If the events of the past two years have taught any lessons, it's that preparation, patience, and poise trump all else in times of turmoil. Our 2010 Rainmakers are a living embodiment of that creed. As the profiles on the following pages show, they've persevered through tough times with hard work and determination. Yet for all the challenges they've faced, they never stopped giving back to the profession.
This year's selections represent many different segments of the supply chain discipline: practitioners, academics, consultants, and vendors. But they're also united by some common threads, including an emphasis on education, training, and people. Through word and deed, our 2010 honorees more than live up to the Rainmakers' legacy of making a lasting contribution to the profession.
As in the past, DC VELOCITY selected the 2010 Rainmakers in concert with members of the magazine's Editorial Advisory Board from candidates nominated by readers and Rainmakers from previous years. If you'd like to nominate someone for our 2011 Rainmakers report, please send your suggestions to DC VELOCITY's editorial director, Peter Bradley, at peter@dcvelocity.com.
 |  |  |  |
 |  |  |  |
 |  |  |  |
 |  |  |  |
Catherine Cooper
As executive vice president and CIO of Ozburn-Hessey Logistics (OHL), Catherine Cooper is responsible for envisioning and developing solutions that help OHL's clients meet their goals. Cooper is a proven leader and entrepreneur. In addition to founding her own company, World Connections, she has served as president of two logistics consulting firms: the Atlanta-based Progress Group and Q4 Logistics in Los Angeles.
Cooper, who holds a Bachelor of Science degree in industrial and systems engineering from the Georgia Institute of Technology, is also an industry leader, serving as president of the Warehousing Education and Research Council's (WERC) board of directors. In 2008, she was chair of WERC's annual conference.
Q: What do you consider to be your greatest accomplishment to date in the logistics field?
A: Helping logistics teams embrace the concept that [information] systems are only tools—what matters are the people and processes supporting those tools. Supply chains are a complex web of people, processes, systems, time, and money, and knowing how they all integrate into a business solution is critical. With my operations background, I can bridge IT and business goals—ultimately positioning IT into a strategic weapon for OHL's customers in a cost-efficient manner.
Q: What do you consider to be the greatest obstacles to supply chain optimization?
A: One of the great challenges facing our industry is managing a supply chain with the new credit market constraints. With a restriction on working capital, we are seeing lower inventory levels than ever before, resulting in reduced supply chain cycle times and the need for networkwide item visibility. OHL's customers are making radical changes in SKU [stock-keeping unit] assortments and sourcing methods. The old model of abundance has been replaced with one of scarcity, impacting every part of our industry.
Q: What have you gained from your involvement with industry organizations like WERC?
A: At OHL, the diversity of solutions we need to provide is vast. WERC helps me stay ahead of trends, technology, and best practices. The interaction with other companies allows me to challenge my own methods and approach, ultimately improving my operations. In addition, serving as the president of WERC provides invaluable experience since motivating a team of volunteers with demanding day jobs draws on a unique set of management skills. I will leave this position better prepared to effectively lead my team through the rapidly changing technical, business, and economic environment.
Mike Duffy
To Mike Duffy, leadership is the most important attribute for supply chain professionals. He has carried that belief across his career in consulting, consumer goods, and now, to health care. Duffy is executive vice president of global manufacturing and supply chain for the Medical Segment of Cardinal Health, a role he assumed in December 2008. In this position, he has responsibility for Cardinal Health's entire medical supply chain, including global manufacturing, sourcing, inventory management, warehousing, and transportation. The Medical Segment, which has operations in nine countries and more than $8 billion in annual revenue, provides medical, surgical, and laboratory products to hospitals, diagnostic labs, physicians' offices, and other sites.
Before joining Cardinal Health, Duffy served as vice president, global value chain for Gillette and as a principal at New York Consulting Partners. He earned both a Bachelor of Science degree in operations research and a Master of Science degree in transportation from the Massachusetts Institute of Technology (MIT). Duffy is currently president of the University of Michigan's Ross School of Business Corporate Advisory Council.
Q: You've mentioned the importance of leadership skills for supply chain professionals. What does it take to be a good business leader?
A: I believe a good leader combines strategic leadership and the ability to execute with great people management skills. While I was at Gillette, the CEO taught me that good leaders are never satisfied with the status quo, that they lead with vision, connect the organization to the external world, and make bold moves. With regard to execution, great leaders remove barriers and eliminate uncertainty. And from a people perspective, it's about gaining the trust of your organization to get people to go places they never imagined possible.
Q: What have you found to be the key differences between managing a consumer goods supply chain and a health-care supply chain?
A: For me, a supply chain is a supply chain. The vernacular is very similar, the principles are similar. The biggest difference is where an industry is when it comes to recognizing the role the supply chain can play in driving business performance. In consumer goods and other industries, we've identified the supply chain as a key enabler to driving business results. Health care is at a different place on the continuum. Most health-care providers came into existence to take care of patients first and were thrown into the business side of health care second. As a result, the industry as a whole is working to adopt best practices from the consumer products and other industries in order to leverage the supply chain to drive efficiencies and performance.
Q: You advocate that supply chain professionals become more engaged in communicating with business leadership. Why is it important, and how can supply chain professionals accomplish that?
A: Often, supply chain folks report through the manufacturing organization of a company and are seen as a "cost and inventory reduction" organization. Leading-edge companies, however, have elevated the role of the supply chain leader to the CEO's table. These companies recognize that supply chain capability can lead to competitive advantage, driving both revenue and margin improvements. As a supply chain leader, that is our challenge—articulating opportunities in language that top management understands so we can get a seat at the table in order to drive improvements. For example, being able to discuss how issues impact margin, earnings, or the customer experience and not just cost or inventory. Given the increased globalization of business, it is even more important now than ever before that the supply chain organization has a voice at the CEO's table.
Q: What's next on your agenda?
A: The biggest thing is working with our partners upstream and downstream to think differently about the health-care supply chain in order to improve overall efficiency and effectiveness. We will do this by looking collectively at how the extended supply chain performs today and identifying opportunities to work differently to improve performance. It is a big cultural change for the industry and will require a level of trust and collaboration that has been missing to date.
