By any standard measure, Rick Blasgen has enjoyed conventional career success. He's got the title—he's senior vice president - integrated logistics of ConAgra Foods. And he's got the clout—he works for one of North America's biggest food processors. Indeed, when it comes to giant food conglomerates, they don't come much more giant than ConAgra.Walk into any grocery store, and you'll find its brands on the shelves (ACT II popcorn and Peter Pan), in the dairy case (Blue Bonnet), in the frozen food section (Healthy Choice and Butterball), and in the deli (Armour and Hebrew National).And though it's not as widely known, the company has a big trade going in food ingredients, such as dehydrated vegetables and milled flour and oats.
Yet Blasgen's career path has been anything but conventional. Not for him the usual MBA route, with the customary postings in finance and management. Blasgen's training ground was more often the DC floor, which may account for his rather unconventional notions about career development. Blasgen began his career with Nabisco in a regional customer service center in Chicago, where he worked in inventory management, order processing and transportation, and supervised a DC operation. Several transfers later—including a stint in Virginia managing a distribution center and one in Pennsylvania as an operations manager—he moved to Nabisco's headquarters in New Jersey, where he eventually became vice president, supply chain, first for Nabisco and then for Kraft after the two companies merged. He joined ConAgra Foods in August 2003.
Blasgen, who's a member of the Council of Logistics Management's Executive Committee and a past president of the Warehousing Education and Research Council, also chairs the Grocery Manufacturers of America Logistics/Distribution Committee and serves on Northwestern University's Transportation Center Business Advisory Committee. He spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald about logistics' contribution to customer service and why it's time to overhaul the conventional wisdom about career development in the logistics field.
Q: You've spent some time on the lecture circuit in the last few years speaking about how companies can use logistics excellence to enhance customer service. Are there subtleties that make the food industry different from other industries or do your observations apply to all players?
A: There may be some wrinkles that apply exclusively to the grocery industry, but regardless of the type of business, I think that effective supply chain management can deliver superior customer service.When you talk to customers or examine the more innovative and progressive inventory strategies, it's all about reducing the amount of inventory they maintain within their supply chain while improving service. The expectation is that you'll be able to provide better service even with smaller inventories because you plan better or you share better information; you're just better at what you do.
Once you start operating with less inventory, you'll notice an immediate improvement on the balance sheet. Some progressive customers take that newly freed-up cash and go out and build new stores. On the manufacturing side, if you can maintain customer service levels with less stock, you'll reduce capital investment and see improvements on your balance sheet and P&L. If you think about it, "logistics" is not just those freight guys moving stuff around. Logistics is partly responsible for the company's financial performance. To me, it's much more of a play in terms of how you participate in growing your company.
Q: Tell us a little bit about ConAgra's logistics operation. Obviously, it's huge and has moving parts that cover the entire planet.What's the scope and scale of the operation?
A: Right now it is huge, as you said. It's also going through a transformation of sorts.We're on the road to becoming America's favorite food company—that's our mantra, if you will. In order to make that happen, we have got to have an infrastructure that differentiates us [from the competition]. That means investing in our supply chain with systems and with best-in-class and world-class facilities that allow us to consolidate our products to support a single order and a single delivery through a unified sales force. A lot of this has to do with the various parts of our company coming together as one ConAgra.
Q: Has it been difficult to get corporate-level support for the investment needed to bring about these infrastructure changes? At the corporate level, what is ConAgra's view on logistics?
A: I think top management considers it an important strategic element. I think it's widely acknowledged that our company's success hinges on our ability to support our customers with a single order, a single delivery, a single face.
As different parts of ConAgra come together as one single company, it's had the effect of streamlining our customer operations substantially.
Q: You've spoken about the need to move customerfocused logistics operations to the next level—I think the phrase you used was "going beyond partnerships."What are you speaking to exactly?
A: I'm referring to the fact that everybody will tell you they've forged a partnership with a vendor or supplier; everybody has a relationship. But is it truly collaborative and can it survive the ups and downs inherent in any relationship? I can have a partnership with a third-party provider. You provide me with warehousing space and I pay you. That's simple, but what value add can you bring?
