What do Elijah Ray and H. Lee Scott of Wal-Mart have in common? It's not just an executive-level job at a big corporation, or their shared background in transportation and distribution. Nor is it just an enthusiasm for RFID, or the fact that they both know their way around a WERC conference.What they also share is a deep conviction that in its most basic form, success in business is all about the people.
Everyone knows H. Lee Scott is president and CEO of Wal-Mart, but who's Elijah Ray? The quick answer is that he's senior vice president of customer solutions at Standard Corp., one of the country's largest third-party logistics service providers. But that title doesn't even hint at all the things he's actually responsible for: business development, quality, engineering and information technology, among them.
Still, Elijah Ray is probably better known for his leadership roles in professional organizations. He has just completed a term as president of the Council of Logistics Management, and he has also served on the group's executive committee in such capacities as roundtable and general conference chair and as first and second vice president. He is a member of the Warehousing Education and Research Council (WERC) and the American Society for Quality (ASQ).
DC VELOCITY Editorial Director Mitch Mac Donald recently caught up with Ray to talk about people, CLM's upcoming name change, and integrity.
Q: Insiders may think of logistics as a highly dynamic field, but there's no denying it has a low profile with the general public. How did you end up in this business?
A: I actually began my career in textiles manufacturing and worked there for a couple of years before moving to McCrory Five & Dime.McCrory had opened a highly automated 500,000-square-foot distribution center in Clinton, S.C., a small hamlet about 30 minutes from my home. I began my logistics career there in 1985, starting out as the receiving supervisor, essentially unloading trucks. I worked my way up through various operations positions until I was recruited first by Wal-Mart, then by Standard, then by Bausch & Lomb, where I worked for about four years in various operations positions, including assembly manufacturing.
At Bausch & Lomb, I was introduced to Total Quality Management (TQM) principles and became a quality facilitator on top of my operations responsibilities. I studied the teachings of Edwards Deming, Philip Crosby and other quality gurus, and I trained a lot of teams.
Then, I came back to Standard as director of business development and quality. Three years ago, I was promoted to senior vice president of customer solutions, where I now have responsibility not only for business development and quality but also for engineering and information technology.
Q: You may have started out on the loading dock, but in the years since, you've worked in assembly manufacturing and as a quality facilitator and a business development director, with responsibility for sales and marketing. Connect the dots for us. How does your background make you a logistics professional?
A: That's a very good question. I think getting that ground floor experience in a distribution center is the key. Over the past 20 years, I've been involved in everything from unloading trailers to put-away and order picking to shipping and carrier management, both for major retailers and for a major pharmaceutical/consumer products company, Bausch & Lomb, that's a supplier to major retailers. All those experiences prepared me for my career in the profession. Having sat where my customers (or potential customers) sit when it comes to relationships gives me credibility as a 3PL professional. To have had the benefit of working in manufacturing, combined with various logistics functions, has been phenomenal in preparing me to offer supply chain solutions to my customers.
Q: Describe Standard Corp. for us.
A: Standard is one of the top integrated logistics 3PLs in the country. We're now part of UTi Worldwide, which acquired Standard a couple of years ago. Together,we're one of the biggest 3PLs in the world—in fact, we're 18th on the list of the top 20 3PLs by revenue.
Q: As Standard has grown, it seems to have evolved from its roots as an asset-based 3PL within the warehousing realm. Is that correct?
A: That is correct. Our roots are in warehousing. But since it was founded in 1894 as the Standard Warehouse Company, the company has evolved into manufacturing support and, later, transportation services. In 1997, we changed our name to Standard Corp. Integrated Logistics. That was the year in which we brought the operating groups together to offer what the industry really needed: integrated logistics services.
Q: Which of the skills that you have developed over the course of your career serve you best as you come to work each day?
A: Hands down, that would be my skill at interacting and connecting with people. That is the one skill that I think sometimes gets overlooked in a profession that's so focused on technology and process-related skills. I think at the end of the day, it's still people who get the work done for us, who make things happen for us. It's people that we need to influence. Whether they're colleagues, subordinates, bosses, customers or suppliers, it's all about the people. It's the way in which we interact with people that determines what we can accomplish in this very fast-paced environment. One of the key skills that I've developed over the years is the ability to lead people and connect with them as individuals.
Q: When it comes to achieving excellence in logistics operations, what are the biggest challenges you face in your job?
A: One of the struggles is getting people at all levels to buy into and embrace quality strategies like Six Sigma and other continuous improvement tools, convincing them that these initiatives do work if we as a group are committed to applying them in our logistics and supply chain operations every day. You, as an executive, can be very, very committed to the idea, but that counts for nothing if you aren't able to cascade your vision, your thoughts, and your leadership ideas throughout the company and convince others to implement them with the same level of conviction that you have as one of the key stake holders in your organization.
Another challenge—especially for those of us working at 3PLs—is finding effective productivity management and labor management systems that help you track operations and productivity throughout your network. Maintaining high productivity while controlling costs will always be important in our business. Customers ask for cost reductions year after year after year, and they want assurances that your operation is as productive as it can possibly be.Of course, we as an organization are looking to do that as well.
The other challenge is retaining good people as we grow. As you probably know, the warehousing and logistics field historically has not been a high-profile profession. It's difficult to retain good people because the grass roots jobs are not necessarily career jobs.
