For our 2014 Rainmakers, success isn't just about fame and fortune. It's also about making a contribution to the logistics field and advancing the profession.
Some measure success by salaries and titles. Others use a different yardstick altogether. Take the 11 professionals selected as our 2014 Rainmakers, for example. When asked about their proudest professional accomplishments, one spoke of the rewards of nurturing talent within his organization. Another cited his company's groundbreaking program to convert its truck fleet from diesel to a more eco-friendly fuel.
So who are these Rainmakers and how were they chosen? As in the past, DC Velocity selected the 2014 Rainmakers in concert with members of the magazine's Editorial Advisory Board from candidates nominated by readers, board members, and previous Rainmakers and Thought Leaders. This year's selections represent different facets of the profession—from practitioners to consultants to educators to service providers. But as the profiles on the following pages show, they're united by a common goal of advancing the logistics and supply chain management profession.
If you'd like to nominate someone for our 2015 Rainmakers report, please send your suggestions to DC Velocity's editorial director, Peter Bradley.
Joseph C. Andraski
Phillip W. Davis
Haydn J. Powell
T. Michael Ray
Joseph C. Andraski
Think of Joe Andraski, and three things inevitably come to mind: Nabisco, CPFR, and item-level RFID.
Much of Andraski's lengthy career in distribution, logistics, and supply chain was spent at Nabisco, where he led that company's innovative Integrated Logistics organization. Following his tenure there, he headed the industry association VICS (Voluntary Interindustry Commerce Solutions). Over the years, Andraski has worked tirelessly to promote the adoption of CPFR (Collaborative Planning, Forecasting, and Replenishment)—a business model trademarked by VICS—as well as item-level radio-frequency identification (RFID).
Long considered to be among the retail industry's thought leaders, he has received numerous recognitions, including the Council of Supply Chain Management Professionals' (CSCMP) Distinguished Service Award, the VICS Milliken Achievement Award, and Syracuse University's Salzberg Medallion. He was also named Logistician of the Year by Penn State University. Andraski currently heads Collaborative Energizer LLC, a supply chain consulting firm specializing in collaborative business practices, and is working on a project to demonstrate the benefits of item-level RFID for suppliers.
Q: Is there a particular accomplishment you consider to be your lasting legacy?
A: Without a doubt, it was being able to build a culture at Nabisco in which individuals could develop the skills and a positive can-do attitude that paved the way to a successful career path for all. Our culture was such that we worked hard but smart, and we had fun in the process. Earning the trust of senior management was an achievement that provided us with the resources we needed to continuously move forward.
Q: Collaboration has long been a primary focus of your work. Why is collaboration among supply chain partners so important?
A: When I moved up into the ranks of management, I witnessed a lack of collaboration not just within the departments themselves, but also with other departments in the company, with service providers, and with the customer. Because of that, it was impossible to provide consistent, acceptable levels of customer service, regardless of how much time, effort, and talent there was in our department. ... Collaboration wasn't part of the business lexicon at that time.
Over time, though, the idea of collaboration began to grow within the context of "team play" in retailing. When Robert Bruce of Wal-Mart Stores came up with Collaborative Forecasting and Replenishment, or CFAR, it all began to coalesce. The next step was to include marketing plans, and CPFR was born. Thanks to CPFR, the value of collaboration became recognized in transportation, upstream manufacturing and logistics, packaging, and practically every touch point in the company and in customer service. Outside of business, I could see the value of collaboration within my family and why working together is so much more productive than working at cross-purposes.
Q: You have long been involved in industry-sponsored initiatives like CPFR and item-level RFID. Would you encourage others to volunteer for similar projects?
A: Absolutely. Let's look at the benefits enjoyed by an individual who volunteers to work on an industrywide project. Networking ranks right up at the top, because you can learn so much by working with peers and superiors. Working on an external/industry project will help you learn how to organize and manage a project, to set goals and objectives, and to build a case for action. It will also give you visibility into other companies, which could be service providers, customers, or competitors. A stellar performance leads to a very positive and compelling reputation that can benefit you as an individual as well as your company. Volunteering is also one of the most effective methods of gaining external knowledge that could be important to the development and execution of your company's strategic plans.
Q: Recently, you published My Incredible Supply Chain Journey ... And What You Can Learn From It, a book about your life and experiences in business. What prompted you to write the book?
A: The idea for the book came partly through my work on business collaboration. It got me thinking about the importance of what I call "caring, sharing, and giving back." First, I felt that if colleagues were acting in a collaborative way, then they had to care strongly about the audience (the company and its customers) and the team they were working with. I've also observed that people who are of a caring nature and are traveling along the collaborative path are the kind of people who are willing to share. But it's important to consider how to begin sharing and what should be shared.
