Leading The Decision To Bring Your Supply Chain Closer To Home — with Lisa Anderson

Pam Harper (00:01): Our guest today says it's one thing to make the decision to bring your supply chain closer to home; it's another thing to lead the decision to elevate the customer experience and drive profitable growth. Join us for Episode 202 of Growth Igniters Radio with Pam Harper and Scott Harper®.

Chris Curran (00:26): This episode is brought to you by Business Advancement, Incorporated, enabling successful leaders and companies to accelerate to their next level of success; on the web at businessadvance.com. And, now, here's Pam and Scott.

Pam Harper (00:43): Thanks, Chris. I'm Pam Harper, founding partner and CEO of Business Advancement, Incorporated, and sitting right across from me, as always, is my business partner and husband, Scott Harper. Hi, Scott.

Scott Harper (00:55): Hi, Pam. It's great to join you for another episode of Growth Igniters® Radio, and, as always, our purpose is to spark new insights, inspiration, and immediately useful ideas to help visionary leaders accelerate themselves and, of course, their companies through their next level of game-changing innovation, transformation, and growth.

Scott Harper (01:15): Now, Pam, as we start to look forward into 2022, and begin planning for the future, it's clear that many leadership teams are faced with changing the game, especially when it comes to addressing the persistent supply chain issues that are dragging on.

Pam Harper (01:31): Exactly.

Scott Harper (01:32): Now, one of the questions that is out there is whether you should consider bringing your supply chain closer to home so there are a fewer lags.

Pam Harper (01:41): It's a big decision. It's one thing to make that decision.

Scott Harper (01:45): Right.

Pam Harper (01:45): But it's another thing to lead it so that your various stakeholders get the highest possible benefit.

Scott Harper (01:50): Of course.

Pam Harper (01:51): So the question is ... really, it's questions ... what role should top leadership play in making the decision and then bringing it to life?

Scott Harper (02:00): Good question.

Pam Harper (02:01): So we're going to take up these questions today with Lisa Anderson, founder and president of LMA Consulting Group, Incorporated. She's also the author of three books including Future Proofing Manufacturing and Supply Chain Post-COVID-19. Her firm specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. Lisa's been ranked number 16 in SAP's Supply Chain Influencers list and is recognized as one of the top 1% of consultants worldwide.

Pam Harper (02:43): She's quoted in media outlets like the Wall Street Journal, ABC News, Industry Week, and a lot more, and she's regularly invited to speak at conferences and events of all kinds. Along with her various leadership roles and many industry associations, Lisa also serves as co-executive director of the Society for the Advancement of Consulting, of which Scott and I are both members. You can read so much more about Lisa's background by going to GrowthIgnitersRadio.com and scroll down to her bio. Lisa, welcome to Growth Igniters Radio.

Lisa Anderson (03:19): Great. I'm glad to be here.

Pam Harper (03:22): Oh, we've seen you all over the place. In fact, there was a clip that we saw out of Bloomberg where you were talking about this issue of the supply chain and the decisions that companies are making.

Lisa Anderson (03:37): Absolutely. It's a critical consideration in today's level of disruption going on in the supply chain.

Pam Harper (03:46): Absolutely. So before we really get into it, for people who don't know you as well as we do, just briefly, what led you to your focus of embracing manufacturing, logistics, and supply chain transformation to elevate the customer experience? Because often these are treated as separate functions.

Scott Harper (04:05): So you're integrating them.

Lisa Anderson (04:07): That's right. Well, when I was a child, both my parents had grown up during the Depression and so my mom was insistent that I gain all sorts of experiences that she wasn't able to have. So I ended up in ballet to swimming, to tennis, to chess, and all of the above. So I ended up really finding the idea of exploring new options, maximizing variables as attractive, and so it led to me getting involved in operations management when I was in college, because it was a great path where you could actually maximize variables and combine related functions and optimize total equations like that. So that's how I got into it.

Lisa Anderson (04:57): And then out of college, I found my first job at Coca-Cola Enterprises doing just that. So I was planning for production, what they produced in their lands on the West Coast, and you're in the middle of multiple variables between the customers, production, finance and others that all have competing interest. So it's where I started my career and I really enjoy it.

