It's probably no surprise that the new chairman of the Council of Supply Chain Management Professionals' board of directors considers supply chain management to be strategic. Or that he's a tireless advocate for the profession. But Edward Huller's views on what could be called the supply chain opportunity set him apart from crowd. Logistics and supply chain excellence represents more than an opportunity to improve the bottom line, he says. It offers a huge opportunity to enhance the top line—sales and revenue growth—as well.
Huller bases that bold statement on experience—36 years of experience in the profession, to be exact. He began his career in 1970 with the Dow Chemical Co., where he spent the next three decades in a variety of logistics and supply chain posts throughout North America and Europe. After retiring from Dow, Huller was recruited by Borden Chemical Inc. in 1999. As Borden's vice president, global supply chain, he spent the next few years building a world-class integrated supply chain strategy and organization. In 2003, Huller formed his own company, Alden Consulting Group, which specializes in strategic supply chain and sourcing solutions as well as executive coaching for functional and business leaders.
A long-time member of the Council of Supply Chain Management Professionals (CSCMP),Huller has served as chairman of both its Research Strategies and Professional Development committees. He is also a frequent conference speaker and guest lecturer at universities. He holds an undergraduate degree in logistics management from the University of Maryland and is APICS-certified.
Huller spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald about what skills today's managers need to succeed, why logisticians' proposals sometimes fall on deaf ears, and the challenge and opportunity that is China.
Q: Tell us a little bit about your background. How did you end up in the logistics profession?
A: I actually have a degree in physical distribution management from the University of Maryland. When I started college, I realized I had been exposed to logistics for years through my father, who had been a senior operations executive at a drugstore firm and had worked in Army and Air Force exchange operations. So I had an early exposure to things like planning and purchasing and distributing products to various locations, primarily in North America and Europe—I lived in Europe for six years as a kid. As I began my studies in the logistics program at Maryland, I realized I understood this stuff and enjoyed it. To make a long story short, that's how I got started with logistics. Then, after I graduated in 1970, I began my career with the Dow Chemical Co.—at that time, the chemical industry was one of the few that were hiring logistics grads. I spent the next 30 years with them in a variety of staff and operational roles. Dow moved people around quite a bit, so I had a chance to try my hand at logistics and planning, purchasing, business systems, all those things, working in both the United States and Europe.
Q: It really helps you gain a macro view of your operation.
A: Yes, that and having seen the various functions. The chemical industry, by its nature, is highly integrated. I learned first hand over the years the importance of sharing information, integrating decisions and so forth.
Q: You were actually discovering these things before the term "supply chain" had even entered the lexicon.
A: Precisely. The chemical industry is one that doesn't tend to talk much publicly about its successes, but it really was doing supply chain activities quite early. I went to Europe in 1988 to set up a center of excellence that became our supply chain center in Europe. I then returned to the United States to introduce some of the ideas developed in Europe and to begin working with people over here to implement those practices and processes. That was the early '90s. We were focused on integrated supply chains. Dow had always been a pretty highly matrixed organization, which meant I had opportunities early on in my career to serve on various product and business management teams. That gave me a chance to understand the importance of integration and to understand business issues versus just functional issues. That is a theme you will hear me mention time and again because I think that is a key factor in this profession.
Q: In other words, you're saying that well-managed logistics and supply chain operations can help the company's bottom line, right?
A: No question about it. It should help the company's bottom line in a big—and measurable—way. In a way, it actually should help its top line—sales and revenue growth—as well. I think there is an often overlooked, huge opportunity to impact the top line.
Q: I haven't heard anyone put it quite that way before. Expand on that a little bit, would you?
A: If you try to think like a business leader, you begin to see ways in which you can use your supply chain capabilities to expand sales. For instance, you might be able to develop an efficient supply chain channel that allows you to serve a new geographical market or smaller customers that, maybe in your old model, were deemed unprofitable from a cost-to-serve standpoint. Or you might find that by coming up with ways to cut lead times from four weeks to two, you can enter new markets with short lead-time requirements that you previously couldn't get into.
Q: As I said, that's an interesting wrinkle. It's always, you know, show me the bottom line.
A: Yes. But that ability to influence the top line may be what finally gets supply chain a seat at the boardroom table that gets talked about so much. Business leaders tend to dismiss logistics and supply chain as a necessary backroom function. They need to be enlightened as to how we can actually use our supply chain expertise as a strategic weapon to open new markets.
Here's where communication skills come into play. In the past, logisticians have had a tough time getting the CEO and other C-level leaders to listen to them. One of the lessons I learned very early was to stop talking like a logistician and start talking like a business leader. If your company's top managers just don't seem to get your ideas about inventory optimization or asset utilization or whatever it may be, it's typically not because they're stupid; it's because you haven't learned how to communicate. Learning how to communicate and think like a business leader is a critical skill.
Q: You may have just answered my next question: What is the single most important skill set for a supply chain executive working today? Would it be what you just described, the ability to think like a business person as opposed to a logistician?
A: Yes. I think that probably would be it. Thinking broadly, thinking of options and trade-offs, thinking of what is right for the business without regard to what is right for an individual function ... that's how you arrive at those integrated kinds of solutions. When we worked in our business teams at Dow, we weren't rewarded solely on the basis of how our individual functions did; we were also rewarded for how the overall business did. It ultimately drove you to make the right decisions for the business.
Q: I think that's something people often overlook. Regardless of what you're doing, you always have to be mindful of the fact that ultimately a company is a business enterprise. That's why it exists. That is the core mission, to be a successful business enterprise.
