors manufacturing was the only sector to reduce their CO2 emissions. In fact, between 1990 and 2012 the manufacturing industry has shrunk their CO2 footprint by 13%; no small feat. 

 

Manufacturing is investing heavily on research and development. 

Research and Development

Annually, the manufacturing sector invests roughly 3.9% of their total sales back into research and development. This is well above the 2.3% found in other industries. This forward-looking approach has yielded many boons for the economy and country in general and should also be credited with the push for greater STEM education as a means of protecting domestic economic security and creating a talented, competitive workforce.

 

The vast majority of manufacturing companies in the United States are actually very small.

Small Business Manufacturing

In 2014, there were 251,901 firms in the manufacturing sector, with all but 3,749 firms considered to be small (i.e., having fewer than 500 employees). In fact, three-quarters of these firms have fewer than 20 employees. (Source: U.S. Census Bureau, Statistics of U.S. Businesses)

 

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It Might Be Time to Get Excited About The Internet of Things

July 10, 2017 at 9:00 AMChad Moulder

The Internet of Things Illustration

The Internet of Things

 

This week, we take a look at the Internet of Things, a buzz-y phrase that is getting more and more attention as the nation and the world move towards a truly digital future.

 

Let’s talk about the future.

 

The most popular definition of the Internet of Things (IoT) is that it is a network of connected devices that operate with a binary connection (on/off) to the Internet. This can include a variety of “things” from cell phones and wearables to the components that comprise them. It can also include other less obvious “things” like virtual items, information or even people. But why should you or your company be thinking about the Internet of Things?

 

Technology research company Gartner recently estimated that by 2020 there will be more than 26 billion devices connected to the Internet. Some analysts even suspect that number to be much closer to 100 billion devices or roughly 12 internet-capable devices per person in just a couple of years. Essentially anything that can be connected to the Internet will be connected very soon. Companies that are looking to improve customer satisfaction, operational efficiencies, and product or service quality should certainly be looking at IoT as a way to address them.

 

Unfortunately, many industries are currently struggling to find a point of access as processing such large amounts of raw data and attempting to create systems that rely upon this connectivity remains one of the most difficult barriers to overcome. Despite these growing pains, I can assure you that it is no longer a question of if but more a question of when large companies begin to integrate IoT into their business models.

 

One of the first industries to adopt IoT on a large scale has been in manufacturing. As many consumers look to curb capital expenses and replace them with operational expenditures, the IoT allows for a more seamless and efficient source of revenue for many businesses. IoT devices also have the benefit of improving the end-user experience which in turn increases customer loyalty and driving sales.

 

In a broader sense, we may begin to see how the IoT might become useful on different scales. Applications and devices could be used on scales large enough to manage traffic or parking. Smaller applications might be to have your refrigerator monitor what foods you have, their expiration dates or the ability to compile shopping lists or recipes based on that information. Although still very early in its current use and adoption, the Internet of Things will most certainly prove itself to be a game changer in ways that aren’t immediately clear.

 

As more consumers begin to move towards cutting capital spending and increasing operational expenditures, businesses may find that early adoption can lead directly to a more seamless and efficient source of revenue. Although it will still take some time to fully realize the potential of IoT, companies that figure out how to collect, process and analyze the vast amounts of information may find themselves at the vanguard of their industry.


Any business can implement IoT, but scale and investment are key to success. Cisco recently conducted a study about the Internet of Things where the discovered that about 70% of IoT campaigns ultimately fail. Why? The top contributing factors from the study revealed that internal expertise, quality of data, protracted implementation, and inconsistent implementation to be among the most challenging obstacles to overcome. The most damning, however was too much emphasis on the technology and not enough on the human element.

 

When trying to define metrics to gauge success, the study went on to suggest that the alacrity with which IoT is implemented and the company’s engagement consistency/commitment were the most important to track. Businesses should be looking at the Internet of Things like they would any traditional implementation. This means competent teams, technology and proper accounting (time and money) all contribute to the success of an IoT rollout. 

