When you work for the company that's been urging customers to "send the very best" for the past 50 years, you can hardly afford to do less than that yourself. That's been Pete Burney's challenge at Hallmark Cards. A 17-year veteran of Hallmark, Burney spent the past two and a half years as the company's operations vice president of logistics solutions, with responsibility for order fulfillment of all Hallmark products to 40,000 retail outlets across North America.
Burney, who was promoted to a corporate officer position this summer, says the game has changed for logisticians in the last decade. For many years, he says, "sending the very best" was largely a matter of making sure that the orders the company shipped out were accurate, complete, and on time. It takes a lot more than that to impress customers today. From here on out, he says, logistics success will be defined less by basic order fulfillment capabilities than by practitioners' ability to anticipate customer demands and to develop new capabilities to meet those demands before it even occurs to the customers to make them.
Since joining the company in 1990, Burney has served in a variety of operational roles at Hallmark, which is the world's largest maker of greeting cards (the company reported consolidated net revenues of $4.1 billion in 2006). He holds a bachelor's degree in secondary education from Louisiana State University and an M.B.A. from the University of Massachusetts. He spoke recently with DC VELOCITY Group Editorial Director Mitch Mac Donald about his career at Hallmark and the challenges that lie ahead for logistics and supply chain professionals.
Q: Would you describe the outbound logistics operation that you managed for the past few years at Hallmark?
A: Our logistics operation is a pretty typical operation. We manage orders through a DC network that includes both our own DCs and DCs operated by our thirdparty logistics service providers. From those DCs, we ship heavy freight as ell as small packages to 40,000 retail outlets across North America—a combination of mass merchandise retailers and our network of specialty shops. We also manage and coordinate our own transportation services, although we are not a private fleet operator.
Q: Could you tell us A something about your background?
A: I came to Hallmark in 1990 after a four-and-ahalf-year tour of duty as a communications officer in the Army, where my last role was as an air movement officer in logistics. My career at Hallmark began with a regional distribution center section manager role. That ultimately led to other logistics operations jobs, including transportation administrator, department manager, and finance and logistics manager for one of our retail groups.
Q: You've obviously developed a wide range of skills during your logistics career. Which of those skills have proved most useful on a day-to-day basis?
A: Certainly, the positions I've had thus far have given me a solid background in the fundamentals of logistics—the blocking and tackling of the job. But the skills I'm most mindful of in my current role relate more specifically to things like planning, leadership, and change management. In recent years, like most companies, Hallmark has had to continually adapt to new customer requirements, improve speed and flexibility, and develop new logistics capabilities. The skill I focus on most is the ability to sustain the operation while managing significant change and trying to bring new capabilities to the operations to better service customers.
Q: The logistician's job has become a lot more complicated in the past decade, hasn't it?
A: Absolutely. The old operating model in which the transportation department's main role was to ship whatever people asked us to ship doesn't really work anymore. Today, it's absolutely critical that we collaborate closely with our sales teams and our inventory people and our strategic business units. That type of collaboration will help us to adapt to the changing business environment and to develop new capabilities that will allow us to meet customer needs even before we're asked to meet them. In logistics, we have to be adept at forging partnerships across the company, not just at managing what goes on within the four walls of a distribution center.
Q: Do you think that's why logistics is becoming increasingly visible within the corporation?
A: I think it is largely the fact that people drive an organization, and in recent years, our logistics people have had to respond quickly to rapidly changing customer needs and, as a result, have gained a strong understanding of how business models are now evolving. When you look at today's list of Fortune 500 companies, you realize that many of the companies—Yahoo, Amazon, and eBay come to mind—did not exist 10 or 15 years ago. Now, they're introducing new business models and new requirements that you have to anticipate. I don't think you can respond well to customer demands if you aren't really thinking about what your business might look like five years from now.
As a result of all that, we have begun to use the language of business and to think more broadly about the supply chain—not just about transportation, warehousing, and distribution. Logistics is the critical component of the supply chain. We really have no choice, if we want to succeed, but to take a very broad view in doing things like responding to demand, predicting demand, linking upstream to both our suppliers and our internal production groups, and really understanding consumer demands and customer demands.
Q: What are some of the biggest challenges that you face in achieving and maintaining excellence in your logistics operations?
A: I don't think our challenges are very different from the ones other consumer goods companies face. Like everybody else, we're always trying to figure out how to take advantage of new technologies like radio-frequency identification (RFID). Anticipating new customer requirements is always something that we are mindful of when we think about new technologies like RFID—not just what we know about its capabilities and what it can do for us today, but how we might use it in the future. How might we harness that technology not only for the benefit of our customers, but also internally to our organization to improve our operating efficiencies? That is one area that we are constantly pursuing.
Another challenge that we have in common with many other companies is maintaining operating efficiency within the organization as a way to improve cost structure. We need, quite simply, to do everything better, faster, and more cost effectively all the time. That mission is paramount.
Q: What are some of the biggest changes you've seen in the logistics field over the years?
A: One has to be the advent of strategic partnerships with third-party logistics service providers. As you look at managing capabilities, you need to distinguish between those capabilities that are best developed and handled internally, and those that might be performed better by an outside partner. The goal today is to work with solid third-party logistics service providers that bring a distinct set of competencies that complement yours.
Q: We've just talked about some of the changes you've witnessed during your two-plus decades in the logistics field. Is there anything that hasn't changed?
A: The thing you want to point to there is quality.We have been so successful here at maintaining a very, very high order fill rate, which is our primary outbound quality metric for items shipped. Frankly, regardless of what changes with customer demands, the basic order fulfillment requirements never change—you still have to make sure your shipments are accurate, complete, and on time. That is a fundamental part of logistics that we pride ourselves on. I think any logistics organization should see this as a core competency.
Q: What advice would you give to a young person just starting out in the logistics field?
A: Secure opportunities that give you a good fundamental understanding of logistics. Look for positions on a path toward leadership roles within distribution centers, operations, transportation, and perhaps an engineering or planning role. I think that is the set of skills to develop.
Q: So get in on the ground floor, then?
A: I think so. Early on in their career, they should find an opportunity through either a job within the organization or through formal training to better understand the business of logistics and planning. You have to expand beyond just one side of an operation to truly succeed. You need to gain a broad view. A good logistics professional today has to have a sense of how the overall supply chain works, along with some solid grounding in the fundamental areas, like transportation, DC operations, and manufacturing.
Q: Any closing thoughts?
A: In the field of logistics today, the people who are going to be most successful are those who constantly develop an arsenal of new capabilities and who anticipate customer requirements. The basic activities—transportation, order fulfillment, packing—don't change much; it's the requirements of customers and consumers that change. The ability to develop new capabilities and anticipate changing demands, I think, is what distinguishes someone who is just doing a job from someone who really advances the profession.