A: And it applies to any kind of activity. Again, I think it speaks to more of the focus of the last decade or so on supply chains as evolving out of logistics and other areas. It begs for that integration of trade-offs. It is opening up the opportunities that the old functional ways did not permit. Even if you excelled in each of those functional areas, you were leaving opportunity on the table because you weren't optimizing the whole business. That is always the challenge of a business leader. Traditionally, they have had to manage their functional leaders. It was that business leader who was doing the trade-offs, looking for efficiency for the overall enterprise. What supply chains require today is for leaders to flat-out excel in that area—to be able to make those trade-offs and bring those options to the table. I think that is the critical skill.
Q: Are there any other important skill sets that come to mind?
A: Another, to me, is getting the right people on the team. At the end of the day, it is all about people. We can read the same books and we can use the same consultants, but the company that will win in the end is the one that puts together a team that will really apply the ideas and concepts and drive the change.
Q: Let's shift gears a bit. You've been in the business for three-plus decades now.What are the biggest changes you've seen in that time?
A: One thing would certainly be technology. The technology continues to change in leaps and bounds and far outpaces our capability to implement and optimize it. This is a technology-driven field, pure and simple, whether it's the technology used to gather and analyze information or the technology used to carry out physical operations in the DC.
Q: So you're defining technology not only as hardware and software but also technology-based automated equipment and so forth?
Q: What other big changes have you seen?
A: Along with the growing technical requirements of the job—the need to understand and utilize technology— another big change is the sheer breadth of the operations. Managers who once were responsible for overseeing a very siloed functional activity— whether it was running a fleet or managing a distribution center or counting inventory—are now called upon to understand and manage a broad spectrum of activities. That has significantly raised the skill and capability requirements in this field.
Q: When you talk about the breadth of operations, are you speaking strictly of the functions within a business or are you referring to geography as well?
A: I'm referring to both. Today's managers need to understand all of the business activities and then, layered upon that, be able to apply that knowledge across different geographies. Now, you can't say this about every business, but an increasing number of businesses—and probably the majority of businesses—have to have some understanding outside of their base geographical area either for customers or suppliers or their own operations, whatever they may be. That adds yet another skill requirement.
Q: Right. And I would presume an extra layer of complexity.
A: Without question. The activities have become more complex. Change is occurring more frequently. People have to learn to be able to manage in the fog. If you put off making decisions until things settle down and you can think matters through, you're making a mistake. That isn't going to happen. Things are simply not going to slow down.
That's why it is so critical to develop the ability and perspective to get it 80 percent right and then move on to the next item. And you have to do that continually. Again, this is not the traditional approach. It is a different kind of skill set, but it's one that is absolutely essential to be able to excel in today's environment.
Q: We've just talked about the biggest changes you've witnessed over the past 30 or so years. Is there anything that hasn't changed at all?
A: To my mind, what hasn't changed is the need to hire outstanding people. This is a people business. It is not a technology business or an information systems business. The technology and the systems are simply tools that, when well applied, can help the business excel. Anyone who assumes that advances in automation and information technology have made people less important is making a mistake. It's really the other way around. Automation may allow you to get by with fewer people, but those people must be highly skilled individuals. As I see it, at the end of the day, the company with the best people is the one that is going to win.
Q: You traveled to China this summer with some of the CSCMP directors. What lessons did you take away from that trip?
A: In my travels over the past year to both Europe and Asia—most recently, to Shanghai and Beijing—I've noticed that the drive to understand supply chain and logis tics on a global basis is greater than it has ever been before. I also think we need to become much better acquainted with what people in other parts of the world are doing, even if it is a regional activity, because there are some really great leading practices occurring around the world.
I hadn't been to China for a couple of years, and I couldn't help but notice the tremendous amount of growth, development and capital investment that had taken place in just that short time. As we all know or at least suspect, it is simply immense. Coastal operations had been a focus in China's prior five-year plan and continue to be now, in their 11th five-year plan, which they just ratified. The new plan, though, adds a stronger focus on inland cities and developments.
Q: You're talking about infrastructure?
A: Yes. China's government is trying to develop business models that encourage development and employment in the country's interior provinces. The problem is, the inland logistics infrastructure is poorly developed. Roads, railroads, airports ... there are still huge challenges for them to overcome.
Once these issues are resolved, China will become a huge domestic market for its own products and services. In the meantime, however, China's logistics professionals are dealing with some unique logistics challenges—challenges resulting from the size of the country, the various levels of regulations and so forth. Right now, the individual provinces have regulatory power over transportation, which means they can determine, say, what documentation is required for freight moving within their borders. That adds layers of complexity to something as basic as arranging for a long-distance domestic shipment.
Q: Which I guess would be their equivalent of interstate commerce.
A: Right. In many ways, it is much easier for them to import and export than it is to ship domestically amongst the various provinces.
Q: Is the rise of China something for American businesses to fear or something to embrace as an opportunity?
A: To me, it is always an opportunity. I spend a lot of time building organizations and recruiting people, and one of the attributes I look for in people is a positive attitude— the ability to see opportunities, not problems. Again, if you think like a business person, you think of opportunities, so China is a huge opportunity for American business. It is only threatening if you don't invest the time to understand and find out where that opportunity exists for your business. It is clearly a significant opportunity.
Q: Is there anything else you'd like to share with DC VELOCITY's readers?
A: Gee, do we have a couple of days here?
Q: We have all the time in the world.
A: Well, I'd like to sum it up by quoting [CSCMP President and CEO] Rick Blasgen, who says: "This is a great time to be in supply chain." The profession that was once viewed as a sort of backroom functional necessity is being increasingly recognized for what it is: a real strategic business capability that can drive both top-line and bottom-line improvements. Of course, as the expectations have changed, the skill requirements have also changed. The companies and the individuals who will succeed in this new environment are the ones that invest the time needed to develop and maintain those new skills.