Timothy Feemster
Timothy Feemster has had a truly varied career: He's been a senior manager in three manufacturing companies, a consultant, and an executive at two third-party logistics service providers. Currently, he is senior vice president at the real estate firm Grubb & Ellis Co., serving as the national director of global logistics. He has direct experience in scores of warehouse layout and logistics systems design and implementation initiatives as well as with strategic planning, carrier rationalization, supply chain network analysis, and 3PL selection projects.
Feemster also finds time for involvement in professional organizations, most actively with the Warehousing Education and Research Council (WERC), where he is a past president and currently serves as a member of the board of directors.
Q: What do you consider to be your greatest accomplishment to date in the logistics field?
A: I really have two. In the early '70s, I participated as a representative of The Pillsbury Co. to the Grocery Manufacturers Association and was on the committee that developed the first bar-coding system used in the retail trade. We, along with consultants, put together the bar-code RFP to the industry, analyzed the responses, and developed the bar code we all see today on all of our consumer packaged goods and grocery items, the Universal Product Code (UPC). This advancement completely changed the way commerce took place in the grocery and consumer packaged goods industries. Once it was fully implemented, bar coding eliminated the need to hand price every item in the store. It also led to better inventory management by retailers, by providing them with accurate store sales data by SKU and other types of real-time information.
Then, when I was working as director of operations for a new 3PL, we brought five distribution centers—totaling 1.2 million square feet of space—on line for a Fortune 100 client in just three and a half months, starting from scratch. Prior to winning this contract, the 3PL had no facilities, DC management personnel, forklifts, racking, or inventory control system. We were able to obtain facilities, negotiate leases, purchase forklifts, hire and train the required personnel, and purchase and install the appropriate IT systems to support the operations. All sites were brought up on time and started receiving a significant number of inbound truckloads on their first day of operation.
Q: What do you consider to be the greatest obstacles to supply chain optimization?
A: I see five: volatile oil and fuel prices, problems with the availability of credit, sustainability, global and national economic recovery, and the current lack of true event management and alert software along the entire supply chain.
Q: What have you gained from your involvement with industry organizations?
A: My association with professional organizations like WERC, CSCMP, ICSC, and RILA has been critical to my learning and maturing as a supply chain practitioner. I believe it is critically important to work on your professional network and education throughout your career. These organizations provide both elements to their members.
My association with the members of these organizations has led to friendships that have transcended business relationships. Many of my professional colleagues in these organizations have never directly done business with me. They have, though, been there to offer me, and I to them, counsel in finding a job and a one-on-one platform for solving day-to-day supply chain problems at our respective firms. That is the true value of membership in a professional organization.
Taking an active volunteer role in local or national activities in these groups allows you to give back to the organizations that have supported you throughout your career. That is why for the last 20-plus years, I have participated in the local and national events at WERC and CSCMP and in the past few years, have been doing the same for RILA and ICSC as I moved into another industry segment. I am a past president of WERC and proud to have been able to lead such a great organization through these tough economic times while still bringing significant value to its members.
Charlie Guardiola
When Charlie Guardiola joined Burlington Coat Factory in 2007 as executive vice president of supply chain, the retailer's distribution network needed a major overhaul. The company had recently conducted a network rationalization study, which revealed that it had too many distribution centers. Not only that, but the DCs were in the wrong places, had the wrong capabilities, and in many cases, were using antiquated systems. In short, Guardiola had a major challenge ahead of him.
Today, just two years later, the initiative is well under way. So far, the retailer has successfully consolidated its DCs while installing a new warehouse management system and material handling equipment. It has also introduced significant process changes.
To ease the pain associated with wholesale operational change, Guardiola drew upon his previous change management experience at companies like Williams-Sonoma, Sears, Siemens, and Payless ShoeSource. He focused his team on two key objectives: evaluating all projects from a broad business perspective and maintaining respect for the experience and expertise of all the company's employees and its supply chain partners.
Q: What recommendations do you have for companies looking to revamp their own supply chains?
A: You need to focus beyond the supply chain and truly take a business role. [Our initiative] was really driven by improving in-stocks and top-line growth versus the old supply chain emphasis on reducing costs or performing better within the silo.
Second, you need to choose partners who have a great track record in similar-type work and then integrate those partners into your organization. Really make them part of the team. The reason why that's so important is you get to apply all that they've learned. For many organizations, a big initiative like this might be done once every 10 years. What you really want to find are partners that do them frequently and successfully so you can avoid the pitfalls that they've come across in other implementations.
Q: How do you identify the right people to help lead a major change? What makes someone a "change agent"?
A: My experience is that great change agents are people who communicate a vision that's easily understood at all levels of the organization. They believe in collaboration and exude confidence in the participants' ability to do what needs to be done. They recognize that all associates have different roles and that none of those roles is more important than any other. The success of a big project like this really relies on many individuals and many smaller teams.
Q: What part of this effort are you most proud of?
A: The people. There's no greater pleasure as a leader than to watch individuals grow and develop. You see people take on leadership roles who have not had leadership roles before; you see individuals grow and develop beyond where you thought they could go. That's the single biggest reward you receive as a leader as you do these transformations.
Q: If you could offer one piece of advice to someone looking to jump-start their career in distribution or supply chain management, what would it be?
My advice would be to be a great businessperson first and then apply that business knowledge to the supply chain discipline. I believe that the best supply chain people are those who are great business people. Back when it was called "logistics" and not "supply chain," we were seen as warehouse guys who moved boxes from point A to point B. But things have really changed over the years, and now supply chain is seen as an integral contributor far beyond the four walls of the DC.
Peter D. Gibbons
As Starbucks Corp.'s executive vice president, global supply chain operations, Peter D. Gibbons is responsible for all of the products that contribute to the "Starbucks experience"—from the coffee in your cup to the cup itself and the table it rests on—at every Starbucks store worldwide.