Pam Harper (05:26): So it just naturally came to you to synthesize, really, these different interests, and that's a critical issue, for sure.

Scott Harper (05:37): It is and, as Lisa said, it's sometimes really hard to balance them all because everybody has different things that they want and need, so that's a real art.

Lisa Anderson (05:47): Well, absolutely, and what I'm finding is that in ... Well, this has always been true, but it's heightened in today's world ... is that it all has to start with your customer and how you can meet changing customer needs and even understand your customers better than they understand themselves and who they're selling to and what's important because then you have to take a look at the rest of your supply chain, how will you successfully deliver what they need and be ahead of what they need through your manufacturing operations, your extended supply chain and purchasing, et cetera, in a way that's profitable, has high levels of working capital so you don't have too much inventory tied up unnecessarily and, of course, number one item is to make sure that you have customer satisfaction, which is really difficult to achieve today.

Scott Harper (06:42): Now, a couple of years ago, not that many people had supply chain at the top of their mind and now with the COVID-19 crisis, things are backed up. Lots of people are hearing about supply chain on everything from the news to the late night TV, and one of the questions is, how do we close some of these gaps? Now, you had a November 9th press release on the trend toward reshoring and nearshoring, bringing things closer in. Can you define that a little bit for people who aren't familiar and why do you think this is going to be a long-term trend? Or, will it be?

Lisa Anderson (07:22): First of all, it might be helpful to understand what the supply chain really is. So you start with your customer, and many times you go through distribution ... Going backwards, you have a manufacturer, at least one; and then you have suppliers and then people who supply your suppliers. That's the simplified supply chain. In the last 10 years, if not longer, it's gone global. We've added so many layers and complexities to the supply chain. So as we've gotten into the pandemic, the complete supply chain has gotten out of alignment. So what products you need and materials you need so you can keep running are in the wrong place at the wrong time, stuck in the Suez Canal, you never know. They're somewhere where they're not supposed to be.

Lisa Anderson (08:08): So what we've realized is that we have too much risk built into our supply chains. We're not as resilient to meeting changing customer needs and we cannot be innovative in a rapid fashion. So the smarter clients are adjusting and reconfiguring their supply chain in many ways. One way is that they're quickly re-evaluating where they're producing and what they're producing. So they are evaluating which products are critical to their customer's needs and their changing customer's needs, and they're, at least, looking at bringing those products to be produced closer to their customers so that they can quickly incorporate changing conditions; and they're also looking at technologies such as 3D printing, additive manufacturing, so you can, pretty much, you can accomplish the same thing. How can you be resilient and incorporate changing needs quickly? So that's one of the reasons why they're looking at reshoring.

Scott Harper (09:15): Now, can you give an example that, without breaking confidence, of a company that's doing this?

Lisa Anderson (09:20): Sure. So the interesting thing is when I talked to the Wall Street Journal about the companies that are reshoring, they ask me to put them in touch with clients. The thing is, is that most clients do not want to be put in touch and communicate this because the last thing they want is their suppliers knowing that they're reshoring and moving production. So it's more of a hidden ... It's happening on the down low, but I can certainly tell you.

Lisa Anderson (09:47): So I have a client that was ahead of the game. Their CEO is really quite proactive. So they were producing everything in China a while back and then they moved to Vietnam, at least 80% of their products to Vietnam, before Vietnam became the place to produce because it was more flexible than China. Now, they are moving 80% of their production out of Asia to a facility in Mexico that they own, and they plan to do that within the year. So that's a very aggressive timeline and they're doing it because they know they need to be positioned to be closer to their customers to be successful. So that's one example right there.

Scott Harper (10:30): Okay.

Pam Harper (10:31): So there are a lot of considerations, of course, and a lot of it has to do with the kinds of things you're talking about. But beyond the logistics, beyond the financial aspects, what do you think is the most important strategic consideration for deciding whether to bring your supply chain closer to home? It's a double-edged sword.