Is it thought, is it industry knowledge, or is it a vision that you're bringing to us that adds value to both of our propositions? What can you do to take the relationship to another level? That means adding value beyond what the contract says. The contract is nothing more than what we have to do in order to continue to have a relationship of any sort. All I'm saying is if that's the case, is that it? Or do we want to say, "Gee, you have strengths, we have strengths; what if we combined our strengths to offer the customer something we wouldn't be able to offer if we were operating independently?'
Q: What are some of the barriers you're encountering as you work to develop partnerships with ConAgra's vendors and suppliers?
A: I think one of the barriers is what my boss calls "enterprise memory." Enterprise memory is that deep-seated corporate "We've always done it this way" mentality that hampers so many change initiatives. To overcome that, you have to learn to forget. You have to figure out a way to get beyond that. If we don't think about that, how can we plan for the future? As Peter Drucker puts it, if we are constantly focused on yesterday,we're not available to create tomorrow.
Q: Where does technology fit into the picture as you try to go to this next level of partnership and collaboration?
A: Technology that helps us move information faster and more accurately is critical and will always allow us to become more productive. But in the end, we still have to move product efficiently. Though we can exchange information at the click of a mouse or tap of a key, we still need to go through all the physical steps: We still put the product in a factory-sealed case. We put it on a pallet. We move it onto a truck. We move it on a road. We take it off a truck and put it in a building. Sometimes we store it again. Sometimes we move it back onto a truck, back onto another road and back into the store and then slide that product onto the shelf. That's fundamental. We do it much better than we have in the past, much better than ever before, but we still have to do it. Technology can make us more productive and help us eliminate waste and redundancy in the supply chain, but in the end, we still have to overcome physical limitations and challenges like the new truck driver hours-of-service regulations.
Q: If you could start with a clean sheet of paper and design a large-scale, far-flung logistics operation, what two or three things would you do right at the outset?
A: Focus on talent. Talent management would be the number one thing because no matter how good your systems are, no matter how good your facilities are, if you don't have the talent—the forward-thinking individuals who really can take this to another level—you won't succeed. That's number one.
Number two, I would focus on the customer —where is my customer going, what can I do to differentiate myself from my competition in my customer's eyes? The last five years have seen a flurry of merger activity among both grocers and food manufacturers. In times like these, companies tend to turn their focus inward as they look for ways to streamline operations and cut costs. That's a mistake. In logistics, you must stay externally focused and process driven as opposed to being internally focused and functionally driven. To do that, you need to concentrate on the customer and try to understand where you play in and what value you can bring.
Q: That's a topic that people have certainly been talking about. The trade press and business press have hammered away at the need to shift the focus from internal functional silos to a broader, customer-driven perspective. Are we really getting there or is it just so much lip service?
A: I think we're really getting there. For example, the GMA (Grocery Manufacturers of America) logistics committee and the chairs of the FMI (Food Manufacturers Institute) distribution committee meet regularly, and we talk about how we can work together to become more productive. I think there's an air of collaboration that exists between new entrants into this business and folks who have figured out there's no way we're going to do this on our own. We have to get together and let down our guard and trust each other to a much greater degree if we are to be successful.
"Certainly, it's possible to build a fulfilling career moving vertically in transportation or warehousing. But if you want to be a true leader, then you have to go and work within and around the various parts of the supply chain."
I'm more than willing to partner with other manufacturers to solve the transportation capacity crunch. We're all fighting for the same capacity out there. If we hope to satisfy the consumer, then folks are going to have to work together with innovative 3PLs [third-party logistics service providers] and innovative software providers. Customers and suppliers are going to have to do things differently in order to mitigate the external pressures. Take labor, as an example. I haven't heard of a lot of kids who want to be forklift drivers or truck drivers when they grow up.Where are these people going to come from?
Q: The whole human resource issue as it relates to freight transportation has been nothing if not fascinating to watch over the years. I know the new truck driver hours-ofservice regulations have gummed up the works some. Then if that weren't enough, you pick up the paper and read that the Los Angeles city council is revisiting the notion of rush hour truck bans on the highways.