The question of determining how and what to share led to the idea of giving back. I felt I had a "calling" to write a book that encapsulated the knowledge and experiences I've had, which I believe are important to share, as my way of giving back.
Phillip W. Davis
Phil Davis did not begin his career in supply chain management. Instead, like many of his peers at the supermarket chain The Kroger Co., he started out working in the store itself. After about 26 years at the company, however, he moved into the supply chain. Now senior fresh supply chain manager, Davis has also held positions in produce procurement/merchandising, floral distribution, and perishable transportation.
That early experience in the store deeply influenced how Davis views supply chain management. Rather than regarding it as a back-office function focused on cost control, he believes the supply chain begins with the customer and should be focused first and foremost on making the customer's shopping experience better.
This perspective helps explain how Davis became involved in one of his favorite causes: the use of reusable plastic containers (RPCs) for shipping. Davis's interest in RPCs was sparked by a simple question: Why is a lot of the product arriving at our stores damaged? As he dug into the problem, he found that the corrugated boxes that Kroger had been using to transport fresh produce were absorbing moisture in their 34-degree shipping environment and becoming unstable.
From the start, Davis realized that shifting to the sturdier RPCs would require buy-in from the end-to-end supply chain. Externally, the company reached out to growers to make sure the RPC program resulted in sustainable benefits for them (increased sales of their produce). Internally, Davis and his team worked across department lines to help the company's distribution centers understand how the shift to RPCs would affect their receiving and handling processes.
Davis has since become an advocate for RPCs not only for his own company and its supply chain partners but also for the industry as a whole. He believes that this is one of those issues where it makes sense for industry players to work together to boost RPC adoption. In recognition of his efforts, the Reusable Packaging Association presented him with its Leadership Award in 2008.
Q: What benefits have you seen from using RPCs?
A: RPCs have provided a sustainable solution that has ensured the highest quality of perishables (fruits, vegetables, and most recently, eggs) for our customers. At the same time, the use of RPCs has reduced waste and improved the efficiency of our fresh supply chain.
Q: What advice would you give other companies thinking of transitioning to reusable shipping containers?
A: First, identify the reason for reusables. Then, identify all participants of the supply chain and "walk through" the entire process, which will reveal details of how reusables can be helpful in all areas of the supply chain.
Q: What keeps you interested in the supply chain profession?
A: Supply chain management is not boring! As a matter of fact, it's very intriguing to me, and I compare it to working a puzzle. It takes many pieces fitting together to achieve a beautiful finished picture. When all pieces of the supply chain work together, the end result is a beautiful, efficient business model.
Q: What advice would you give someone just starting his or her career in supply chain management?
A: If you like solving puzzles, then use the same mindset for supply chain projects, as there are many parts that need to be "pieced" together in order to achieved the desired outcome of increased efficiency.
Michael DelBovo began his career in logistics in 1985 with Schneider National and has since held a variety of positions for companies such as Dart Transit and C.H. Robinson. Since 1997, he has been a part of the leadership team at the logistics and supply chain service provider Saddle Creek Transportation Inc. Today, he serves as president of Saddle Creek Transportation, with responsibility for Saddle Creek's trucking operations, logistics and brokerage company, and cross-dock centers located in nine facilities nationwide. He has also devoted considerable time and energy to industry organizations such as the Council of Supply Chain Management Professionals (CSCMP) and the Warehousing Education and Research Council (WERC).
DelBovo recently achieved considerable acclaim for spearheading a $25 million compressed natural gas (CNG) project, which resulted in Saddle Creek's adding over 100 tractor-trailers powered by CNG to its fleet.
A regular speaker on logistics practices and supply chain management, DelBovo earned his bachelor's degree from Carroll University in Waukesha, Wis., and received his M.B.A. from the University of Wisconsin, Oshkosh.
Q: What do you consider to be your greatest professional accomplishments to date?
A: First is guiding Saddle Creek's investment in compressed natural gas (CNG). As part of a cost-control initiative back in 2009, we began exploring opportunities involving alternative-fuel vehicles that would dramatically reduce Saddle Creek's carbon emissions, stabilize fuel costs, and reduce our reliance on foreign oil.
Convinced that CNG could help Saddle Creek mitigate rising fuel costs while supporting the sustainability goals of our company and our customers, I became a passionate advocate for this exciting new technology. Our innovative fleet and operation give Saddle Creek customers an eco-friendly transportation solution, supporting their regional delivery needs while helping to reduce their carbon footprint. Our fleet has grown to over 150 trucks and has already traveled more than 21 million miles on CNG—saving nearly a pound of carbon for every mile when compared with the older diesel trucks they replaced.