Lisa Anderson (10:54): Yeah. So really what it is, is what are your plans for growth and what are your customers ... Really, in today's environment, customers are changing products on the fly. It depends on what you're producing, but their customer buying behaviors are changing rapidly because people are trying new items, like consumers are trying new items and they sometimes like them and decide to keep doing that. Businesses are redesigning products because they don't have something available. They're changing on the fly. They're trying out new suppliers, and, in some cases, they're realizing, "This is a partner that came through for me. I want to keep it in place."

Lisa Anderson (11:40): So there is really a matter of keeping in touch with your changing customer behaviors and what your customers are going to need in the future, and then determining, like, it's never a good idea just to implement a strategy, "Let's just reshore." I mean, that's what people did when they offshored. I mean, at the time they were offshoring, I was a vice president of operations and I said, "This is ridiculous. It makes no sense for us to offshore because we don't have a high labor component in our product and our product is fluffy and big. It's going to cost a lot of money and freight," but it was the fad. So everybody wanted us to like, "Oh no, we're spending too much money on labor costs, you need to do this." I said, "No, it makes no sense."

Lisa Anderson (12:24): So it's never going to be a all or nothing proposition. But, generally speaking, you have to find a way to be more resilient to your changing customer needs if you want to grow the business and scale appropriately because I think that we're getting to the point where there's going to be more opportunities in the next few years than there has ever been since the great depression where it's going to separate the winners from the losers, and so the winners are going to keep increasing volume and so you can't be just 13 weeks later plus another 10 weeks of extended lead times later, trying to figure out what it is you're going to do with changing customer requirements.

Lisa Anderson (13:08): So you don't have to reshore, but you need to figure out a way to partner with manufacturers that are closer to your customers, implement technologies so you can quickly produce on the fly or you produce it to a certain level and then you allow it to be configured to your customer satisfaction and personalized. So it's really more about how do you create a flexible manufacturing environment to meet the changing customer requirements.

Pam Harper (13:38): So a strategic decision to be sure about much more than just costs and logistics, and, of course, there are leadership considerations beyond that. So we're going to take a quick break and when we come back, we'll dig deeper with Lisa Anderson, founder and present of LMA Consulting Group, about the leadership it takes to bring the supply chain closer to home. Stay with us.

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Pam Harper (15:17): Welcome back to Growth Igniters Radio with Pam Harper, that's me, and Scott Harper. Today, Scott and I are speaking with Lisa Anderson, founder and president of LMA Consulting Group about the promise and challenges of leading the decision to bring your supply chain closer to home. Lisa, tell us how people can find out more about you and your work.

Lisa Anderson (15:40): Well, they can go to my website at lma-consultinggroup.com. There's plenty of free articles, newsletters, and information. That's probably a great place to start, either that or LinkedIn.

Pam Harper (15:55): OF course, you have your books as well that people can find through Amazon, right?

Lisa Anderson (16:00): Absolutely, and they're also on my website, so you can find them in both places.

Pam Harper (16:04): Okay, and you can find out more information and links about this episode by going to growthignitersradio.com, Episode 202, and scrolling down to resources. So we established in the first section of this episode that there are a lot of powerful strategic reasons to figure out a different way to deal with the supply chain, and you set that up. But let's build our conversation about the leadership it takes to reposition the supply chain, which surely has some challenges as well as benefits. For example, consider the great reshuffle and resignation, what do you see as its impacts on quickly attracting and retaining the employees? How do your clients deal with this?

Lisa Anderson (16:54): Well, that is definitely the second largest problem that I've been talking about lately in other speeches is this great resignation and great shuffling and how you handle it. So when it comes to moving your production back ... well, it doesn't have to move back. It can be just moved closer to your customer, but moving it, generally speaking, back home or closer to your customer, you would want to be proactive when it comes to people because there are fewer good people, high skilled people out there.

Lisa Anderson (17:28): So one of the things is utilizing technology, digitizing your supply chain, automation, robotics, a lot of those concepts. You want to be utilizing the ones that are smart for your business, including business intelligence systems to turn data into insight. So how you can make good decisions and have less positions required that are really unnecessary, because they can be automated away. So you start there, but then it does require that you need more higher skilled people to handle that automation as well as you still need folks in manufacturing and distribution, et cetera.