Gibbons, who joined Starbucks in February 2007 as senior vice president for global manufacturing operations, is responsible for the overall business management of Starbucks' manufacturing, engineering, procurement, distribution, planning, transportation, inventory management, and worldwide coffee and tea sourcing. This work includes the operation of Starbucks' network of roasting plants in the United States and the Netherlands as well as a tea blending facility in Portland, Ore.
Gibbons started his career with ICI, a global chemical company. He then worked for the Scottish Development Agency's business development team, supporting its engineering and manufacturing companies. He rejoined ICI and spent the next 18 years with the company in a variety of operations, finance, and IT roles.
Q: What do you consider to be your greatest accomplishment in the logistics field?
A: In 2008, the Starbucks North American distribution network, which included five regional DCs and 35 local consolidation DCs, was delivering service at levels far short of standards. In addition, costs had increased faster than sales had during the previous three years. During the subsequent 18 months, we successfully rebuilt the logistics organization, restructured key logistics contracts, implanted key logistics professionals to work alongside 3PL providers, and implemented new service metrics and standards. We finished 2009 with our best-ever service record and a material reduction in costs.
Q: What do you consider to be the greatest obstacles to supply chain optimization?
A: Two things come to mind: talent and coordination across the supply chain. The logistics field needs more well-educated logistics professionals with early hands-on experience who can understand quickly what needs to change and can implement change without negatively impacting customer service and cost.
Q: What have you gained from your involvement with industry organizations?
A: In the Starbucks supply chain, our external connections and roles in industry organizations are essential to finding and attracting top talent, calibrating our progress and performance, and supporting the explanation of our plans with the leadership of the enterprise. Our senior supply chain team is committed to connecting with peer companies, key academics, and industry and professional organizations. We are using these connections to support the professional development and training needs of our supply chain team.
Lee Hales
During three decades of consulting, Lee Hales has witnessed the gradual shift of American business away from manufacturing and toward a service-based economy first hand. Hales, who is now president of High Performance Concepts Inc. and its industrial engineering division, Richard Muther & Associates, says that in 1980, 80 percent of the Muther business was manufacturing based, 20 percent warehousing and logistics. "That has flipped," he says.
Hales' early experience in the distribution and logistics side of operations prepared him for that slow but crucial evolution. Early on in his career, he managed distribution centers for National Supply, then a leading supplier of oil field equipment and today part of National Oilwell Varco. He also managed purchasing, transportation, and information systems in the company's distribution division. Hales has written or co-written several texts, journal articles, and video courses on such topics as facilities planning, manufacturing, and automation. His latest work, Simplified Systematic Network Planning, was co-written with Shekar Natarajan, one of DC VELOCITY's 2009 Rainmakers.
Q: You are deeply involved in supply chain education. Why is that so important to you?
A: Our company rests on three pillars: consulting, training, and research. Training has been an essential and major part of our business the whole time. What I'm really proud of is the number of people we've been able to teach our systematic planning methods. These practical procedures are used around the world. They bridge the gap between quantitative academic training based on algorithms and the everyday needs of planners in industry. No matter how much education or training you receive, logistics is a field in which you still need significant on-the-job experience to become wise.
Q: What do you consider to be the major developments in supply chain management over the past 30 years?
A: Certainly the scope is broader. In the '70s, the big thing was being a materials manager. Then we put warehousing, materials management, and maybe purchasing into one organization. That evolved into logistics, and then, transportation—inbound and outbound—was welded onto materials management. We took on a supply chain focus.
Q: You've worked around the world. What do you see as the major challenges and opportunities in the era of globalization for businesses, and how does supply chain management fit into that?
A: More of the supply chain action is going to be offshore. Your components are going to be made offshore. Hopefully, you'll also be serving major markets offshore. The good news for Americans is that everyone speaks English. You can get by almost anywhere in the world. But that is not the best way to approach it. If you look forward, you should learn some Chinese and expect to travel overseas. You will need to know geography, taxation, and currency exchange rates, and also understand and respect cultural differences. You also need to become knowledgeable about global trade management. There's a whole body of knowledge about what it takes to move shipments around the world. Supply chain managers who know these subjects will be critical to their companies' success and on a path to executive management.
What I wrestle with and what our clients face are issues in sourcing; investing in manufacturing locations and distribution points; deciding which ports to use and where to locate relative to ports; and how long a choice may make sense as costs and taxes change, and currency values fluctuate. This is one of the most stimulating careers you can find. If you like to see the world and like intellectual challenges and problem solving, this is a great career.
Mark Holifield
Mark Holifield is senior vice president of global supply chain at The Home Depot. He is responsible for the home improvement company's retail logistics, import and domestic distribution, delivery, transportation, and inventory planning and replenishment operations.
Holifield, who joined The Home Depot in 2006, is now in the process of leading the company through a near four-year remodeling of its supply chain, including the building of 19 flow-through distribution centers (see "Home Depot's supply chain remodel," August 2009).
Holifield's career has spanned nearly 30 years. Prior to joining The Home Depot, he was executive vice president of supply chain management at Office Depot. He also worked as director of consulting projects at Dallas Systems Corp. and as a traffic manager for Frito-Lay. He holds a Bachelor of Business Administration degree from the University of Texas and an M.B.A. from Baylor University.
Q: Your academic background is in business administration. What led you to the supply chain sector of business management?
A: Well, it's been a long-time interest, and it actually appears to run in my family. I'm told that one of my ancestors was an executive at the Pennsylvania Railroad in the late 1800s. My dad was also a brakeman on the Illinois Central Railroad for a short time.
Q: So you have train depots in your blood, and your career has taken you first to Office Depot and now to The Home Depot. So you just sort of switched depots?
A: Yes. We all want to go from office to home, I think.
Q: How did your experience at Office Depot prepare you for the role that you have now at The Home Depot?