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Tips and Tricks for using AllOrders

June 27, 2017 at 8:42 AMChad Moulder

 

In this week's blog, we look at some features we have added in previous versions that may help you to be a more efficient user of AllOrders.

 

Tips and Tricks for Using All Orders

 

One of the great things about All Orders is just how robust a tool it is and the flexibility it gives users looking to make their processes more efficient. With all of these features and functions, however, it can create situations where additional efficiencies can be overlooked. This week, we look at a few tips and tricks that can sometimes be overlooked.

·Using the Scan BoxYou do not need a scanner to use the scan box. Simulate a scan by pressing the tab key. You can enter in the Item Name, UPC, Manf. Part #., Vendor Part #, Vendor UPC, or Descriptions.

·Auto Email Shipping FormsShipping forms can be setup to be automatically emailed once a Ship Doc is marked as shipped. Emailing directly from All Orders has to be turned on for this feature to work. 

·Editing Multiple OrdersTypically only one single document for any document type can be open at a time. Users needing the ability to open more than one order or quote at a time can turn on the "Allow Multiple SOs/Quotes to be open" in the Sales Order Preferences. 

·Multiple Copies of All OrdersYou can open multiple All Orders windows. Simply Click the All Orders Icon to open another copy, confirm that you want to open another copy, and use the same username and password log in.

·Setting up Default PrintersTypically All Orders does not tell Windows which printer to use when sending documents to the printer. Use the "Apply default printer" in the Report Preferences to have All Orders dictate which printer to use. By doing this All Orders will make sure the report is sent to the default printer but allows users to set the default printer per report and override the default printer. 

·List HackSort multiple list columns by clicking the initial column to sort by and holding down Shift key while clicking additional columns to add to the sort. 

·

List Hack - Use powerful filters to find what you are looking for. Using the * for fuzzy matching, using the Greater than > and <less than characters to help filter the numeric columns.

·Batch ProcessingVarious commands can be done in batch from the list by using the filters and the check boxes to focus on the rows in the list that processing needs to get done on. Orders can be easily closed in batch directly from the Sales Order List, Ship Docs can be marked as Shipped and Recorded in Quickbooks, Work Orders can be changed to a status of Finished, they can by Picked and Allocated, Drilled Down, and Flattened in a batch.  

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Why You Should Update Your Inventory Process

June 20, 2017 at 9:37 AMChad Moulder

As more and more companies march towards in-store and online sales integration, it has become clear that there's more than just shipping costs digging into profits.

 

Why You Should Update Your Inventory Process

Modernizing your inventory management process could be just the change your business needs to stay successful. 

 

There can be no doubt that as a whole, retail operations have become vastly more complicated within just the past decade. As more and more businesses and companies look to reconcile in-person (in-store) transactions with online sales, the importance of managing that business with an efficient inventory management tool becomes all the more apparent. Poor or inadequate inventory management can open the door to production and order delays, unhappy customers and unexpected expenditures, so it is not difficult to understand the importance of getting it “right”.

The problem seems to stem from the slow adoption of processes and technologies that have been proven to save time and money for businesses in all sectors. For example, according to a recent study 43% of small businesses operating in the United States do not track their inventory or do so through a manual process. In the same study, it was also discovered that 55% of those same small businesses don’t currently track their assets or do so manually. This has resulted in overstocks, out-of-stocks and returns costing the U.S economy more than $1.75 trillion dollars in lost revenue annually, a number that has been steadily increasing. In fact, if you sell a product within the U.S., on average it is costing you $1.43 in inventory costs for every dollar made in sales.

To the business planner looking to forecast costs and sales, numbers like these must seem especially egregious. With nearly $14 billion in industrial assets changing hands and an increase of 15% in eCommerce over the same period last year, many companies may find themselves wondering why their gross margins may not be experiencing the same growth. For some, increasing the number of skus to meet long-tail customer demands has been the solution, but a much more efficient solution is to integrate better processes that remove contributing factors like human error from the equation.