Lisa Anderson (18:12): So my most successful clients are working with, are heavily involved with the community. Some are partnering with community colleges. Others are partnering with other organizations. They're looking for partners, like manufacturing partners, even competitors that they can work with as they ramp back up. There's a lot of options. I think it's looking at the options for how you can bring production on relatively quickly and be looking at it from an engineering point of view and just getting the right resources together.

Lisa Anderson (18:50): Earlier today I was talking about this topic and what I would say is you have to start with your people. So the minute you know that you're going to be even evaluating the topic, my most successful clients have been hiring talent before they need it. So one key question I was asked earlier today was related to an ERP system. I said, every other case for the size company, I would say no way, no way, no way should you be getting this system, and they were looking at an e-commerce system too, that was much more than they needed, but it was advanced and it would get them providing a superior customer experience.

Lisa Anderson (19:31): But in their case, I said, sure, because they had gone ahead and hired at least two executives and several other people that would be progressive given their size company that could handle that sort of an investment and really take use of it. So I would say starting with your people is really where you have to start, and then they'll find creative solutions like partnering with community colleges and that sort of thing.

Pam Harper (20:00): So just to emphasize, this is a proactive kind of thing. You just don't turn on the dime usually, although it's almost like there's that pressure to do so. But those are some great thoughts.

Scott Harper (20:12): And also something that you sparked in me is the memory that, so often, if you're going to make big changes, as you say, you start with the people and it's so important to make sure from the top down that you're communicating these strategic context of these changes so that people understand what's coming and they understand their role and how they contribute, and what is going to change, what's not going to change. Do you see that?

Lisa Anderson (20:43): Oh, absolutely. I mean, there's no doubt about it that people leave people, they don't leave companies. In today's world, we have to be developing people. We haven't had to do that in years. I mean, it's smart to do it, but you didn't have to because you could hire talent away. But now you have to develop them and you need to be able to retain them, and you also need to find your hidden talent. So the only way you can do any of those is by having really great leaders that do exactly what you were saying.

Scott Harper (21:18): In addition to employees, with people within the company, so much of the supply chain and other parts of a company involve partnering other organizations that are not on your payroll. So you've got all these changing partnering relationships that go beyond logistical and financial considerations. How do you recommend that leaders look for partners that are going to be the right fit, that are going to work with them and for them in the right way?

Lisa Anderson (21:50): Well, again, it's helpful to be doing this early on in the process, but certainly the most successful folks who have re-shored, since that was what we're talking about, or near-shored, have immediately started partnering with all sorts of organizations. There's technology providers. There's supplemental manufacturing, subcontracting types of people you can work with, trusted advisors. There's the universities and community colleges. Really, the only successful people in the next couple of years are going to be those that find ways to collaborate with partners, and sometimes unique partners could even be competitors to make one plus one equals 22, and it's really the only way you're going to get new plants started, or meaning you don't have to new plant, but you have to start with a new partnership, but they're still going to need to expand. So there's limited resources available. So you have to be creative and you have to be better, really, than the rest.

Pam Harper (22:57): So thinking expansively about the types of partnering that can exist, people get into "Well, it's that outsource company," or whatever it is, but there's so many other ways to think about it. So you're almost really building a virtual org chart. That's what we tell people.

Lisa Anderson (23:16): Yeah, absolutely, and actually I should have mentioned suppliers as well because you're not going to keep the same suppliers halfway around the world necessarily. So, absolutely, you need to design a roadmap with like a virtual org chart, like you're saying, or a virtual multidimensional organization with your customers and your suppliers and all your supply chain partners that you'll need to be successful in your reconfigured supply chain.

Pam Harper (23:47): So it's its own leadership consideration as well, and we're just touching on it because there's so many different types of stakeholders and how things change. For this episode, that's about all we can handle right now are these two big ones, but it is something to consider when you're thinking about having a change in your supply chain is coming up with how is this going to impact all of your different stakeholders that need to know about this and how else can you think about it?

