Gerry Fay has a lot on his plate. As the chief global logistics and operations officer for giant electronics distributor Avnet Inc., his job puts him in charge of an operation that spans the globe with 48 locations and ships 40,000-plus items per day on behalf of the 300 suppliers that make up Avnet's client base.
While those numbers may tell you something about the scope and scale of the operation, they don't begin to convey the magnitude of Fay's overarching challenge: keeping more than 100,000 end customers in 70 countries happy.
Fay may have the ideal background for the job. Upon joining Avnet in 2005, he was named senior vice president of global strategic accounts for Avnet United and created the Avnet Velocity global supply chain practice at Avnet Electronics Marketing. In that role, he led the expansion of a key accounts program designed to provide global support services to Avnet's top customer base.
He met recently with DC Velocity Group Editorial Director Mitch Mac Donald to discuss his career, Avnet's extensive logistics operations, and the company's strategy for winning the "war for talent."
Q: Could you describe the scale of Avnet's global logistics operation?
A: Avnet is the world's largest electronic equipment distributor by market cap. We are in many countries all around the world and finished FY 2012 at $25.7 billion in revenue. We've got about 3.4 million square feet of Avnet-owned warehouse space globally and ship billions of units each year.
Q: What are your key responsibilities?
A: To think about the supply chain and the way we plan, source, make, and deliver. That naturally and ultimately includes everything related to making deliveries, integration of our cable and connector assembly facilities, our programming facilities, and then all of our warehousing facilities on a global basis. I oversee our corporate operational excellence program and a group called Avnet Velocity, through which we sell supply chain services to our supplier customer base.
Q: What skill sets do you draw on most heavily in your job?
A: I spent my first 15 years in business in manufacturing, working for the big aerospace companies. I have been in distribution for 17 years. At Memec [an electronic components distributor acquired by Avnet in 2005], I really got to broaden my horizons because I started out running operations and eventually, as Memec went global, I became responsible for our global operations. Then, I moved into managing all parts of our supply chain and then, eventually, into being the president in the Americas, where I ran all the sales and marketing. I have been both a line and a staff guy.
I think one of the main skills that I brought with me when I moved from a sales-facing or customer-facing role back into this logistics role is an understanding of how our own logistics challenges affect the customer. The first question I always ask is: How is this affecting the customer, either positively or negatively?
Q: What are some of the biggest changes in logistics you've seen over your career?
A: The two biggest changes, I think, have been changing customer expectations and what I call a "war for talent." Regarding the first, changing customer expectations, it used to be that if you got an order and you told the customer they'd get it in a week, they would be OK with that. Now, they expect things to happen overnight. We are in the Internet age. With that, the challenge for us in logistics is, How do we get that profitable proximity? How do we get close enough to satisfy the customer while being still able to have a logistics infrastructure that is supportable and cost-effective?
As to the war for talent, we are now expecting our logistics leaders to be a lot more strategic and to have a broader set of experiences. We want them to be knowledgeable, for instance, in how you set up logistics operations in emerging markets. We want them to know how you deal with different cultures, different laws, and different export and import rules.
Q: How about the converse? Can you point to anything that has remained constant over the years?
A: The main thing that hasn't changed is that people are the key differentiator. Just about any company can go buy the latest conveyance, the latest WMS system, or the latest AS/RS and integrate it. The differentiator is how well your people are integrated into your operations.
We are very focused on employee engagement at Avnet because we believe if our employees are fairly paid, continue to be educated, are focused on doing their job, and have the tools to do that, that will translate to delighted customers, which means we will get more business, which means we can hire more logistics people. We see a nice healthy symbiotic relationship between employee engagement and customer engagement. For me, the biggest challenges I've had in my career in fixing logistics operations usually came down to management and employee engagement.
Q: You used a term I haven't heard before: war for talent. How does a company like Avnet approach that? How are you finding folks with the right skills? Are you bringing them up internally or are you hiring people at a higher level with more specialized degrees?
A: The fundamental thing we do is succession planning. Through many levels down through the organization, we have identified who are our major succession candidates, who are our key players, and who are folks that need development. Then, we create development plans. Our ultimate goal is to grow people up in the organization.
Q: As folks move up the ladder, are they primarily coming out of logistics and supply chain management or are they coming from other areas of the company?
A: It is a little bit of both. For the most part, they work their way through the logistics organization over time. One benefit we've had at Avnet is that because we have acquired so many companies, we generally get a look at the best talent that exists in the industry. One of the things that we say at Avnet when we do an acquisition is "Best people, best practice" and we really believe in that.
When we acquire a company, we look at the talent they have and determine if the talent is as good as or better than the talent we already have, and as much as possible, we will bring in those folks that we think can add to our talent base. I don't think most companies involved in an acquisition spend as much time evaluating the talent from businesses they acquire because a lot of time, it's all about synergies. When we do an acquisition, we are looking at both the Avnet folks and the acquired company's folks to really pick best of breed.
Q: What's the next big challenge on the horizon for managers striving for logistics excellence?
A: As operations expand around the world, driving efficiency, effectiveness, and standardization becomes a bit of a challenge. A lot of companies have not designed their logistics networks to support future growth.
The next big thing, I think, is logistics leaders looking out in three- to five-year chunks about what emerging markets their companies are getting into and starting to plan what their logistics infrastructure will need to look like. I think that is a big change. It used to be, "Hey, we are going open up here, find us a warehouse and use a 3PL," but there wasn't a lot of thought of connecting those because business was generally fairly local. Now that it is global, a lot of times, the customer will be in the U.S. this week and move its manufacturing to Asia and expect you to move the supply chain. You've got to have a logistics infrastructure to support that.
Q: What advice would you offer someone considering a career in logistics and supply chain management?
A: I would tell them that before they focus on logistics as an area of study to try to go get a summer job at a warehouse and learn what logistics is about from the inside out. Try to help build relationships with management there to understand that.
Once you do that, my personal opinion is that even if you are focused on logistics, move on to a focus on supply chain because you have a little bit broader background. I think that helps anyone understand how that all fits together and the role logistics plays in the supply chain.