This may be changing, however. As more and more companies look to shore up holes in their budgets, more and more are looking towards taming their inventory as one of the more rewarding opportunities. According to a study by Motorola, 66% of warehouse IT and operations decision makers plan to expand technology investments by 2018, citing automation efficiency and worker productivity as the driving forces behind those decisions.

The benefits of improving tracking and inventory management are numerous, but there are some considerations for businesses still on the fence as to whether to embrace digital solutions (such as All Orders by NumberCruncher) or not. One key consideration that may not be so obvious is that whether you like it or not, customer satisfaction is absolutely an external factor that can affect your ability to forecast inventory or production. Agitating your hard-won customers with low or out of stock items will almost certainly lead your customers to question if their patronage is worth the hassle to get the product and just as a recall can damage a business’ reputation, failure to recognize the value and importance of managing your inventory is a nightmare waiting to happen.

Additionally, for businesses that operate with regulatory or government oversight, proper inventory management can not only improve efficiencies within your business, it can also help to keep your customers safe. In a study by the New England Journal of Medicine, researchers observed that the use of barcode tracking led to a reduction of administrative errors by 41.4% at an academic medical center. In other industries, this might translate into an avoided recall or unexpected costly expenditures so there are other benefits a company can expect to receive by integrating and updating their inventory processes.

If your company is one of the estimated 69% of small to medium-sized businesses expecting revenue growth this fiscal year, it certainly seems worth investing the time and resources to implement an efficient inventory control strategy.

Give your company accurate insights into stock and inventory conditions and see a positive impact on your business’ profitability. Connect with one of our industry inventory specialists today for a free demo or to start your free trial of All Orders from NumberCruncher.

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Can Your Business Avoid Total Recall?

June 13, 2017 at 9:23 AMChad Moulder

 

Recall Image

In this week's blog, we look at some popular ways of managing the risk of recall to your business.

 

Can Your Business Avoid Total Recall?

This week, United Pet Group was forced to recall five different brands of popular rawhide dog chews when it was discovered that several lots contained a quaternary ammonium compound mixture used in some of it's facilities as a processing aid. The recall, which affected five different brands including the very popular Digest-eeze, has been traced back to the company’s Edwardsville, Illinois distribution facility where it was packaged and sent to a wide range of retail locations including many popular online retailers.

What happened to United Pet Group isn't, unfortunately, that uncommon an occurrence. For just the first half of 2017 alone, there have been 78 official product recalls issued by the Food and Drug Administration for reasons ranging from Listeria contamination to undeclared ingredients. Seven of those were this week alone and affected not only pet products like Digest-eeze and Loving Pets (Salmonella), but also retailers like consumer-favorite Trader Joe's (Listeria). When one looks at the affect even a small recall can have on a business and brand, it quickly becomes obvious that having processes and protocols in place can be a company’s blessing should the unthinkable become a reality.

Obviously, the best policy would be to avoid a recall altogether, but when dealing with complex manufacturing or production processes across multiple facilities and/or countries, the task of managing the individual parts can certainly become challenging. It’s too early to see the impact this recall will have upon its brand, but it does provide a chance to look at ways your business can minimize the risk of a recall. Let’s take a look at a few.

It cannot be overstated enough: although often tedious, this is by far the most important method of protecting your company from this kind of embarrassment. Having accurate knowledge of where your materials are, what condition they are in, and when materials are going to be in transit is one of the most essential contributors to maximizing efficiency and being proactive about introducing (and maintaining) processes. It can be a godsend for established businesses that have frequent interactions with multiple customers, manufacturers and suppliers or companies looking at releasing new products.

When looking at establishing procedures or standards for your company, it can often be helpful to model them to support or utilize industry code standards. One valuable resource for this is the American National Standard Institute which can provide comprehensive information about the standards within a variety of industries.