Second, I am very proud of being able to serve and grow my team along with coaching many young leaders who are entering the logistics field. Saddle Creek has been blessed with tremendous growth over the 17 years that I have been here, and I have had the opportunity to work with some of the finest people in the industry.
Q: What do you consider to be the biggest obstacles to greater supply chain optimization?
A: While I strongly support simple government regulation to make sure we operate safely and fairly, the cost and complexity of regulation continues to make supply chain optimization a challenge for the industry. In addition, congestion and infrastructure challenges along with a diminishing driver workforce will continue to burden the industry with costly, inefficient operations. These obstacles continue to erode the progress our industry has made over the years in reducing costs and increasing efficiencies in supply chain management.
Q: How important is the role of technology in logistics?
A: Each and every company we work with is looking to better manage its supply chain on some level. The "game changer," or differentiator, in doing so is their ability to deploy and leverage technology that offers their customers a strategic advantage.
There's a growing expectation from manufacturers, retailers, wholesalers, and distributors that their logistics service providers have significant capabilities in information management and customer reporting. It's critical to provide customers with robust supply chain management technology that ultimately gives them accurate, real-time information to guide their business decisions, improve inventory control, and effectively manage their supply chains.
Q: How important is the role of customer service in logistics?
A: Often, the logistics service provider is the face of the manufacturer or retailer to the customer, acting as a true brand ambassador. Logistics has become completely embedded in the overall purchasing experience, and customer service is a critical component. In addition, with the rapid growth of e-commerce, the importance of customer service in logistics continues to be "mission critical." Order accuracy, timely delivery, and personalized service are just a few examples of customer service elements that can help to ensure customer satisfaction and retention.
Q: You've been a leader in sustainable logistics practices, specifically in regard to the use of natural gas. How important is it to embrace "green" in logistics, and why?
A: Corporate America and its stakeholders continue to recognize the need to control energy use and reduce their carbon footprint—both for environmental and financial reasons. In fact, I find that more than 75 percent of our prospective customers have a specific interest in our corporate sustainability programs in support of their own green goals.
With over 21 million CNG miles under our belt, we have learned a lot about "green" transportation—and most of it is about maintaining balance. We continue to look for new and innovative ways to help our customers balance the desire to minimize the impact on the environment with their need to maintain a strong bottom line. I firmly believe that it is not enough to simply invest in green sustainable logistics. We needed to make sure to invest in economically viable alternatives that have an opportunity to provide our customers with the potential for a "gr$$n" solution in the long run.
You might say that Robert Martichenko, chief executive officer of LeanCor Supply Chain Group, first learned about Lean at the source. Early in his career, he helped support the development of the Toyota Motor Manufacturing plant in Princeton, Ind. A decade ago, he started LeanCor, which helps customers implement lean principles and also operates as a third-party logistics service provider (3PL). Through his books and his regular speaking engagements as well as his business, he serves as the leading advocate for the application of lean principles in logistics and supply chain management.
Martichenko is a senior instructor for the Lean Enterprise Institute and the Georgia Tech Supply Chain and Logistics Institute. Two of his books have won Shingo Research Awards, which recognize writing on lean and operational excellence.
Q: You've long been an evangelist for applying lean principles in logistics. Can you describe how you came to embrace lean thinking?
A: I got the opportunity to support the greenfield startup at the Toyota Motor Manufacturing plant in Princeton, Ind. That's where I began to learn about lean principles. Being part of that startup was probably the defining moment of my career. During those years, I also got to know Dr. Jim Womack, Dan Jones, and John Shook, all leaders in lean thinking. Dr. Womack asked if I would put together a workshop for lean logistics and lean supply chain. That started my teaching. When you start writing and teaching, that's when you really become the student and the evangelist.
Ten years ago, I left my corporate role and started LeanCor, and that's when I really started to mature my thinking. Our vision is to advance our customers' supply chains through the use of lean principles and operational excellence. Putting together the book Building a Lean Fulfillment Stream forced me to synthesize my own thoughts and understand the strategic and tactical elements of implementing Lean in the supply chain.
Q: How is applying lean thinking in logistics and supply chain management different from applying it in manufacturing?
A: I love that question because almost 20 years later in my career, I'm actually questioning why Lean started inside manufacturing. Lean thinking should have started in distribution because it is really about understanding customer consumption, then manufacturing and distributing to the pull of actual demand. So, the fact that a lot of organizations started in the factory, in my opinion, has led to a lot of lean implementations that have not produced the business results the companies expected because they never connected work in manufacturing with the actual supply chain. The analogy I use is that their work amounted to building an on-ramp to a freeway that's already gridlocked.
Q: When you visit clients, what are the biggest barriers you find to implementing lean principles?