Pam Harper (24:19): So we're going to take another quick break, and when we come back, Scott and I will speak more with Lisa Anderson, founder and president of LMA Consulting Group about immediately useful ideas for leading the move to bring the supply chain closer to home. Stay with us.

Scott Harper (24:39): You are listening to Growth Igniters Radio with Pam Harper and Scott Harper, brought you by Business Advancement, Incorporated. We focus on enabling visionary leaders to dramatically increase momentum for game-changing results, and we're on the web at businessadvance.com.

Pam Harper (24:57): Wherever your supply chain is located, if your company is like many others, it encompasses a wide range of partnering and supplier relationships. Do you consider companies in your supply chain to be strategic alliances or something else? From a survey we conducted of senior executives in over 15 industry sectors, we found that not everyone defines supply chain relationships the same way, and this can measurably impact your success.

Scott Harper (25:25): Read about our findings and recommendations for increasing success of any external partnering relationship. Download our special report, Building Powerful Strategic Alliances. Simply go to growthignitersradio.com, select Episode 202, scroll down to Resources section and click on the link Download Strategic Alliances Report. Feel free to contact us with your specific questions.

Pam Harper (26:03): Welcome back to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last two segments, Scott and I have been speaking with Lisa Anderson, founder and president of LMA Consulting Group about leading the decision to bring your supply chain closer to home. Lisa, remind us how people can find out more about you and your work.

Scott Harper (26:24): Absolutely. So go to my website at lma-consultinggroup.com, or you can find me on LinkedIn. It's Lisa Anderson LMA, and I also have presence on, of course, LMA Consulting Group, Incorporated.

Pam Harper (26:40): Okay, and her website is filled with very valuable resources, we encourage you to visit. You can find links to this episode by going to growthignitersradio.com, Episode 202 and scroll down to Resources.

Pam Harper (26:57): So this is the segment where we talk about the three immediately useful idea in this case for leading a strategic transformation for reshoring or nearshoring. So Lisa, let's talk about an immediately useful idea that you found helpful for quickly attracting and retaining the right employees that are going to help a company to make that transition, that transformation.

Lisa Anderson (27:24): Well, I would say that one is to look for your hidden talent. So in working with clients over the last 16 years, I have yet to run across a client that does not have some sort of hidden talent in their organization, whether they're not being listened to, whether they need to be in a slightly different position so their strengths can be utilized, one way or another, if you find a hidden talent in your organization, you should definitely focus them on helping you guide this path forward.

Pam Harper (27:59): I think the more, too, that you have a clearer idea of the kinds of skill sets that you're going to need, because it is very different, isn't it?

Lisa Anderson (28:08): Absolutely. I mean, like you said, there's a lot of considerations, and so building a roadmap and understanding the key skills that are going to be required, and then you can look in your organization; and don't worry about what positions folks are in today. Look at what skills they have and where you can put their strengths to use, and that's going to be one way where you can engage people in something that they may really enjoy, and leverage strengths, and you can gain tenfold in productivity.

Scott Harper (28:43): Absolutely, and as I'm sure you know, when you're talking about skills, you're not just talking about knowledge and abilities; you're talking about mindset, attitude, flexibility, and the ability to change as change is needed.

Lisa Anderson (28:56): Absolutely. Certainly have found that the resume of folks is by no means an indication of success. It's really much more about their capabilities and their ability to learn and have certain skills or capabilities, I guess, you could say, that are appropriate to the position.

Scott Harper (29:18): Now, looking beyond your employee set, we've talked about creating a strong trusting partnering relationship with all the people that are necessary to create a good supply chain. Do you have a immediately useful idea for doing this with a new partner, finding a new partner that can meet your needs?

Lisa Anderson (29:38): Hopefully you have people who are involved in industry groups and/or actually alumni groups, well-connected people is where I would start. So you want to look at who can refer you to the supplier, to ... I mean, there's so many partners you need in this situation. You're going to need to go to all of the resources and organizations they belong to. Hopefully, you belong to industry groups for your system, and you'd be surprised, many of those folks can send you to somebody completely unrelated to the system because they have like capabilities or like manufacturing.