Q: I'd like to step back here to give you a little background. I've been reporting on the logistics industry since the 1980s. I started out at a magazine called Traffic Management (later renamed Logistics Management) that concentrated largely on the transportation sector; then I got involved in the launch of a magazine called Supply Chain Management Review that took a broader view of the field. Later, I worked as publisher of a magazine called Modern Materials Handling, which is predominantly a manufacturing publication but occasionally touches on logistics as it relates to internal operations within a warehouse or DC.
During the time I worked for those magazines, which were all published by the same company, each maintained a discrete focus: We had internal logistics at one, external logistics at another—much the same way that these parts of the supply chain have been traditionally managed. It eventually dawned on me that this is the classic example of the silo mentality. All of the magazines were exhorting readers to break down functional silos, yet we kept forcing the market to accept magazines that were themselves stuck in silos.
That led us to launch this magazine, which has DC, or distribution center, in its title. We felt the DC had emerged as the natural nexus, or hub, where the internal and external worlds of logistics come together. Do you agree?
A: There's absolutely no question about it, Mitch. As it relates to DCs, it is very, very clear that now, we're in a new era. In the past, distribution, logistics and the supply chain were considered a necessary evil, just another cost center. Now, we're really focusing on logistics and the supply chain as a means of driving revenue, of improving profitability, of taking days out of inventory cycles, and really increasing, improving, and channeling the value. That's what we're trying to do in supply chain management.
The distribution facility has a huge impact, and yes, it becomes a hub, especially given the key cost component that we all call inventory.Working with other disciplines to reduce the cost of inventory and to increase the velocity of inventory will become increasingly important.Additionally, when we start talking postponement and all the things that are happening now, this is what happens—we create new problems for ourselves.We delay the customization of that end product to as late in the game as possible before it's shipped to the customer, thereby creating a greater need for the distribution center to be more diverse and flexible.
The activity taking place within the DC represents a significant component of the supply chain.Managing the DC, and managing it effectively, is becoming more and more critical to the overall success of the supply chain. It all boils down to cost. It all boils down to servicing customers. It all boils down to being more competitive and growing your market share.
Q: Let's look at the other side of that coin. Can you point to any fundamentals of logistics or distribution that haven't changed over the years?
A: Your question brings to mind a presentation made by Wal-Mart CEO H. Lee Scott at the annual WERC conference in Atlanta earlier this year. After running through the statistics, explaining how Wal-Mart has evolved, describing its volume and tracing its growth, he commented: "You know what? I like technology and RFID, but at the end of the day, it is all about people." It really is. That hasn't changed.Maybe people have changed a little bit in their values, but the bottom line is that we as leaders still have to be able to lead and manage people to get done what we need to get done.
Q: What's the next big thing in logistics and supply chain? And yes, it's OK to say RFID even though that's what everyone is saying these days!
A: I think it's partly that, but I think it's also the concentration of buying power. A large retailer, and we can certainly point to several primary examples, is almost a market segment by itself.
Q: Like a Wal-Mart?
A: That's a big one, yes. Some of them are like an entire nation! What that represents is the opportunity for a smaller provider of technology to get off the ground, if you will, because a major retailer has sufficient leverage to say, "Look, here's my problem." That ultimately is how great innovation happens and how technology gets applied in any market. Somebody solves a problem. Retailers are really good at saying, "Here's my problem. If you solve it, I will buy your stuff. If you're selling stuff that doesn't solve my problem, leave me alone; I have no time for you."
Q: You're now a staunch advocate of voice technology. How does that fit with the recent explosion in RFID? Can the two happily co-exist? Do you think voice offers some advantages that RFID can't match?
A: I was getting ready to say that! That's exactly where I was headed. RFID and connective technology in general will become prominent factors in our lives. It's very clear that they will have a tremendous impact on what we do in logistics and supply chain as we move forward.
I also think that collaboration within the supply chain represents a huge area of opportunity. Frankly, I think this was a factor in CLM's decision to change its direction to address various supply chain disciplines, while still focusing on logistics. One of the group's core educational missions will be teaching how to collaborate within the supply chain. Generally, I don't think there is a universal understanding of how to do this. I think there is a huge opportunity for us as logisticians to impact other disciplines within all of our organizations, especially the Procter & Gambles and Kimberly-Clarks of the world. This whole effort to collaborate and understand how we work together is a huge wave as we move toward the future.
Q: Any closing thoughts?
A: One of the things we didn't get a chance to talk about is a challenge I faced a few years back and was unable to overcome. I think this story contains an important message, one I like to communicate whenever I have an opportunity.
Just briefly, we consider ourselves to be an organization of high integrity—that's very, very important to us. One of the toughest struggles I've faced in my career was working with the rest of our senior management team to mitigate the impact of an "integrity breach" between us and one of our largest customers. Without going into the details, we lost our second largest customer because of the actions of a few people. This was a difficult time, to say the least. Even though individuals in our two companies had formed great relationships with one another, that company decided to sever ties with us because of the integrity breaches of a few people. In effect, our entire organization was punished for the actions of a few.
We've seen other instances of this nature in the press over the past few years, with Enron and other prominent entities. The message is, especially in an era when parties must trust one another and share information if they want to create more effective supply chains, integrity becomes even more critical to our efforts to be great leaders in supply chain management. It is a basic necessity for leadership effectiveness. The lesson from that is to make integrity a core value within your organization. Then, whenever you suspect there's been a breach in that integrity, take action immediately. Don't delay. Look into the situation and work with the leadership team to resolve the issue swiftly and justly.