A: There tend to be two types of customers. The first type already understands the power of Lean and operational excellence. The barriers are about process and technology: How are speed and velocity going to be achieved with the current technology systems, what processes will need to change, and how will the companies manage that change? When a customer already understands and is already emotionally committed to driving a lean culture, the barriers are around tactical implementation.
The second type of customer we have is the customer that is not quite there yet on understanding the benefits of lean thinking. In that case, it's more of an education process, getting people to our Kentucky operations center so they can see lean logistics processes live and in action, and see the business results they can get. The first toll gate you have to get through is to get people in the organization aligned with the idea that Lean is a business system designed to drive results relative to speed, cost, and quality. It's not about the tools and implementation of the tools; it's really about building a learning culture based on problem solving—specifically, on exposing problems every day and finding the root causes so tomorrow the business is stronger.
Q: What do you see as the greatest opportunities for applying lean principles in logistics and supply chain management?
A: For companies with supply chains that are really good, the next step is extended value stream work, where you're getting out of your own four walls, getting upstream working with suppliers, moving downstream with customers to identify all of the waste. We've learned that waste tends to exist in the interfaces, unleveled flow, and connection points between stakeholders in the supply chain. Consequently, focusing on end-to-end supply chain improvement will produce the breakthrough results that leading companies are now looking for. Secondly, transportation is changing very quickly, and therefore, organizations are very interested in lean thinking for transportation management. This is a very busy part of our 3PL services right now.
Hadyn J. Powell
As global supply chain strategy manager for the Advanced Components and Systems Division of Caterpillar Inc., Haydn Powell is accountable for shipping performance excellence in his company's component manufacturing business. He also leads supply chain activities worldwide in such areas as strategic process transformation, demand and orders management, material requirements planning, supply chain planning, and performance improvement as well as logistics.
Prior to joining Caterpillar, he was involved in research and the application of joining and process technologies at the Welding Institute in the United Kingdom. Before that, he spent a number of years in the European automotive industry, working for such companies as Automobiles Citroen, Peugeot SA, Jaguar Cars, and Ford Motor Co. in the field of manufacturing engineering. He graduated from the University of Coventry in the United Kingdom with a bachelor of science degree in materials science and was appointed to a research fellowship in materials management and logistics at Cambridge University in the United Kingdom.
Q: How and why did you go from engineering to supply chain management?
A: That's an interesting question as the change in direction was subtle. My basic training was in material science, and I always enjoyed the variety and challenge associated with manufacturing processes and how to keep them in control and produce what is expected. I started my career in a foundry and was fascinated with the science of how it all worked. This led to welding and joining technology and their application in industry. One of my mentors described welding as micro-casting metal by throwing molten metal at high velocity at a target—hoping it all went to plan and remained in control. The ability to manage many parameters, simultaneously, some counteracting each other and on a knife edge close to disaster, and still maintain control drew me in. As I matured in my career and management skills, supply chain management presented very similar characteristics. Above all, the challenge of complexity and managing large networks is irresistible to me.
Q: In the supply chain part of your career, you have been involved in sourcing and strategic planning, including nearshoring of manufacturing. Can you talk briefly about the advantages and the challenges for manufacturers who want to relocate production closer to certain markets?
A: As companies grow and satisfy new markets, the risks and challenges associated with longer and longer supply chains become an increasingly important consideration for both profit pull-through and market agility. In some cases, the tipping point may be reached where a company's competitive position has to be re-imagined and activities that were once offshored for competitive cost reasons may need to be reshored. One of the greatest challenges is to identify and recognize that point. Oftentimes, the true cost associated with the risk element is difficult to measure. The normal rate of return, net present value, and landed cost analyses don't always reveal the need soon enough. Adopting true total lifecycle cost models is clearly part of the equation that companies have to master.
Q: Could you elaborate on what you mean by total lifecycle costs?
A: I am alluding to the need to consider the cost of supply from a total cost perspective, which includes not only inventory, risk of obsolescence, storage, and management costs but also the additional lifecycle costs such as returns, rebuilds, and disposal.
Q: What's the biggest challenge facing supply chain professionals these days?
A: I would have to say getting started. Graduating college and finding the first job at the right company is hard enough. Then, there is a period of knowledge growth through practical experience, which is needed before an individual's career can really take off. Working through this period and maintaining one's external network is essential.
Q: What's your greatest accomplishment in the profession to date and why?
A: I recall a couple of times in my career when I was faced with developing and overseeing a plan to establish a complete manufacturing operation from zero to full production in an extremely short timeline. Because of fantastic teamwork, the tasks were a great success. Given the sheer complexity of projects like these, they have naturally become some of my favorite stories.
Q: If you could go back to college, what would you study to sharpen your supply chain management skills?