A: I read that in USA Today's Feb. 10th edition. I will never forget that date. It was interesting to me because they were talking about curfews. Then, of course, what truck drivers will do is simply reroute their rigs over to the secondary roads and smaller towns to get around that.
Q: One of the points you've raised in your presentations is that Corporate America may soon have to change the way it compensates employees. Would you talk a little bit about that?
A: It's funny you bring this up because I was just at Miami University speaking to some students there. One of the things that popped into my mind as I was talking to them was this: When you graduate from college, you're maybe 24 years old. Assuming you'll be working at least until you're 60, you have a 36-year career stretching out before you. In other words, your career's a marathon. Why would you want to sprint through it?
Certainly, it's possible to build a fulfilling career moving vertically in transportation or warehousing. But if you want to be a true leader, then you have to go and work within and around the various parts of the supply chain. Go work in inventory management. Get some experience in transportation management, customer service, warehousing management, production scheduling and procurement. That will give you the breadth and the technical background as well as the managerial confidence a successful leader needs.You won't have that if you don't make time for those experiences.
Not all of those experiences can come with a promotion, however. But what's to stop us from overhauling the system so that people are compensated for those experiential gains? That way, you could move laterally in a company but you'd get compensated for it. If you're just constantly going after that next promotion, sooner or later somebody like me will look at you and say "Gee, you don't have the breadth and depth for that next job; you're tapped out." The Peter Principle is going to kick in.
Q: So essentially you advocate compensating folks for deliberately expanding their skill sets so they can be better asset to you down the road?
A: Exactly. I think most people reach a point, somewhere in their career, where money is not the motivator; it's challenge, it's enrichment, it's the opportunity to have an impact on your company.How do you get there if you don't have the right experience?
Q: Is Corporate America ready for that?
A: I think so. I think in logistics, we have a perfect opportunity to do so because logisticians typically touch so many different parts of the company. If you work in these different parts of the company, you'll quickly come to understand how people have to work together to be successful and how you can advance the total agenda. In logistics, there's this bullwhip effect. A little twitch at one end of the supply chain and the whole thing's flopping all over the place on the other side of the country. It's not until you really understand all the implications of even the smallest decision that you can bring value to your company. A career should be a journey, not a sprint.
Q: I was probably 40 before I woke up to that fact. I was always in a rush to get somewhere. Then one day I realized that first I needed to decide on a destination.
A: Well, I tell younger folks all the time, "Look, if you're good, within a couple of years some recruiter will call you and offer you another $10,000 a year. You can jump for that and when you get there, that same recruiter or another recruiter will call you and offer you another $10,000 a year to jump. At some point, you're just not going to have the depth and breadth to be a successful leader. Don't rush through it."
At the same time, it's important to keep in mind that there's no substitute for interpersonal skills. Interpersonal skills are increasingly important. We do everything in task forces nowadays, and that has created a huge need for crossfunctional leaders.
Q: I'm going to ask you to look into the imaginary crystal ball for a minute and pick a point—whether it's five, 10, or however many years out into the future. You come to work to the job you have today; how is it different?
A: Well, I think that logistics will have come into its own. Maybe this is my commercial here, but this is a wonderful time to be working in logistics and supply chain management. It's no longer dismissed as a necessary evil or viewed as a cost center—or at least, it shouldn't be. I think that logistics and supply chain management is becoming a topic of boardroom conversation. It's now looked upon as a leverageable differentiating asset in the company and as a value add. It is almost a brand.We tend to concentrate on ways to enhance company revenues by squeezing a nickel out of the supply chain here and there, but I think that it can truly be a means of generating revenue as well.
Q: It wasn't so very long ago we were saying, "Gee, if we could only get recognition in the boardroom for what we're trying to do, we could really achieve something." I guess it's important to point out that the profession has actually come quite a way in the past 10 years, hasn't it?
A: Yes, it certainly has. If you look at the late Bob Delaney's annual "State of Logistics" report, you'll note that year after year, logistics costs have dropped as a percentage of GDP. We've done a remarkable job in the face of adversity and a lot of industry change.We just have to continue to do that and get smarter at what we do.