Keeping track of all the moving parts: interview with D.G. Macpherson
With a catalog of over 1 million products, W.W. Grainger aims to clean up in the facility maintenance market. It's D.G. Macpherson's job to keep the orders flowing smoothly.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
A supply chain that moves over 1,000,000 items around the globe each year and supports worldwide sales of $7 billion annually demands organization, innovation, and a leader with the right background, skill set, and management style. For W.W. Grainger Inc., that person is D.G. Macpherson.
Macpherson, who joined Grainger in February 2008, heads up the company's global supply chain operations as senior vice president of the division. He is responsible for operations, including the performance of Grainger's distribution centers as well as its product offerings and availability. He also provides global planning, coordination, and specialized expertise to the supply chain organizations in all of Grainger's business units.
Macpherson came to Grainger from the Boston Consulting Group (BCG), where he was partner and managing director for six years. In that capacity, he served as a strategic consultant at Grainger and led BCG's relationship with Grainger. His guidance helped Grainger shape and execute many supply chain initiatives that have been foundational to the distributor's growth, including product availability improvements and product line expansion. Earlier in his career, he was an operations manager for Rain Bird Sprinkler Manufacturing Co. and a test engineer with the U.S. Air Force.
Macpherson holds a bachelor's degree from Stanford University and an M.B.A. from Northwestern University's Kellogg Graduate School of Management. He spoke recently with DC Velocity Group Editorial Director Mitch Mac Donald about his career path and his team's commitment to supply chain excellence.
Q: Tell us about Grainger and its mission. A: Grainger is an industrial distribution business that has been around since the 1920s, and we have a Canadian operation that's even older than that. Grainger today is focused on making sure we provide customers with a very broad range of products to help them keep their facilities and operations up and running. Our reputation is based on providing terrific, very high-level service to our customers.
Q: What do you see as your mission as senior vice president of global supply chain operations? A: We are a very large U.S. business that last year generated roughly $7 billion in sales. We've been around for a long time and we have international businesses, our Canadian business being by far the biggest of these. I am responsible for the global supply chain, which really supports all of those. My role is making sure that we have, to simplify things a bit, the right products in the right place at the right time for all of our businesses throughout the world. I spend a lot of time thinking about product management, inventory management, transportation, operations, global sourcing, and our relationships with suppliers.
The best way to describe the nature of our operations is that we have literally thousands of suppliers that we work with and that are very important to our efforts to make sure we provide great service to our customers. They provide us with hundreds of thousands of products, which we distribute to our customers through multiple channels. In the United States, in Canada, in most of our businesses, customers can walk into a local branch to get their product or they can use one of our catalogs or our website.
In the United States, for example, we have about 3,000 suppliers. We have 10 distribution centers, which are fairly large buildings. We carry over 400 brands of products in our DCs. We have over 300,000 transactions a day, so we have a lot of transactions in those buildings. Our objective every time we have a transaction is to get the order perfect. Our business is really based on our team members' understanding that objective.
Q: Given your extensive product line and the varied sales channels, you probably use a pretty broad mix of shipping modes, everything from parcel express to truckload, right? A: Yes, we do. One thing that's interesting about our business is that we do many transactions, but they're typically $250 to $300 at a time, so customers are not ordering huge amounts in most cases. We are generally really working on their immediate needs, and those are typically small orders. For that reason, small parcels account for the biggest share of our shipping transactions, but we do use pretty much every mode of transportation.
Q: You've seen substantial growth with global initiatives. Could you touch a little bit on Grainger's global strategy? A: We have expanded pretty rapidly. International is about 20 percent of our total mix. We have a very clear strategy to leverage our supply chain scale to expand in the Latin America region and in Asia. We have strong business in Mexico. We have strong business in Japan. We have fledgling businesses in China and India. From a supply chain perspective, I'd say we aim to follow the same principles we follow in our U.S. business, which is making sure you provide absolutely flawless service to customers, making sure your key members are wired to ensure absolutely flawless execution.
I think some things are different, though. For example, depending on the competitive side of the market you're in, the product range requirements may vary dramatically. Oftentimes, the product range in smaller countries is much narrower than in, say, Canada or the United States, so we have to think differently. Still, we want to make sure we have a better product offering, in many cases a broader product offering, than any of our competitors. What that equates to can be much narrower margins, so it can be a very different ballgame.
Q: Which of your skills do you believe serve you best as you go about the daily business of managing Grainger's global supply chain? A: There are a couple of things that I think are important. One is making sure that we stay very focused on what delivers value for the customer. The other, I think, is just being comfortable working with multiple levels of our organization, multiple functions, and working and cross collaborating with the commercial side of the business. It is important to be able to go from discussions with sales and marketing and then translate the key points for my team, every level of my team, effectively. I think those are the things that are important—making sure you have a strategic focus that is based on customer value and then working with all levels of the organization to communicate that to all team members successfully.
Q: Put on a futurist's hat for a moment. What do you see as the next big thing in logistics and supply chain management? A: Connectivity to our suppliers and collaboration with our suppliers that allows us to improve that part of our performance. Our suppliers do a great job of providing us with products of very high quality, but I think we can probably do things on the collaboration side with suppliers. For us, it is specific probably because we have got so many. We've got thousands of suppliers and some of them are very small businesses, some are very big businesses. The challenges of achieving transparency, visibility, and collaboration in ways that improve performance—I think that is really the area where we could probably improve the most.
Q: What advice would you give to a young person interested in a career in supply chain management? A: There are two bits of advice I would give them. The first is make sure that you get out and understand customers, that you actually visit customers and develop a visceral understanding of what your customers need. I think you really need to get out there and touch and feel what the customer does.
The other thing is to think carefully about where they go. In some organizations, supply chain and operations are absolutely core to strategy and kind of one and the same. In others, they are not. I think you will get kind of a different level of interaction with core strategy and what the business does depending on where you go. Both can be great, but you need to think about it because it can have an influence on the overall business.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”