A: I would have to say two things—data analytics and business management.
Q: Would you recommend the supply chain field to a young person?
A: Yes, I would. It is a field that has so many possibilities—for the curious, for those who like the certainty and predictability of standardized work, and equally for those like myself who thrive on change, variety, and the challenge of large complex systems.
T. Michael Ray
T. Michael Ray brings long experience in international finance to his role as vice president for business integration and strategy for IBM's Integrated Supply Chain. It's experience he believes serves him well in overseeing Big Blue's vast international supply chain. Ray leads strategy, planning, and transformation for all areas of IBM's global supply chain. That includes the business management system, performance metrics, employee skills and development, supply chain analytics, supply chain environmental and social responsibility, and global asset management.
Ray has served in several senior executive financial positions for IBM both in the U.S. and abroad, most recently as vice president of finance for IBM Systems and Technology Group, Manufacturing and Development. He graduated from the University of Chicago with an M.B.A. in finance and marketing, and from the University of Tennessee with a B.S. in industrial engineering.
Q: Your background is principally in finance. What brought you to supply chain management?
A: I was always highly operational, so I've had elements of the supply chain working for me along the way. As a result, it was not a foreign area to me, but certainly it's a change of focus. One of the things that most attracted me to it was that while supply chain at IBM had been integrated in the early 2000s, it was going through that next phase. We still saw significant opportunities to manage the whole process better.
Q: What are the overarching principles that guide your leadership of what must be an enormously complex supply chain at IBM?
A: If you go back a few years, we focused on how we could make internal operations better and more efficient. But in the last several years—and I've helped lead some of this change—we've put the client first in everything we do. That does put a whole different spin on what your priorities are and where you make your investments.
The second thing, and I talk about it often, is restlessly reinventing ourselves. We've made that part of how we live and breathe, and we really strive to find talented people who are uncomfortable with the status quo and are willing to drive change. And I think that's made a huge difference.
The last thing, and I've seen how powerful it can be, is employee engagement. And I mean engaging everyone all the time. You want to overcommunicate, making sure the strategy is understood, making sure you have simple straightforward messages, making sure you take time to get your team's buy-in to what it is you're doing.
Q: What do you see as some of the greatest challenges and opportunities for global supply chains?
A: The rate of change in technology is an incredible opportunity but at same time, one of the greatest threats. As you look at how technology can change the information flow, access to data, the way that firms communicate with each other, the way information drives sourcing decisions—that will all change as data proliferates. I think the rate of change in technology will be the biggest single decision maker in who wins and who loses, especially in the global context.
Operating on a global basis, it is becoming more and more challenging to navigate the confusing, difficult, and hard-to-interpret regulatory environment, along with the associated cultural and political challenges. We've had to step up our efforts in this area, whether it be environmental issues, social issues, or import and export regulations.
The last thing I would say is how much transparency is changing how supply chains operate. We see a great opportunity in using new social tools and new technology to make transparency in the supply chain a competitive advantage. I think we're doing some groundbreaking work in looking for ways to leverage existing data to be more transparent with all our ecosystem partners.
Q: You also have broad international experience. What advice would you offer U.S.-based managers on successfully building global supply chains?
A: I had the opportunity to work in both Europe and Asia. You do have to get out and learn how business is done in other cultures. You can't just copy what works in the U.S. and expect it to work in other countries. In many places in the world, the U.S. model is just not relevant.
Chris Rork has cut his career from the apparel industry cloth. He currently serves as executive vice president of supply chain at Carter's Inc., the well-known children's clothier. In this job, Rork, who joined the company in 2011, is responsible for the end-to-end supply chain, including product development, sourcing, quality, logistics, distribution, and inventory management.
Rork's résumé in apparel includes 13 years in Asia, four of which were spent in Hong Kong for Levi Strauss & Co., where he was responsible for global sourcing and the total supply chain for its Asian operations. He has also worked for Ralph Lauren and children's apparel company Little Me. He recently oversaw the construction of a 1.1 million-square-foot omnichannel distribution facility in Braselton, Ga., that supports Carter's retail, wholesale, and e-commerce channels.
Q: You've had a long career in the apparel industry working in key positions with many major brands. What are some of the biggest changes you've seen in the industry?
A: I was in Asia when companies began chasing low-cost production there. Now, those frontiers have all been sourced into, and everything has, for the most part, leveled off. Companies are not just seeking the lowest cost any more; they are also looking at their speed to market and inventory productivity.
Q: How did the time you spent in Asia prepare you for your current role at Carter's?
