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Guest: Francisco D’Angelo, a coach at CEO Coaching International. Francisco has extensive experience growing revenue in outsourcing supply chain management services in procurement, contract manufacturing, logistics, and 3PL environment across 13 countries in the Americas.
Quick Background: The pandemic showed many CEOs that they were taking their supply chain management for granted. To keep your business growing through the next disruption, CEOs need to reassess their core competencies and identify strategies that will keep their warehouses stocked and their customers happy.
On today’s show, Francisco D’Angelo explains how companies can make their supply chains more resilient, more efficient, and more profitable.
Keys to Optimizing Your Supply Chain from Francisco D’Angelo
1. Define your product and assess demand.
Francisco says, “The supply chain starts when the company defines a product: what they’re going to be selling, and then how to execute that product. Where are we going to be sourcing raw materials? Where are we going to be sourcing packaging, and production itself? And then, after it’s been produced, where are we going to move those goods and where are we going to sell those goods? So, you define the strategy of your supply chain once you have defined your product, and where are you going to be selling it.”
This is the more robust vision of product design that too many CEOs overlook. It’s easy to fall in love with a shiny new toy that you’ve developed from prototype to market-ready. But if you don’t have total clarity on who your customers are and what they want, it’s impossible to plan out your supply chain or justify the cost of investment.
As for your existing products, Francisco recommends looking for ways to simplify your offerings. “Having many SKUs is going to be harder on the supply chain,” he says. “And if each product uses a different bottle, a different cap, a different label, that’s going to make our job harder on the supply chain side. How can we optimize the amount of SKUs that we offer to the customer? If we can at least consolidate to, say, one kind of bottle for X category, then we can just change the product inside and the labels. Trying to minimize those items and SKUs will get your supply chain leaner, faster, and more flexible.”
2. Maintain visibility.
“Brands don’t compete,” Francisco says, “the supply chains do. If you go to the supermarket and you’re thirsty, if the Coke is not there, you’re going to have the Pepsi. Pepsi won because the supply chain got the product to the supermarket. Not because of advertising or anything else. Nowadays, consumers are not loyal to a brand. If the product is not on the shelf in the supermarket or on e-commerce, they’ll go to the next one because they want to satisfy a need.”
Keeping your product on shelves isn’t just a matter of supply and demand — it’s also a matter of knowing where your products are on the supply chain, how much inventory you have stocked in your warehouse, and how quickly you can move it to distribution centers or direct to customers. If you don’t already have a robust tech stack for tracking and managing these KPIs, look for turnkey solutions that can tie in your most important data with a broader picture of what’s happening in your industry.
Francisco says, “I’ve always used an outsourced IT company that already has a system that includes benchmarks not only for the industry but also on things like warehousing, production or procurement, and logistics. The challenge is, do we adapt our way of doing business to the tech solution? Companies I’ve seen that try to modify the solution to their way of doing things, sometimes that’s not a good thing and it creates a Frankenstein system. Get the best IT in your industry, and if you can, adapt 80% to that system.”
3. Diversify your suppliers.
Francisco believes that CEOs need to make a distinction between a crisis and a disruption. For example, COVID-19 was obviously a public health crisis. But from a purely business perspective, it created a disruption that revealed some longstanding inefficiencies in supply chain management: namely, an overdependence on too few suppliers. That’s a structural issue that’s going to keep hurting your business if, say, a boat gets stuck in the Suez Canal for a week, or a war breaks out on the other side of the world.
And, unlike a crisis, a disruption is something that CEOs can take action to address. Build out a more diversified supply chain now, and your infrastructure will be more resilient to the next disruption.
“Everybody’s talking ‘China plus one,'” Francisco says, “and that means not only China, but look around at Taiwan, Malaysia, Turkey, Mexico, Central America, and all of these countries that might be as good as China. If I had a magic wand, I would make peace in the world, and that would simplify a lot of supply chain issues. But that’s not going to happen. So we need to have diversified suppliers.”
It’s possible that the ongoing geopolitical tumult in Europe and Asia will inspire some U.S. companies to consider “reshoring” as a way to broaden their pipelines. For example, Intel is building manufacturing plants in Ohio. These kinds of BIG investments in the U.S. can strengthen your brand and your connection to your community. But the social, political, and economic differences between the states and the higher cost of business will always require careful analysis.
“First, focus on what the government or the state is going to give as incentives to bring manufacturing to the U.S.” Francisco says. “There’s going to be a lot of increased costs associated with that. It’s always going to be cheaper doing business outside of the U.S.”
There’s another important reason why a company like Intel would start manufacturing its products “in house” and a company like Apple probably won’t: core competencies. “It depends on what they feel they are good at,” Francisco says. “I think Intel has been manufacturing chips from the start. Apple wasn’t born as a manufacturing company. So I think the difference between them is how they started and the core business.”
In other words, top CEOs know what their companies do best and what their customers want. The better you can connect the two with a diversified, resilient supply chain, the BIGGER your competitive advantage is going to be in any business environment.
Top Takeaways
1. Know what you’re selling and if your customers really want it.
2. Know what you have, where you have it, and what you have to do to meet demand.
3. Know what you’re best at and whom you can rely on to keep you front and center in the marketplace.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average revenue CAGR of 31% (2.6X the U.S. average) and an average EBITDA CAGR of 52.3% (more than 5X the U.S. average).
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