Lisa Anderson (30:18): So think about all of the partners you work with today and all of the groups that you belong to that may not relate directly to your work environment. It could be your alumni group, could be your ... like a industry group on supply chain, could be an industry group in whatever you belong to like food, aerospace, whatever, medical, and talk with all those resources, gain insights, get referrals and rapidly assess which are going to be most aligned with what you're going to need in the future.

Pam Harper (30:52): Also, one of the things that we found is that having a cultural kind of sync, obviously it's not going to be the same, but having those same values and beliefs are going to contribute to a smooth alignment.

Lisa Anderson (31:09): No doubt about it. The number one issue with clients is when they're out of sync. It's the same thing with the supply chain. You're out of alignment, you're out of sync. So you have to have the same general philosophy or the same, like you said, cultural fit. So that's why I say go to a lot of these groups and find somebody who's technically a fit, process-wise is a fit and culturally are fit and that you can trust, because you may have the best fit ever technically, but if they're not trustworthy, you should start with somebody you can develop.

Pam Harper (31:46): Absolutely.

Scott Harper (31:47): Always dig deeper. There's always more to the story.

Pam Harper (31:47): Absolutely. So let's talk about managing the expectations of customers. What is reasonable? If a company is going to re-shore or nearshore, what is the best way to prepare customers for this so that they don't have expectations that are out of sync. Again, alignment, smooth transition.

Lisa Anderson (32:10): Well, I find that you always want to start with your customer and you really don't need to ... this is always in the best interest of the customer. So when you're talking, you don't even really need to talk about re-shoring. What you need to do is say, "We're looking at making sure that we can work with you on an innovation basis. Your customer's needs are changing, and so we want to be able to meet with you, sync up with you, brainstorm with you about changing requirements so that we can make sure that we incorporate it into our designs, and so in order to better serve you we're looking at moving ..." it depends on the customer and like what kind of problems this could create if the word gets out, but you might tell them you're moving some production back. You might tell them you're supplementing production, which is all of the above is probably true.

Lisa Anderson (33:04): You're supplementing production; you want to make sure that you are pre-positioning capacity and/or inventory for their needs, and so therefore you need their help to be looking out and doing what's called a sales inventory operations planning process, where you can get a better feel for their needs and that you can hold continual joint strategy sessions with them so that you can better serve their needs.

Pam Harper (33:31): That sounds good. So we are now at final thoughts. Is there anything you'd like to leave us with as far as the decision whether to bring your supply chain closer to home?

Lisa Anderson (33:44): Well, what I would say is that this topic is prone to analysis paralysis and getting really stuck in the weeds. So, instead, what you really need to do is look at it from a strategic point of view, from an 80/20 point of view, directional as I frequently tell clients. It's what's going to help you move in the right direction and how can you make sure that you're taking key steps forward to move in that direction while keeping everything going on the back end. Because you obviously can't afford to lose all your customers while you make this transition because it's going to take time to make these types of transitions. So you want to have a step process and roadmap.

Pam Harper (34:33): Sounds good. Lisa, thanks so much for being our guest on Growth Igniters Radio.

Lisa Anderson (34:38): Great. I enjoyed it.

Scott Harper (34:39): Thanks, Lisa, and thanks to you out there for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To contact us, get show notes and resource links for this week's episode, go to growthignitersradio.com, select Episode 202.

Pam Harper (34:55): Until next time, this is Pam Harper...

Scott Harper (34:57): And Scott Harper...

Pam Harper (34:58): Wishing you continued success and leaving you with this question to discuss with your team.

Scott Harper (35:03): As a leadership team, what conversations should we be having, and with whom, about the promise and challenges of re-shoring or near-shoring our supply chain?

Chris Curran (35:16): Growth Igniters and Growth Igniters Radio with Pam Harper and Scott Harper are registered service marks of Business Advancement, Incorporated. All Growth Igniters Radio episodes are copyrighted productions of Business Advancement, Incorporated, intended for the private use of our audience. Except as otherwise provided by copyright law, all other uses including copying, editing, redistribution and publication without prior written consent of Business Advancement, Incorporated are prohibited. All rights reserved.