A: The time I spent with Levi Strauss there gave me a good background in managing the end-to-end supply chain. I was responsible for sourcing globally as well as the end-to-end distribution process for the Asian business, which included China, Japan, and Malaysia. So I gained experience in sourcing, inventory, distribution, and logistics—getting all of those to coordinate and align to meet the corporate goals. I was also indirectly managing about 400,000 people who touched my supply chain, any of which could cause disruption. You get a different perspective when you are on the firing lines in Asia than you do here in the U.S. It was a good place to be.
Q: What has been the most satisfactory accomplishment or project in your career?
A: I would say the construction of our new omnichannel distribution center in Braselton, Ga. It is now the focal point of our distribution strategy. We wanted to aggregate our inventory platform, which had been housed in three places, into one facility. It now serves wholesale, retail, and e-commerce, which is our fastest-growing channel. We operate a tightly modeled supply chain, which was why we went into this highly automated facility.
Q: What are the biggest challenges supply chain professionals will face in the next five years?
A: We all face the challenges of mitigating rising inflation in Asia against more stagnant inflation or deflation in North America and Europe. For my company, it is also balancing how we serve our channels. We have to serve each channel as if it is our best channel. We move over $500 million worth of units annually. Almost all of these units are valued at less than $10 each, but it still costs as much to move them as a widget that costs $40. I think the biggest opportunity ahead is to manage inventory in such a way that it can increase margins.
Q: What advice would you give to someone about to enter the profession?
A: Get a diversified range of experience. The best supply chain people I've come across have experience in sourcing, inventory management, distribution, and logistics. Seek experience in all aspects of the supply chain.
Robert (Bob) Sabath not only likes to break the rules, he's made a career out of helping others do the same. A long-time supply chain consultant, Sabath believes that achieving true supply chain breakthroughs often means flouting the conventional wisdom about how a supply chain should operate.
Currently a principal at the boutique consulting firm Trissential, Sabath previously worked for such leading consulting firms as A.T. Kearney and Mercer Management (now part of Oliver Wyman). He is a frequent speaker on customer service and supply chain management, has written for more than 40 business publications, and has edited two books.
Throughout it all, Sabath has distinguished himself through his sense of humor. Among numerous other awards and recognitions, Sabath was honored as the "World's Funniest Management Consultant" by the Journal of Management Consulting in 1985. Although Sabath downplays the achievement—"I found out that management consultants are not very humorous," he says—the accolade did lead to a feature-length profile in The Wall Street Journal. "Ever since that experience, I have been thoroughly convinced that humor opens doors, relaxes people, assists in communications, and builds relationships," Sabath says.
Q: What are some of the biggest changes you've seen during your career?
A: I have seen the transition of supply chain from transportation and inventory efficiency, a backroom function, to being the network that integrates everything from the supplier's supplier to the customer's customer. I have seen supply chain move from that back room to become a required step in the career development of most CEOs. And now, when I meet strangers, they know what's meant by "supply chain." Most important, shareholders, owners, investors, and competitors know that the effectiveness of the supply network is one of the most important drivers of business success.
Q: What hasn't changed?
A: The pain experienced and human resistance to change. Everybody is happy to support change—as long as it is happening to someone else. Because supply chain improvements inevitably cause change to other areas, we often pay double.
Additionally, there's been a continuing lack of change in three surprising areas. First, there remains a belief in old wives' tales, those silly truisms that drag down the results of supply chains. Second, in far too many places, there is a preference for efficiency over effectiveness, which translates into a preference for doing things right, before doing the right things. Finally, there has been a continuing dramatic gap between the results of supply chain leaders and supply chain laggards. I have never been able to figure out why the laggards are willing to spend as much to get consistently sub-par results.
Q: What are some of the truisms that should be forgotten? In other words, what rules do companies need to break?
A: Some of my favorites are: "We treat every customer equally" (which means we treat our worst customers the best, and our best customers the worst); "We ship every parcel immediately" (without recognizing that holding parcels for consolidation causes shipments to get to customers faster and at a lower cost); and "We never stopped our focus on cost reduction" (which often describes a preference for forgetting about a focus on profit, often with a greatly improved top line earned through outstanding supply chain efforts).
Q: What advice would you give someone just starting a career in supply chain management?
A: I consistently recommend five points: 1) Build deep talent in at least one supply chain area, but learn how all the pieces fit. Become a go-to person. 2) Focus on organizational interfaces (those places where supply chain people interact with people from other functions or other companies), and when you work at one of those places, befriend people on both sides of the organizational line. 3) Rather than offering a verbal opinion, demonstrate the points you raise wherever possible. 4) Find a mentor. 5) Embrace change. Whether you love or hate it, it's the only constant.
Dov Shenkman is a man who knows a lot about algorithms. He recently developed one to help manage the replenishment process for all 8,200 Walgreens stores. As group vice president of supply chain global inventory and transportation at Walgreens, he is responsible for distribution, full inventory management, import management, transportation, and private-brand supply chains.