A: Office Depot was founded a number of years after The Home Depot. The Office Depot formula liberally copied The Home Depot formula, all the way down to not building an upstream distribution infrastructure. At Office Depot, that created problems much earlier than it did here. Many of the things that The Home Depot is going through at this point I went through at Office Depot some years ago, so it was good preparation.
Q: Could you tell us a little about the strategy behind The Home Depot's distribution network remodeling project?
A: The primary issue was a lack of central distribution for our stores. This led to a lot of poor in-stock conditions, inconsistent inventory turns, and inflated logistics costs. In addition, the store folks spent a lot more time on supply chain tasks than they would if we had a central distribution infrastructure. Now, we've got 12 rapid deployment centers, or RDCs, up and running. We plan to have 19 to serve 100 percent of our stores by the end of 2010.
Q: Has the economy affected your remodeling initiative, or is it something you've been able to do in spite of the downturn?
A: Certainly the economy has been an issue in the home-improvement business. But we've not allowed this opportunity to go by. The slowdown in business, I think, has actually benefited the supply chain transformation. It has been an advantage to not have the pressure of high growth in sales to deal with on top of remodeling our supply chain.
Q: What would you say is the biggest takeaway from this process?
A: It's an arduous journey. You've got to make sure that you manage change effectively. Centralizing important functions is a big cultural shift for The Home Depot. A big part of managing programs like this is effectively managing risk. We spent a lot of time thinking about all the things that could go wrong and figuring out how to avoid them. I think a big part of the process is to not fear tackling a big project. No risk, no reward in some ways. This program has required some fortitude on our part. We've made big changes very quickly. But we owe it to our customers and our shareholders to act fast on these kinds of key opportunities.
Doug Jones
Doug Jones is the executive vice president, global supply chain operations for MSC Industrial Direct Co., a Melville, N.Y.-based company that supplies nearly 600,000 different items to the industrial marketplace. Among the items it distributes are hand tools, hardware, safety equipment, janitorial supplies, and cutting tools and products for metal work.
Jones has been leading MSC through the largest strategic supply chain initiative in the company's history. Known as the fulfillment optimization program, the initiative includes a move to paperless processing, establishing engineered standards, and enhancing customer service.
Jones joined MSC in 2001 as vice president of fulfillment. He later was promoted to senior vice president of logistics and then to senior vice president, supply chain management before taking up his current position last October. Prior to joining MSC, Jones held various managerial positions in fulfillment, finance, purchasing, and inventory management at Fisher Scientific and McMaster-Carr Supply Co.
Q: You studied accounting in college. What led you from the financial end of the business to supply chain management?
A: I got my accounting degree to get a solid business background, but I never really wanted to be an accountant. When I was with McMaster-Carr, I was in the management program learning a lot of different aspects of business, and eventually I began managing their warehouse and supply chain. And I found that I really like that aspect of the business. But with my accounting background, I can hold my own with CFOs, so that has been a huge advantage for me.
Q: What has been the biggest challenge you have undertaken in your career?
A: There are a number of things I can point to. In my first role at MSC, I was responsible for customer fulfillment. I learned that while nothing was really broken, we managed our operations with brawn, not brain. There were things we could improve on, so I had to convince the rest of the management team to mess with the "secret sauce."
Q: And how did that go?
A: Well nine years later, we've made wholesale changes that have lowered our costs of distribution and improved customer service. We have improved the flow of orders in our warehouse, and we've improved our cycle times and cutoff times. We have gone paperless and moved to automated wave management. We went from a pick-and-pass model that took about three hours to fill an order to a dynamic-start model with centralized consolidation that has cut that time to about 40 minutes. We have added a lot of operational capacity, so we have room for growth. Engineered standards and labor management is the second part of it, and then we will move on to Lean.
Q: What have you learned through that process?
A: Change management is critical. You have to pick the right team and start with one beta site. Since nothing was broken, we had a lot on the line. It was critical that we maintain a high level of customer service throughout the changes.
Q: Have you found that making those incremental changes is as rewarding as building a supply chain from scratch?
A: I have done expansions in the past and also built from scratch. But I fancy myself a fix-it guy. What juices me is the operations side. My job has evolved over the years to include areas like engineering, logistics, health and safety, purchasing, and product management. I think it's important to align the supply chain under one leadership structure. Our transactions affect all aspects of the business. But it all falls back on my team.
Q: What advice would you give someone just entering the profession?
A: I would say to keep an open mind. There are a lot of interesting parts to the supply chain. Some you will gravitate to more than others. But you can find yourself easily pigeon-holed in one position. I had the opportunity to see a lot of aspects, and it was good for me to get a well-rounded view of the supply chain.
Derek J. Leathers
In some respects, Derek J. Leathers has the classic freight transportation background: The chief operating officer of Werner Enterprises and president of Werner Global Logistics was born in Texas, lives and works in Omaha, Neb., and has spent years in the truckload industry.
But Leathers is not your typical trucking executive. For one thing, he holds a degree in economics from Princeton University. For another, he boasts nearly two decades of international experience: Leathers has led the launch of logistics products in several countries and guided Werner's expansion into Asia. His experience includes advising two U.S. ambassadors to Mexico, serving on the American Trucking Associations' Cross-Border Advisory Committee for North America, and becoming one of the first foreign members of CANACAR, Mexico's national trucking association. Prior to joining Werner in 1999, he was vice president of Schneider National's Mexico operation.
Q: The last 18 months have been very tough on the trucking industry. How has Werner, which has the added pressure that comes with being a publicly traded company, come through the recession, and what steps did you take to weather the storm?
A: We came through the recession exceptionally well, in our view. We are still debt-free and have more than $700 million of equity.
We did it by focusing on our core values. We've been known as a conservative, consistent company for decades. When the recession began, we were the first trucking company to publicly address the slowing economy by reducing the size of our fleet. That was not an easy decision to make, but it was the right one. We've also held ongoing and very open all-employee meetings to keep them informed of where we're at. And of course, we've asked all of our associates to focus on cost control like never before. That's been successful enough that we were able to take out more than $75 million in 2009 throughout the entire network.
