The master supply chain builder: interview with Kathy Wengel
Recently honored with CSCMP's prestigious Distinguished Service Award, Kathy Wengel—Johnson & Johnson's top supply chain executive—has dedicated her career to building diverse teams that create world-class supply chains.
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
As a child, Kathy Wengel loved to build with Lego bricks. She enjoyed selecting blocks of different sizes, shapes, and colors and then bringing them together into a unified whole.
Her job today as executive vice president and chief global supply chain officer at the health-care giant Johnson & Johnson (J&J) is not much different. For instance, she recently co-led an effort to redesign and rebuild J&J's supply chain and quality operating models. This entailed taking all of the disparate parts of the health-care company's global operations—and those of its suppliers and customers—and melding them together into an integrated process that's focused on the end customer.
Wengel and her team proved to be master builders. The redesign propelled J&J's operation into the ranks of truly world-class supply chain organizations. In 2019, the company captured the number-eight spot on the analyst group Gartner's annual "Supply Chain Top 25" list.
Wengel believes the initiative's success lies in the diverse and global supply chain teams the company has spent years building. Johnson & Johnson is committed not only to bringing people with diverse experiences and perspectives onto its teams but also to broadening those team members' perspectives by moving them through varied roles around the globe.
Wengel herself is an example of this. During her 31-year career at J&J, she has served in a variety of positions in a variety of places, including manager of manufacturing engineering at a J&J site in Puerto Rico and general manager of one of J&J's largest production facilities in Italy. She has also served as vice president of quality and compliance for the company's Europe, the Middle East, and Africa (EMEA) and Asia Pacific regions and as the corporation's first chief quality officer.
In addition to her day-to-day activities, Wengel has made time to give back to the profession. She is active in many industry organizations, including the Council of Supply Chain Management Professionals (CSCMP), the global standards organization GS1 Global, the National Association of Manufacturers, and AWESOME (Achieving Women's Excellence in Supply Chain Operations, Management, and Education).
In recognition of her service and leadership, CSCMP recently presented Wengel with its Distinguished Service Award (DSA), which honors an individual for significant, consistent, and career-long contributions to the logistics and supply chain management disciplines. She recently talked with DC Velocity Editor at Large Susan Lacefield about her career path and her vision for the profession's future.
Q: What do you see as the top challenges facing supply chain executives going into 2020, and how is Johnson & Johnson addressing those challenges?
A: In my opinion, a top challenge for every supply chain executive is a question I ask myself every day: How do we find the best talent to drive future innovations for patients, and ultimately the growth of our company? I spend more than a third of my time working on this challenge: accelerating talent development, identifying the most promising future leaders, establishing a culture of self-direction and accountability, and ensuring we equip our entire workforce with the skills and capabilities they will need for the future.
From artificial intelligence (AI) to automation and the Internet of Things, the world of supply chain is quickly evolving as technology challenges us to think bigger and innovate faster. To deliver top-quality products to our patients, customers, and consumers, our Johnson & Johnson workforce needs to include the best and brightest minds. We must also continually expand our pool with respect to diversity and experience, searching for and developing talented people from all backgrounds who have the right blend of skills, curiosity, and passion that will continue to fuel our company's innovation engine and maintain our position as a leader in the industry.
Q: What is your proudest work-related achievement, and why?
A: I'll actually give you two. The first is the excellence with which we implemented our redesigned supply chain model for J&J. Over the past decade, we have completely transformed the role of supply chain for our corporation and, more importantly, for our customers. While this journey never ends, I want to recognize our more than 50,000 supply chain associates for their fantastic work.
Second, and very much related to the first, would be building more diverse global teams at every step of my career. I've seen so many times how results are dramatically improved when you put people with different experiences, from different backgrounds, and with different perspectives together and give them a problem to solve.
We are very proud of the external recognition we've received, including being ranked this year by Gartner as one of the Top 10 supply chains in the world across all industries and the top-ranked health-care company. And I'm extremely honored and humbled at being named the recipient of the 2019 Distinguished Service Award from CSCMP. Each of these recognitions is due to the strong, dynamic, and diverse teams we have that are tackling the complex challenges that come at us in health care each day.
Q: How have things changed for women in supply chain management since you entered the profession? What further changes would you like to see?
A: Over the years, I have seen an increase in the number of women in supply chain management roles and supply chain overall, but there are still too few of us in leadership positions. This is reflected in the very small percentage of women (approximately 5%) who occupy the top supply chain spot in Fortune 500 companies. Supply chain is such an interesting and exciting place to be, and there are many talented women leading and innovating—I know thousands of them! We can all do a better job in telling that story and supporting younger women who have the interest and drive to succeed in this space.
I'm very proud to have a gender-balanced (50/50) globally diverse supply chain leadership team here at Johnson & Johnson. We need visible and vocal women in supply chain roles who can inspire the next generation of supply chain and STEM2D (science, technology, engineering, math, manufacturing, and design) professionals. That is why I dedicate a portion of my time to serving as the executive sponsor of Johnson & Johnson's "Women's Leadership & Inclusion" and "Women in STEM2D" initiatives.
Q: What advice would you give someone who's just starting a career in supply chain management?
A: I'm asked this question a lot, and I've realized that the lessons we learn early on in our careers will influence the way we work and lead teams, often for decades. I always encourage people to ask lots of questions to help understand the overall context of a situation and where it sits in the priorities of the business and our customers. I certainly asked a lot of questions at the beginning of my career, and my team can confirm for you that I still do today! By hearing what others have to say, on the corporate level, on the manufacturing lines, and especially on the customer side, we can gain a better understanding of the vast health-care landscape and make decisions that are in the best interest of the company and our employees.
More specifically, I'd tell a newcomer that when an interesting opportunity presents itself, raise your hand! I'm an advocate of stepping outside of your comfort zone and taking opportunities or positions that may seem different or unusual; in my experience, that's when you learn the most. Each new opportunity and relocation pushed me to new perspectives and helped me to grow as a leader. Those are the moments that define you, teach you, and set you apart from others.
Q: You're active in a number of industry associations and university programs. Why do you feel that's important?
A: It is critical to spend part of your time outside of your own organization's walls. We do not exist in a vacuum. We're part of a vast—and constantly evolving—global health-care ecosystem, where the effects of even minor regulatory or process changes can reverberate throughout our operations.
That is why I'm proud to serve as chairman of the board of GS1 Global, an organization that sets and maintains global standards for the exchange of critical business data to ensure patient safety and supply chain efficiency. I also sit on the board of the National Association of Manufacturers in the U.S. and am on the advisory board of AWESOME. And I very much enjoy spending time with university students getting ready to embark on supply chain careers.
I see all of these activities as part of my responsibility as a leader to find and support the next generation of supply chain leaders. They are the ones who will usher in the next technology breakthroughs to meet the changing needs of a market that we can only imagine today.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."