Before joining Walgreens last year, Shenkman was a senior vice president of inventory management and replenishment at OfficeMax. He has over 25 years of industry and management consulting experience, including executive positions at General Motors, i2, and EDS-A.T. Kearney.
Q: You have a broad background in the various aspects of supply chain management. How does that help you in your role at Walgreens?
A: Throughout my career, I was lucky to get exposure and experience in many different facets of supply chain, such as manufacturing, retail, and business-to-business (B2B) as well as business-to-consumer (B2C) e-commerce. This wide range of experience enabled me to have a broad understanding of a complex value chain like Walgreens and facilitate the translation of customer requirements to all its components.
Q: You have developed an algorithm for delivery frequency based on maximizing economic profit. What does that entail?
A: One of the key challenges in every supply chain is to find a balance between conflicting goals such as service level, working capital, and cost. We developed a methodology to facilitate and optimize the decision process around store delivery frequency that balanced the conflicting objectives and optimized enterprise economic profit.
Q: What do you consider to be your greatest professional accomplishment to date?
A: There are many achievements I am proud of in my career, but the greatest would be the people and the teams that I have had the opportunity to work with and the incredible results we were able to achieve.
Q: What do you consider to be the biggest obstacle to greater supply chain optimization?
A: The greatest obstacle is cross-functional and cross-enterprise collaboration. As simple as it sounds, it is very challenging to overcome on a consistent and repeatable basis. Collaboration also represents one of the largest opportunities many value chains have.
Q: What advice would you give a young person about to embark on a career in supply chain management?
A: You are entering a great journey and adventure. Many new factors such as technological development, environmental responsibility, changing consumer requirements, globalization, and omnichannel will require continuous evolution and will drive change. Lead the change; do not resist or adapt to it!
Jeff Silver got his first taste of freight brokerage 30 years ago when he joined the executive team that formed Chicago-based American Backhaulers. Backhaulers, a high-intensity place, would revolutionize brokerage by applying what were then powerful information technology (IT) tools to give participants real-time visibility into the supply chain.
After C.H. Robinson Worldwide Inc. bought Backhaulers in 1999, Silver took time off to pursue an M.B.A. from the University of Michigan and a master's degree in engineering and logistics from the Massachusetts Institute of Technology (MIT). He returned to the business in 2006 by launching, along with wife, Marianne, Coyote Logistics LLC, a broker whose model and culture remind folks of the high-energy financial trading floors that make Chicago famous. Coyote's gross revenue soared to a nearly $1.4 billion full-year run rate based on its first-quarter results and it capped the quarter by buying privately held competitor Access America Transport (AAT). The combination will create a $2 billion-a-year broker that stands to capture big market share of a deeply fragmented business.
Q: What drew you to the freight brokerage field?
A: When I joined American Backhaulers in 1984, I was a day out of college; the brokerage industry seemed like the Wild West in terms of opportunity. I spent 16 years in the industry before taking a three-year hiatus, during which I went back to school.
When I returned to freight brokerage in 2006, I was more informed. I had spent a lot of time in graduate classes at Michigan and MIT, thinking about how to do things better. Ultimately, the two biggest factors were the unlimited opportunity and the "building" nature of customer relationships. This isn't an industry where you sell something once and never speak with the customer again; one of the most rewarding aspects is that if you take great care of a customer, you will grow together over decades.
Q: There are about 14,000 property brokers in the U.S. Most of them perform domestic transactional functions. Does Coyote's purchase of AAT fire the first salvo in a long-predicted consolidation, especially as shippers look for more from their providers than domestic transportation management?
A: I am not sure that I would characterize it as the first salvo, but it is significant. As a combined company with more than $2 billion in revenue—and the resources that accompany that level of business—we provide support to customers that smaller brokers will struggle to bring.
Q: How did your time away from the field to pursue advanced degrees influence your strategic and tactical thinking as you started up Coyote?
A: In the Backhaulers days, we didn't have M.B.A.s, and we laughed at people who did. We liked running our business on intuition, and it worked. But Michigan's program was great, and it gave me insight into how the people with whom I interact today think and the challenges they face—finance, marketing, accounting, legal—you name it. As for MIT—that is truly a special place. It is unique in terms of sharing ideas with intelligent, entrepreneurial people who have a passion for blending business, science, and technology. I spent a year studying how to use optimization in supply chain planning and execution. I developed a great understanding of the problems our shippers and carriers are trying to solve every day in planning and operating their businesses.