We've really diversified our portfolio. We have believed for many years that a diversified portfolio would do better in a downturn, so we've gotten involved in more cross-border and international business, and diversified away from just truckload and into areas like forwarding, intermodal, and logistics. Each of them goes into a downturn at a different time and comes out at a slightly different time.
That operational change started taking place about 10 years ago. It served us very well when we were in an actual downturn. Because we were not growing or spending capital, we decided to take [capital] and invest heavily in systems and infrastructure. I would say the idea was to build the systems that will be necessary for the next 20 years. It's been a successful strategy for us.
Q: At last year's NASSTRAC spring conference, you said that just as shippers routinely check carriers' financial stability and safety record, carriers should do a similar review of their customers. Why do you believe that, and has your view changed now that the economy is improving?
A: We continuously review the finances of our customers. Carriers don't have a monopoly on bankruptcies; there are a lot of troubled companies out there and there will be for years to come.
We're seeing customers attempting to pay more slowly. It's a common problem that's tied to a lot of factors. In the best case, we won't get reimbursed by the customer for 30 to 45 days. But we pay for our costs as they happen. So we can't afford to go any longer than that. One of the difficult things is that it's often the largest multinational companies that push those payment terms to the limit, when in fact their vendors need the cash on a more immediate basis.
I think carriers absolutely should [review their customers' finances] regardless of economic circumstances. The margins in this business are razor-thin. It might only take one customer's bankruptcy to wipe out a carrier's profits for a quarter or even an entire year.
Q: You've been a frequent speaker at industry conferences in the last couple of years. With such a high level of visibility, do you see yourself as representing Werner or the trucking industry as a whole? And what message are you trying to bring to your audiences?
A: First and foremost, I always represent Werner. But we take our position as industry spokespeople very seriously. As a large carrier with business across the entire supply chain portfolio, we are in a position to speak about trends in all aspects of the industry.
The overriding message that we're attempting to get across is to persuade both shippers and carriers to avoid the very volatile, cyclical approach to rates that has long plagued this industry. I don't know how successful we've been; unfortunately, rates were driven to all-time historical inflation-adjusted lows. Rates will have to bounce back sharply to ensure provider viability in the near term. Hopefully, when we're back to sustainable levels for shippers and carriers, we can all collectively take a longer perspective. Until then I see continued reluctance for carriers to add any capacity within the next two to three years.
Judy McReynolds
Judy McReynolds, who in January became the head of Arkansas Best Corp., the parent of less-than-truckload (LTL) carrier ABF Freight System, does not call attention to the fact that she has gone where no one of her gender has gone before. But the facts do the talking: In the male-dominated world of trucking, no other woman has attained such a high-level position—president and CEO—at a company of Arkansas Best's size.
McReynolds' ascent was not a sudden bow to political correctness. It came after years of dues-paying, working for and with Arkansas Best in various roles. From 1992 to 1997, she worked in the Little Rock office of accounting giant Ernst & Young, where she served as senior manager on the Arkansas Best account. McReynolds joined Arkansas Best in 1997 as director of corporate accounting. She rose through the ranks to become the company's senior vice president, CFO, and treasurer in 2006. She held that post until her most recent promotion.
Q: It is believed that you are the first woman to reach the top spot at a publicly traded transportation company of this size. What have been the cultural challenges in climbing the corporate ladder in a male-dominated business like trucking, and why do you think it has taken so long for a woman to reach this level?
A: I am honored to be the first woman in my position in a publicly traded trucking company. I have to admit, though, that I have never been overly focused on my gender. The opportunities to progress in our company that were provided to me by people such as Robert A. Young III [board chairman], Bob Davidson [retired president and CEO], and Dave Loeffler [retired CFO] were numerous. I can only guess that other women may not have been as fortunate as I have been to work for individuals like those. I have always enjoyed the LTL business. I often tell people that there has never been a dull moment in our company's history and in the history of our industry. Our industry is always changing, and I enjoy that challenge.
Q: You have taken the reins of Arkansas Best during a very challenging time for the economy, transportation, and the LTL segment in particular. LTL faces overcapacity, soft demand, and ongoing price wars. What is your strategy for steering Arkansas Best and ABF through this?
A: Both the industry and our company have been severely impacted by the length and depth of this recession. Our most experienced officers will tell you they have never seen a business climate as challenging as this one. Fortunately, we have managed the company conservatively and that has provided us with flexibility. We have remained focused on understanding what is important to our customers and finding a way to be an essential element of their distribution networks. Those are the things that have sustained us during this challenging period and will allow us to be successful in the future.
Q: Is there one single issue or concern that is more predominant in your mind than others?
A: I know this sounds basic, but our company's future success will come through growing our revenues profitably. In order to accomplish this, we have to continue to focus on and meet our customers' needs. In addition, our cost structure must be competitive. We must continue to evolve with our customers and that also brings our IT function into focus.
Q: What have been the most enduring lessons you've learned in getting to this point in your career? And what impact could those lessons have on young people, men or women, who are interested in entering the field?
A: Throughout my career I have tried to accomplish objectives that are within my control, and I have tried to make good decisions every time an issue is presented. I have come across many people who have been focused on issues outside of their control. This approach does not typically breed success in an organization. Another core belief I have is to be positive. I find that most problems have solutions if you have the right attitude. I believe young people, both male and female, would benefit from these principles.
Steve Mulaik
Steve Mulaik is a partner in The Progress Group, a warehousing and logistics consulting firm headquartered in Atlanta. Over the course of a 20-year career, Mulaik has worked on distribution center design and productivity improvement projects for such well-known companies as Gap, J. Crew, Victoria's Secret, Ozburn-Hessey Logistics, Norm Thompson, Williams-Sonoma, and Nike. Having worked on major supply chain projects in the United States and overseas—most recently a 30-month stint in India leading a big DC design project for a food and mass merchandising retailer—Mulaik has first-hand knowledge in building supply chains in the "flat" world of 21st century global commerce.
Q: How did you end up in your current position at The Progress Group?
