Tom's Column

June 23, 2011
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Reducing Weight and Getting to Hollywood!
 
I’m just back from Shanghai and sitting around on Mother’s Day thinking about supply chain.

Seeing the guys on bikes with huge loads of varied products piled precariously on top of them while in China makes me think also about inflation and what we are all doing to counteract its effects.

I also listened to a good friend of mine talking about software he recently came into contact with that plots a driver’s route across the country and sets a specific targeted trip based on optimal use of roads, highways, speed limits and the price of gas.

The savings against regular routes that look the quickest are significant. Sure, there are many more obvious initiatives that we can be doing in these increasingly inflationary times, but we have to dig deep right now.

So folks, get your teams together and dig into every avenue of your manufacturing endeavors. It’s all too easy to say we have to pass this on to our retailers and expect them to get higher prices from their customers. Well that sure ain’t easy.

So what have you done these past few weeks? Have you called your top 20 suppliers of ingredients, machinery maintenance, packaging and transportation and brainstormed with them to find ways to reduce costs?

There are many interesting developments in open book costing that also expose our own vulnerability to every aspect of the incoming supply chain. What can be done to go back up the line before componentry even hits the back door at the plant?

When did you last sit down with work teams from within the plant and ask them to dig deeper than ever to uncover hidden costs that can be reduced?

Sure, we’re all combing the shelves and watching the category data (where we can get it) to see what the brands are doing in terms of downsizing the package sizes so we can follow suit. Smart manufacturers have already gone “lean” “six sigma” and “poka yoke” to get defects off the manufacturing floor. They then are looking back to their suppliers for help. And then to their retailers. Like giving better estimates of forward production. Like forward planning of promotions to enable better negotiation of larger quantities of raw materials, packaging etc.

So folks, think on it and look in the mirror and ask yourselves what you have done in the last six months to create cost reductions so actual increases can be absorbed and not passed on.

Which finally brings me to Hollywood. Watching the Mother’s Day episode of Modern Family (one of my favorite shows) this week, I was horrified to see that after Ed admits that his gift of a diamond necklace to Gloria was not made of “real diamonds,” Manny was forced to admit that his “Cheerio necklace” was not real either, it was made of “generics.” Would someone please get to those scriptwriters in California and bring them up to speed in the 21st century!!!
 

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