Q: The 2012 surface transport reauthorization law increased to $75,000 from $10,000 the surety bond amounts that brokers must post to ensure carriers will be paid for hauling their loads. It also tightens the requirements for being a property broker. Some say it will eliminate the "bad actors" and clean up an industry that has not always operated ethically. Others say it will force many brokers out of business and concentrate loads in the hands of fewer and larger intermediaries. What is your view?
A: I'm for higher standards, but I don't think these efforts will have much of an effect; broker bonds are still inexpensive even at the higher level.
As vice president of supply chain solutions at Sears Holdings Corp. and president of Sears Logistics Services Inc., Jeff Starecheski played an important role in developing his company's omnichannel strategy. Currently, he is responsible for supply chain strategy, business integration and planning, solutions marketing, reverse logistics, dot.com fulfillment operations, information technology solutions, DC and transportation support, and analytics.
Before stepping into his current role, he held positions of increasing responsibility within Sears, spending time in such areas as transportation, inventory planning and placement, supply chain strategy, and retail operations. Before joining Sears, Starecheski served for seven years as an officer in the U.S. Navy. He holds an M.S. in transportation and a B.A. in integrated science from Northwestern University.
Q: At Sears, you've been involved in the company's omnichannel initiatives. What's the biggest challenge that logistics managers face with omnichannel distribution and fulfillment today?
A: The biggest challenge is understanding how to engage in the omnichannel conversation with the organization. Traditional elements like order density, time in transit, and fill rate are still very important but not enough. Omnichannel retailing has moved the supply chain closer to the end customer. Logistics managers must now engage in conversations around the customer experience, which has inherently different measures of success.
Q: Does Sears have DCs that are dedicated to online orders or does it use its retail DCs to handle both store and online orders?
A: Sears leverages dedicated online DCs, retail (store-facing) DCs, and stores to handle online orders. Two years ago, we had a separation of church and state: Online DCs fulfilled online orders; retail DCs fulfilled store orders. We still leverage dedicated online DCs, but inventory in a retail DC and in designated stores is now available for fulfillment to a customer based on geography and total fulfillment cost.
Q: Can you briefly describe what Sears has done in terms of having its retail workers pick and ship online orders?
A: Stores get credit for the sales they fulfill. Store associates all understand the positive impact of fulfilling online orders to their P&L (profit and loss). In our designated online stores, dedicated associates are used to pick, pack, and ship orders. These associates leverage handheld technology to direct picks, which can come from the backroom stock locations or the floor, depending on availability. Handhelds and terminals are used to stage, pack, and ship product in support of our "order-by/get-by" promise.
Q: In your view, are there any particular pieces of equipment or software applications that are essential to effective omnichannel distribution?
A: A flexible and scalable distributed order management platform is critical to effective omnichannel distribution. By the way, it is also one of the most complicated and difficult solutions to engineer. Integration is critical. The legacy systems that most retailers employed prior to omnichannel are tuned to solve a different problem and will likely be inadequate. The ability to source orders from the "right" location is fundamental. The ability to modify your optimization rules on the fly is the next level. It may be important to source orders from the location that has the largest inventory pile or the location with the shortest transit time, the lowest fulfillment cost, or the most capacity. These priorities may change throughout the course of the year. At Sears, we adjusted these levers to maximize peak-season performance based on changing priorities.
Q: What advice would you give other logistics managers dealing with omnichannel distribution?
A: Start with the customer. When you ask the big "What should I do?" and "Why should I do it?" questions, start with what is in it for the customer. What experience are you trying to create for the customer? There are lots of supply chain reasons for considering omnichannel fulfillment. As an example, shipping from stores can allow a retailer to leverage inventory, avoid capital investment, and manage fulfillment expense. You will likely be disappointed with the result if you don't design your solution around the customer.
Q: You were in the Navy prior to joining Sears. Would you recommend military service as a way to prepare young people for a career in logistics?
A: There is no doubt in my mind that military service provides a great foundation for a career in logistics. At Sears, we actively recruit from the military for management roles within supply chain. Many of the operational and leadership skills developed in the military are directly applicable to logistics. Additionally, we find that the values and temperament of military vets are a natural fit with our culture. My decision to pursue a career in logistics after the military was based on looking for the same things I loved about the Navy. I have not been disappointed.
Q: What's your greatest accomplishment in the profession to date and why?
A: Our transformation from a traditional retail to an omnichannel supply chain. This, in many ways, is a journey that we are still on, but the change is pronounced across multiple dimensions. Going from conception to pilot in 75 days and national rollout in nine months was no mean feat.
Ultimately, the most important part of this accomplishment to me was changing our culture, approach, and identity as a supply chain. We now think beyond our four walls and trucks to the customer and the complete retail experience. We are part of a broader retail ecosystem, and our values and KPIs (key performance indicators) reflect this important change.
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