A: I got a degree in computer science from Georgia Tech and worked for the systems consulting arm of a Big 8 accounting firm, and then a logistics consulting firm called SysteCon. Afterward, I took a job as the VP of process improvement at Race Trac, a $1 billion convenience store chain, and was eventually promoted to CIO. This was an invaluable experience because it gave me great insights into the "real world" beyond consulting and it really sensitized me to the value of simple, practical solutions to problems and the need to employ the 80/20 rule whenever designing those solutions. In 1996, I joined The Progress Group.
Q: What's been your biggest accomplishment to date in India?
A: I was fortunate to help establish one of India's very first organized retail ventures, sponsored by India's wealthiest man, Mukesh Ambani. I led the team that focused on developing facilities to support just about every possible retail concept you can think of, from perishables to apparel to electronics to furniture. The plans we developed called for almost 15 million square feet of space. While we were working on the project, the company's retail division grew from about 200 to 15,000 people in just 16 months' time. The whole experience will get some mention on my tombstone.
Q: What are the key differences between distribution in India and the United States?
A: The biggest difference is the sensitivity to labor efficiency. In India, labor is obviously cheap—a well-paid warehouseman might make $2,000 a year. Consequently, management doesn't give this resource nearly as much attention as it would in the United States. This has implications far beyond what you'd think.
If you don't manage the productivity of labor closely, then you're not managing the quality or service output of your people very well either. They go hand in hand. This difference in management focus has hindered many Indian managers from gaining the experience needed to manage complex-but-manual U.S.-style operations. Consequently, procedures need to be simpler in India to reflect this challenge and the high employee turnover rates. Do not think you can just drop in a U.S.-style operation into India and it will work—it won't.
The second big difference is obviously the lack of infrastructure. It is getting better, but I doubt that when the smoke clears, the logistics practices that are popular in India will be like those here. I think they will evolve to be more similar to European practices because of the population density, the wide variety of cultures and tastes, and the high costs of land and energy.
Q: What one key piece of advice would you offer a supply chain manager looking to set up a logistics network in India?
A: Always have a Plan B in your pocket. Things happen fast or they never happen at all in India. The problem is you never know which until the last second. Risk management is child's play in the United States compared to what it's like on the [Indian] subcontinent. Make it your organization's mission to be prepared.
Q: In general, what's the biggest challenge that supply chain professionals face today?
A: Perhaps the biggest challenge today is that we spend so much time squeezing blood out of a rock—trying to run and optimize the old system—that we don't find the time to think about what I like to call "extreme innovation." Too much innovation today is done out of necessity and not by choice. If we're going to continue to drive costs out properly and deliver more value to the planet [and our companies], we need more really new ideas that originate from logistics professionals. We can't let the government, Wall Street, and the Bay Area techies create the change agenda for us.
Egil Møller Nielsen
In January 2004, the Lego Group recruited Egil Møller Nielsen from Ecco Shoes to develop a turnaround strategy for its European logistics and distribution operations. Nielsen oversaw the toymaker's initiative to consolidate most of its Europe-based distribution centers into a single facility in the Czech Republic to serve customers in all of Europe and Asia. Lego was the first major company to move its regional distribution operations into that former Eastern Bloc country (see "
Q: Lego has worked hard to transform its supply chain over the past few years. What's been the toughest challenge in that regard?
A: The biggest challenge was the consolidation and outsourcing of 10 European logistics operations into a single facility located in the Czech Republic that's managed by DHL. The tangible result of that effort is the 1 million-square-foot facility that now services 130 countries worldwide. What's not so visible are all the changes and difficult decisions we had to make in order to make it all happen.
I can talk for hours about the changes we have made in connection to this decision. But just to mention a few, we made changes in organization (competencies and layoffs), selling of old Lego operations and buildings, changes in the way we sell and process orders, new IT systems, and planning principles. I will not lie if I say this had the greatest impact on most people within the world of Lego. When we did stakeholder analysis, it was difficult to find many stakeholders who weren't significantly impacted by this decision.
Q: Do you see other European companies adopting a similar approach?
A: I do. I expected that other companies would follow suit pretty quickly, but so far we haven't seen that. To my knowledge, we are still the only company in the world that has consolidated all of its logistics operations in the Czech Republic or another former Eastern Bloc country, serving all of its customers on the European continent directly from that site.
We ended up with a regional supply model, where our products bound for Europe are manufactured and supplied from locations in the Czech Republic, Hungary, and Denmark, and our markets in the United States, Canada, and Mexico are served from our Mexico plant. Our markets in the Asia-Pacific region, the Middle East, Africa, and South America are served from local logistics operations.
Overall, where we have the big volumes, we have a local supply model with a simple and agile logistics operation and with a very short replenishment lead time. In our model, there is hardly any complexity and no double handling. It's very flexible in terms of capacities and costs.
Q: What's the one piece of advice you would offer a U.S. supply chain manager looking to set up a distribution center in the Czech Republic?
A: That you must have the right skills and competencies on board, and you must possess much confidence and experience. It is hard work and requires much on-site time regardless of whether you are outsourcing or not. My philosophy, after having spent the past six years outsourcing all my global logistics operations, is that you can only outsource your body, not your brain.
Q: What advice would you offer a young person considering a career in logistics or supply chain?
A: Go ahead and just do it. It is one of the few areas where a person possessing the same skills can be in either a selling or procurement role. Furthermore, you get in touch with the global and local aspects, including various cultures and ways of working. Lastly, as long as there is trade, there will be a need for professional logistics and supply chain people. So from a high-level perspective, there is always a job.
Wesley Randall
We're all familiar with the old saying, "Those who can, do. Those who can't, teach." Wesley Randall, assistant professor of supply chain management at Auburn University, is the exception: He can do both.
Randall spent 20 years as a logistician in the Air Force, retiring as a lieutenant colonel after leadership tours that included supporting combat operations in Southwest Asia and the Balkans and serving as chief of engineering management for NATO's Airborne Warning and Control System. Along the way, he found time to earn two master's degrees and a Ph.D.
