4-Step Approach to Manufacturers Leveraging the Web

Going Digital

No, we haven’t suddenly decided to get out of the business of sourcing for manufacturers to become digital marketing experts. Not even close. What I did think could be interesting is to begin sharing Tributary Sourcing’s experience with going digital. While we have just started and have yet to pursue many of the marketing opportunities going digital presents I think this might be the best place to begin sharing our experiences; good, bad or indifferent.

We had a website for about four years, a piece of s**t, but a website nonetheless. I can’t tell you whether or not anyone ever visited the site never mind found it useful. There was little in the way of a brand message and I never connected my digital “presence” to the rest of my selling activities. In August of this year I decided to try something different and make an investment to not only improve my website (how it looked and functioned) but hopefully find a way to broaden my company’s reach and develop leads. Here is the 4 Step approach I took:

1.       Decided what the goal was and became really really clear about it

2.       Identified a professional to assist with the technology build and design

3.       Found our voice and created content for the website

4.       Committed to sticking with an execution plan for an extended period of time

Over the next couple weeks I’ll write blogs that drill down on each of the 4 Steps we took to provide a better picture of the commitment it takes to ramp up your digital strategy.

Commodity Prices May Continue to be Manufacturing Headwind

As a sourcing service provider to manufacturers in the United States I know how important the price of product components and materials can be to the overall success of your business. Sometimes it becomes a “win or lose the deal” situation with your customers. One of our roles in sourcing is to help you find the best resources at the lowest cost and most efficient supply processes to optimize your product completion and sales results.

There are some realities we must recognize and deal with as we look toward the future. Prices of commoditmetals-miningies are likely to increase. The cause, not necessarily what you might think. Many believe it is rising labor rates in Asia and Africa as their economies become more advanced and a middle class emerges. Recent McKinsey & Co research tells a somewhat different story. When they look at the primary inputs to manufactured products, such as metals, they see two core drivers of price inflation; 1. the increasing demand of emerging markets and 2. geological issues due to increasing cost of inputs (like energy) and more difficulty with extraction due to risky and challenging locations (in remote areas and more frequently deep underground). It is expected that this dynamic will persist as depletion rates of raw materials double demand rates. http://www.mckinsey.com/insights/energy_resources_materials/resource_revolution_tracking_global_commodity_markets

So how can manufacturers manage the headwinds of increasing costs when no realistic solution to the commodity element exists? Our answer, focus on what you can control:

·         Secure a range of supply sources for your product input needs

·         Implement an efficient supply chain

·         Ensure that strategic partners understand and are aligned with your business objectives

·         Measure and report everything that is important and hold those that are accountable, responsible

If you effectively manage what you can control, you’re sure to improve profits.

Six Myths On Sourcing Outside the USA

myth-vs-truth

#1 – My orders must fill an Industrial Shipping Container

Many people believe the only financially viable way to take advantage of sourcing outside the US is to scale orders up to fill 20ft (1,158 cubic feet) or 40ft (2,372 cubic feet) containers. This is patently false. If a sourcing partner contends this is true it is most likely because they operate on a very small scale (maybe you are there only customer) or they have not developed an effective network of suppliers and logistics providers. Frankly, it should be easy for any quality sourcing support system to competitively fulfill orders of any size.

 

#2 – I won’t have an opportunity to review samples prior to shipping my order

Not true. Always demand that you review and approve final samples before production commences. If you are told this isn’t possible, move on and find a better resource.

 

#3 – Raw materials from Asia are inferior to the USmetals

Standards established in the United States are clear and measurable. This makes it easy when working outside the country to define raw material requirements and assure compliance prior to the sampling process.  Trust can be an issue and this is why it is important that your sourcing partner has a high quality engineering team on the ground overseas to test and qualify raw materials used in the factories.

 

#4 – I’ll have to pay for the product before it is shipped, negatively impacting my cash flow

The answer is… it depends. Sourcing partners that are looking to establish long-term relationships with their prospects will work with you to understand your product and customer needs. They can, and will, put in place a program where you are not invoiced until the product reaches its destination.

 

#5 – I can’t be sure of product quality over timeFinishedProduct

Unlike many Trading Companies a high quality sourcing partner will identify and establish relationships with factories that are sustainable over the long-term. By doing the hard work up front you will have comfort order after order. The sourcing partner acts as a relationship manager to the factories making sure capacity and capabilities remain in place otherwise they will begin to seek out alternatives for you.

 

#6 – I have no recourse if my product doesn’t meet my pre-defined requirements

This can be really scary from both a business management and customer relationship perspective and often times ends up being the show stopper from moving forward on what otherwise looks like a smart business decision. One approach is to Think Big, Start Small and Scale Fast after proven success. This is an approach any high quality sourcing partner is willing to execute.

 

It is fair to say that the risks inherent in what I’ve referred to as Myths are real, but, if you have high quality partners helping you navigate the risks your bottom line can swell!