Organization also affords companies traceability of their products and when dealing with complex systems of crates, bins, lots and pallets. For some industries, such as food and beverage, traceability is not only important for internal business but also a matter of compliance with laws like the FDA Food Safety Modernization Act. Having lot traceability, MSDS maintenance, and easily accessible HACCP documentation is one of the simplest methods for staying compliant and can make the process of ensuring quality across the brand easier.

When introducing new products or making changes to existing ones, it is not uncommon to receive components that do not conform to your specifications. Having the ability to trace components to their origin allows you the capacity to address quality control issues early on or to identify suppliers that produce inconsistent materials for your business. There are a variety of ways to accomplish this by leveraging software and experience, but one of the simplest is to establish and cultivate relationships with your suppliers.

Very few products today can be created from components manufactured in-house, so the use of third party suppliers is a well-established tradition in nearly every industry. Just as you would (likely) not buy a car sight-unseen, it is important to have a good understanding and relationship with your suppliers.

Although we are talking about recalls, the cultivation of these relationships have multiple benefits that reach beyond just ensuring your materials are of a suitable quality. For example, a company that produces food may want to ensure that their ingredients come from clean processing facilities or that the supplier meets kosher or organic guidelines in their production.

Even with all the planning and standardization, no system can really be considered complete until it has been tested. It is obvious that no company wants to issue a recall, but how can you know if all the work you put into place to protect your business from it works? You test it.

Many companies find great benefit in running mock recalls once or twice a year to target specific aspects of their production and distribution cycle. On the Quality Assurance & Food Safety website, Brian Honigbaum dives deeper into the how’s and why’s a company would want to run a mock recall, but the primary reason is to find holes in whatever system you have established for your company. Speed and the goal to locate 100% of a product regardless of production or distribution stage is an activity that affords a company the chance to refine processes and make improvements to its system. This will in turn ensure that high standards are not only adhered to, but maintained and refined across the landscape of your business.

The resilience of your customer base should the worst happen is dependent in very large part upon that consumer’s faith that your products are safe, that you take every available opportunity to ensure that all laws and regulations are followed, that your company is fully in control and being proactive by taking immediate action against specific lots and batches getting to the consumer.

A Software Solution

All Orders™ by NumberCruncher helps make avoiding recalls easier and managing them more efficient with a full suite of tools and features. Lot Number Tracking ensures that no batches can be created and no stock moved into or out of inventory without the correct data entered. This system of locks and gates means whether your company is consuming raw materials or ingredients with lot numbers, or even producing new batches with new expiration dates and lot assignments you will always be able to maintain full visibility of all the components of your production.

Receive lot numbers into stock, create Work Orders to deplete existing raw material numbers and move them into newly manufactured WIP or Finished Good Lot numbers. Transfers allow lot numbers to be moved around the warehouse and Ship Docs enable users to pick and choose which ones are sent to the customer and which will be invoiced to QuickBooks. Once tracking is configured, no user will be able to circumvent it always ensuring data integrity.

In the unfortunate event that a recall is needed, various tools are in place to take advantage of all existing tracking data that has been entered as lot numbers in All Orders™. The Lot Number Find Screen allows users to enter any series of lot numbers and generate a list of every document it appears on in an easy to filter Inventory Movement Detail Report that can provide logistical information such as a breakdown of precisely where each affected lot number was used.

Various Receiving, Ship Doc and Work Orders Log Reports have even more detailed breakdowns specific to each type of movement to help pin down as many details as possible for the lot numbers in questions. Production reports help find raw materials that went into the productions batch/lot numbers in the event that contaminated inferior raw material went into various batches or lots and lists all related production batches your company may need to have recalled.

Each of these reports is easily exportable to Excel, Access, CSV and PDF formats. Database experts love our SQL Server back end database for building any type of customer queries, connected Excel sheets, and custom business intelligence dashboard reporting. When combined or used in concert, these tools give users the capabilities they need to efficiently address the recall with precision and efficiency.

 

Contact us today for your 30 day free trial or to schedule a demo with one of our industry experts to see how All Orders™ can help you.

 

 

Posted in: AllOrder | Features | Lot Numbers | Production | Tracking

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