When Randall hung up his uniform, he didn't even look at the opportunities available in the private sector. He had already decided to pursue teaching. At Auburn, he has established himself as a leading expert in performance-oriented supply chain network strategy, publishing in academic journals. When certain high-ranking Department of Defense officials need to better understand logistics topics, Randall is a trusted, go-to expert.
Q: What is your research focus?
A: How outcome-based strategies align incentives to create investment—looking at product support from the perspective of providing life-cycle value instead of repairing parts really intrigues me. I'm also getting involved in retail supply chain management and transportation demand forecasting projects with colleagues at Auburn.
Q: What challenges do you see facing academic institutions, and how must they evolve to stay relevant?
A: We need to stay close to the practitioner. The world is just moving too fast, and academics have to learn to move with it. We need to understand real problems, find new ways to solve those problems, and develop generalizable solutions, and we have to do it more rapidly. We need rigorous theoretical or mathematical academic research that moves the discipline forward. At the same time, we have to keep pace with our audience. Deliberate is good, but ponderous is not.
Q: What knowledge is essential for an individual going into the supply chain profession today?
A: Understand cost and spend. Know where the money is and where it went. Understand how your supply chain strategy directly supports firm strategy. Appreciate knowledge and information. We are to the point where knowledge-based infrastructure, like SAP, Oracle, and other systems, may be the most critical production resource available. You don't need to be an enterprise resource planning expert but you must know how to use and interpret the knowledge these systems provide.
Q: What advice would you offer a young person considering a career in logistics or supply chain?
A: Work hard, learn the basics, find a mentor, be willing to take a lateral job to learn a new skill, and don't be afraid to go international. For my family, the time spent internationally was some of the best of our lives. And care about the people around you. I recently heard an executive from The Container Store say, "Culture eats strategy for breakfast". How true that is. There is an emerging realization that attracting and keeping talent is critical to sustained competitive advantage.
Q: If you could return to school as a student for a day, what's the one course you would take?
A: Data mining and analysis. It provides incredible insight. I'm a novice at it, but I realize the potential. I am currently sitting in on a colleague's Ph.D. seminar in data mining, so I'm actually backing up my answer with action.
Q: What's your greatest personal accomplishment to date?
A: It isn't a single thing, but a collection of related events. I think it is the e-mails and phone calls from students and employers. It's hearing from former students that I have impacted their lives and careers, by teaching them a critical concept or simply encouraging them in a difficult time. From employers it is when I have helped match the right student to the right company. This is truly a win for the company, student, Auburn, and me.
Dale S. Rogers
When Dale Rogers' name is mentioned, most people automatically think of reverse logistics. A pioneer of research in that field, Rogers co-authored the now-standard text
Going Backwards: Reverse Logistics Trends and Practices
and is chairman of the Reverse Logistics Executive Council. The Foundation Professor, Logistics and Supply Chain Management at the University of Nevada, Reno, and director of the university's Center for Logistics Management, he has expanded his research to include sustainable supply chains and e-commerce supply chain management. Over the years, he has lectured at more than 200 executive education seminars and conferences and has written several books on supply chain management.For the last decade, the intrepid Rogers has shared his expertise with students throughout Latin America, particularly in Brazil and Argentina. As a result, he can sketch a current—and for many people, probably surprising—picture of the state of logistics and supply chain management in the Southern Hemiäphere.
Q: You've become involved in logistics and supply chain education in Brazil. How did that come about, and what kind of work are you doing there?
A: The first time I went down there was in 2000. [Ohio State University professor] Walter Zinn, who is from Brazil, talked to me about speaking down there, so I went and struck up a very close friendship with Cesar Lavalle of ILOS, the Instituto de Logística e Supply Chain. ... I'm doing so many things there, including a recent appointment as the leader in sustainability and reverse logistics practices at ILOS.
There are a lot of talented people and a lot of excitement about supply chain management and logistics there. I consider it a real honor to participate in educational programs and work with my friends in Latin America.
Q: How would you describe the state of supply chain education in Latin America?
A: They've got some really good programs down there. I spoke at a conference in Mexico last March ... the speakers included [University of Kentucky professor] Tom Goldsby and [Cranfield University professor] Martin Christopher—so they're playing in the big leagues when it comes to education.
Some of the bright, successful doctoral students that have been educated in U.S. and European schools have gone back home to teach, and some are establishing supply chain programs there. One example is Sebastian García-Dastugue, a former student of [Ohio State University professor] Doug Lambert's who is now teaching at the Universidad de San Andr&és in Argentina.
Q: What do you think the future holds for supply chain practitioners in South America?
A: Brazil was hurt a little bit by the recession, but it's still a booming economy, and people who were poor are now entering the middle class. So they need to figure out how to service all this new demand. This is happening not just in Brazil but throughout Latin America.
One of the challenges they face involves distribution complexity. Say you're a manufacturer of soft drinks or beer. You'll sell some to large chain stores, but you also sell some products in ones or twos to a guy pushing a cart through the favelas (slums). You have to come up with some pretty clever stuff to efficiently manage distribution all the way out to that guy with the cart.
In South America, they emphasize different things than we do because, for example, labor is much cheaper. There is a fair amount of automation, and some it is very sophisticated. In the United States, we tend to go for the fastest, cheapest, simplest solution; Brazil is a little like Germany: They tend to like expensive, optimal solutions.
Some of the best supply chain models I've ever seen have been in Brazil. There are a lot of best practices in South America, and many of the supply chain leaders in multinational companies have come from there. You have very sophisticated businessmen who are doing some pretty cool things, even though they may not have as much capital to invest [as U.S. and European companies do]. ... You really have to think globally, and appreciate the fact that some great ideas generated in South America haven't made it to the United States yet.