Backskatter Networks and the Internet of Things

Look Mom - No Batteries, No Wires!

radio wave

I’ve been really interested in the Internet of Things recently and plan to keep a pulse on the topic for our customers and readers of my blog. Recently I came across an article in PCWorld http://www.pcworld.com/article/2047374/backscatter-network-could-support-the-internet-of-things.html that I found truly fascinating.

I’ve always imagined that invisible signals are whizzing around us coming from radio waves, cell phone towers and even our garage door openers. Like manmade spirits passing through our souls, ears, nostrils and… well you get picture. Now researchers at the University of Washington have categorized these spirits, umm signals, as “Backscatter”. They have also found a way to corral the Backscatter into a network and wireless communication system that allows devices to talk to each other without batteries, wires or any other form of power system. This is pretty mind boggling and may play a huge role in advancing the Internet of Things.

Basically they have invented devices that have antennas which repurpose wireless signals already traveling through the air so devices can communicate with each other. One example they use in the article mentioned above are devices used in bridges that allow the concrete to communicate with the steel to monitor structural soundness.  Let your mind go wild!

We believe these types of breakthroughs will dramatically change manufacturing in the future. How far in the future, who knows, but ignoring technological advancements like these may be a fool’s errand.

 

Internet of Things – Connecting Machines, Processes and People

From our vantage point, as global sourcing specialists, the evolution of manufacturing is about to accelerate? To this point the web has been a disruptive force for sure, but mostly by taking on processes somewhat independent of each other, e.g. procurement, sales, marketing and facilitating human interaction and communication. Now, jumping into the queue is the Internet of Things.
We see the Internet of Things as a new ecosystem for many manufacturing processes of the future no matter if it takes place in China, Thailand, Mexico, or domestically in the good old USA. This ecosystem includes all aspects of manufacturing a product including post sale maintenance and replacement. Imagine sensors embedded on or inside products that measure key functions and effectiveness. A simple analogy is the sensors in your car that tell you it’s time for an oil change by flashing an annoying red light on the dashboard. What if the car sent a message to you and your mechanic to schedule the replacement of a timing belt based on actual wear and effectiveness. Better yet, what if the sensor could actually go out and secure the best price while scheduling the appointment. Can you imagine machine monitors that are designed to optimize energy usage? As you may know, they already exist – take a look at Nest!

Nest image

Now think about your own manufacturing process, components, material and finished products. What aspects of the product life cycle and customer experience might benefit from the Internet of Things. Might “just ahead of time” ordering of replacement products or parts (hard metal components, plastics, carbon fiber, textiles) improve cash flow and customer satisfaction? How about having data on how your products are being utilized, might that not spur innovation?
The Internet of Things is coming. Many experts expect it to be deeply embedded in products and manufacturing processes within ten years. As a global sourcing specialist we look to stay on the forefront of these emerging technologies and help our clients reep all its benefits.

3D Printers, the Next Home Appliance!

Unlikely, at Least for a While

3D Printing, also known as Additive Manufacturing (distinct from traditional processes which are subtractive via cutting and drilling), has been around for some time. The first working machine was created in 1984! Seems hard to believe given the “discovering plutonium” hype offered by some in the media these days. As prices have come down over the past 10 years, quality printers can be had for as little as a couple thousand dollars.

For now, the primary uses have been prototyping and emerging Distributed Manufacturing. Some Wall Street Analyst have become quite giddy on the future of 3D Printing, see Forbes’ story from August 27, 2013. We agree, although we don’t see the growth coming from average families cranking out a weapons cache. Expanded utilization will be start through reduced cost and easy access relative to everyday average household needs.

3D Printing products are just getting going and there are analogies from our past to draw on. Anyone remember a time when you needed to copy a document and you went to the library or pharmacy? Certainly that support system still exists and has been extended to stores like Staples. A copier didn’t have enough daily use in the home to validate such a high cost purchase, further complicated by the fact that the service related support systems really weren’t in place. Over time things changed, and now, well you know.

For the foreseeable future we believe 3D Printing will continue to grow primarily based on benefits to prototyping and distributed manufacturing of some products. That said, we can imagine a world when our wives decide it’s time for a new set of dishes… then place the old set into the 3D Printer and out the other end comes something modern for this weekend’s dinner party.

Tributary Sourcing – Your Global Connection

Are you comfortable with the diversity of sources for your products, components and parts? Are you getting the right balance of great price and great service? What is most important as it relates to your ability to manufacture your product on time, on budget and at the standards your customers require?

At Tributary Sourcing we focus on these challenges and tactically executing on your behalf each and every day. We also pay attention to innovations in manufacturing and economic related issues to better understand how best to serve our clients looking forward.

Welcome to our new Blog where we look to introduce interesting new ideas and competitive intelligence that assist you in managing your business and product lines. Our expertise is in optimizing your product manufacturing process and cost through global sourcing. If you’re interested in learning more about what we do and how we do it, spend some time reviewing our website or feel free to call Steve Kittredge on his cell at (860) 304-0314.