Related video:Meet the Rainmakers: Dr. Dale Rogers, University of Nevada-Reno
Reuben Slone
The demands of a senior corporate management position typically leave little time for outside activities, but Reuben Slone hasn't let that stand in his way. While holding down executive-level jobs at General Motors, Whirlpool, and now OfficeMax, where he serves as executive vice president of supply chain, Slone has also been a frequent speaker and writer. He has written two well-received
Harvard Business Review
articles: "Leading a Supply Chain Turnaround" in October 2004 and "Are You the Weakest Link in Your Company's Supply Chain?" in September 2007. This past May saw the publication of his first book, co-authored with Paul Dittmann and the late John T. Mentzer, The New Supply Chain Agenda, which grew out of the "Weakest Link" article.Slone views writing and speaking not just as a way to give back to the profession but also as part of his own learning process. "The work [of writing] is the grist for my mill," he says. "The writing is the refinement of my ideas. That's how I keep current."
Q: Is writing something you would recommend to other supply chain practitioners?
A: I would recommend it to anyone. Frankly, it's not just writing; it's speaking and dialoguing. I find it almost invaluable to take ideas and present them to a group and then be hammered with questions. That's the way I learn—through dialogue and discussion. That's also the way I like to lead organizations. As long as you have a foundation of respect, you need to have debate because many minds think better than one.
Q: Your book is titled The New Supply Chain Agenda. What makes this agenda new?
A: This is meant to be a no-jargon book. There are a lot of books written on supply chain, but not so many that you could read on a cross-country trip across the United States. The more technical thing that's unique is linking supply chain performance to shareholder value by economic profit.
Q: Do you think supply chain practitioners pay enough attention to economic profit and shareholder value?
A: It does not get enough attention—and not just from the supply chain practitioner but also from the CEO and the boards of supply chain-intensive companies.
My wife was the one who challenged me to write the "Weakest Link" article [which the book grew out of]. And her haunting question to me was: "When you were at General Motors and Whirlpool, why did you always have to explain to the CEO what it is you did and why you did it?" And I said, "Wow, that's a great question."
Q: How have you promoted the importance of the supply chain to shareholder value at the companies you've worked with?
A: At the end of the day, it's really built around the results that you drive, and there's a simple hierarchy of results for any well-functioning supply chain. The first is availability, the second is doing that at an optimal level of inventory, and the third is doing that at the optimal level of cost. So if you run that as an optimization problem, it's, "What is the appropriate availability at the optimal inventory and cost in the system?"
What's interesting is that at many of the manufacturing companies that I've either worked at or consulted for, the CEO runs that algorithm precisely in reverse: "Give me the lowest-cost supply chain, and then we'll address our inventory and availability of our product." But that actually gives you a very inefficient supply chain. I used to say, "Well, the **ital{reductio ad absurdum} argument for that is if we don't ship all year, I can return three-fourths of a billion dollars. Is that what you want? Because that is the lowest-cost supply chain."
Rich Thompson
When Rich Thompson was approached in 2007 by the Staubach Co. to head its Logistics Practice Group, he was, to say the least, skeptical. With 20 years of experience, he was more than qualified for the job. But he wondered how expertise in supply chain management would fit with the needs of a huge real estate services organization.
He needn't have worried. In 2008, Staubach merged with the powerhouse real estate firm Jones Lang LaSalle (JLL). Today, Thompson heads the firm's global Supply Chain & Logistics Solutions operation, a group that has been elevated in importance and influence within Chicago-based JLL. As Thompson discovered, the supply chain division has indeed had a critical role to play in JLL's industrial development decisions and in its success.
Q: What is the role of your division, and your job in particular, within the framework of a large commercial and industrial real estate organization?
A: As head of the global Supply Chain & Logistics Solutions consulting practice, I work daily with 65 professionals across the United States, Mexico, and Canada. The primary focus of my job is supporting our corporate clients with supply chain consulting strategy through implementation services to save them time and money and to mitigate risk.
When I was approached three years ago to develop and grow our supply chain consulting capabilities, I thought, Why are they calling me? Why is a commercial real estate firm interested in supply chain issues?
It didn't take me long to realize that it made all the sense in the world. It became clear that a commercial real estate firm could not consider itself a trusted business adviser on industrial real estate—plants, warehouses, land, distribution centers—without knowledge and experience in supply chain management.
Logistics can account for as much as 80 percent of a project's total operating costs. Developing a thorough understanding of your client's supply chain strategy is critical in being able to deliver optimal solutions.
Q: The conventional wisdom has been that the industrial property segment skirted much of the damage inflicted on the real estate market in the past two years. Is the other shoe about to drop, or has it already dropped?
A: In general, real estate values are down 30 percent across the board, and industrial properties have suffered as with the rest of the commercial real estate market.
Over the past five quarters, the majority of U.S. industrial markets have experienced rising vacancy rates, creating the potential for landlord cash flow issues. Based on how the debt is structured on properties experiencing these problems, we expect to see more foreclosures, loan defaults and public disclosure of these problems in the industrial market in 2010 and 2011.
Q: Are developers and lessors having difficulty securing financing for projects? If so, when do you see lenders' purse strings loosening?
A: Yes, developers and lessors have had a hard time getting financing, but the situation is improving. Lending for speculative development is virtually non-existent. Build-to-suit financing still exists, but much more selectively and at lower loan-to-cost ratios than were achievable prior to the recession.
Perhaps more important is that cap rates upon sale are significantly higher. Thus, the rental rates required to justify new construction have increased and are much higher than prevailing rental rates. For existing properties, financing is available for acquisitions and refinancing, albeit at substantially lower loan-to-value ratios than before the recession. However, with banks, life insurance companies, and commercial mortgage-backed securities lenders all back in the market, debt financing is significantly more liquid than it was during 2009 and is likely to continue to improve throughout 2010.
Q: How do you expect your operation to be positioned 10 years out?
A: I see my role and that of our Supply Chain & Logistics Solutions team expanding in scope and complexity, especially on global scale. Supply chain management is without question a global business and I would expect our team to be well positioned to provide world-class strategic consulting to our clients in a truly seamless manner anywhere in the world.
Related video:Meet the Rainmakers: Richard H. Thompson, Jones Lang LaSalle
