Going to war and lovin' it: interview with Dave Bozeman
Dave Bozeman, vice president of Amazon Transportation Services, says he wakes up every day ready to "go to war for the customer." And he wouldn't have it any other way.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
When Dave Bozeman, vice president of Amazon Transportation Services, goes to work each day, there's just one thing on his mind. It's not the competition. Nor is it the latest marketplace innovation. It's the Amazon.com customer. "Everything is about the customer, and anything outside of the customer doesn't matter," he says. "We wake up every day, and we go to war for the customer."
So far, his team appears to be winning both the battle and the war. In less than two decades, the online retail giant has turned the market on its ear, conditioning customers to expect free two-day deliveries, seven-day-a-week service, and in-home and in-car deliveries, to name just a few examples. But Bozeman has no illusions that his job is now done. "Once you've accomplished all that, are the expectations just going to stop?" he asks. "No. There are going to be even bigger expectations."
Bozeman sat down with Mitch Mac Donald, group editorial director of DC Velocity and CSCMP's Supply Chain Quarterly, for an interview in October, following his opening keynote at the Council of Supply Chain Management Professionals' (CSCMP) Edge 2018 conference. The following is an edited version of the conversation. See the full interview here.
Q: You work at a company that continues to enjoy historic growth year after year, with no end in sight. How do you make sure that your supply chain keeps up?
A: First, it is scale and innovation. You have to have scale and innovation in order to do what we do. But more foundational than that is leadership. Amazon is run off of 14 key leadership principles. I'm not going to talk about all of them here, but they all support what we see as our primary mission: staying focused squarely on the customer, or what I call our "customer obsession." We wake up every day, and we go to war for our customer.
When I tell you everything is about the customer and anything outside of the customer doesn't matter, that's how it is at Amazon, including the supply chain. The supply chain has evolved, it has scaled up, and it's all been for the customer.
As we plan for tomorrow, we keep our eye on three basic elements: quality, cost, and the delivery experience for the customer. "Quality, cost, and delivery" is the obsession we have. We build our supply chain around that obsession. Be it planes, trains, or automobiles, we're going to make sure we have quality and speed. And we're going to make sure we provide an exceptional delivery experience because I know our customers expect nothing less, and that's what we are here to do.
Q: Let's talk a little bit about the tactical side. What role have enabling technologies like automation played in the evolution of Amazon's supply chain?
A: They've been extremely important. Amazon's operations have obviously grown in scale since that day 23 years ago when Jeff [Bezos] put a few books in a box, sealed it up, and took it down to his local post office. We've made millions—even billions—of customers happy since that time, but in order to continue to do that today and tomorrow, things had to continue to evolve and change. At Amazon, we're never satisfied with the status quo. When it comes to serving the customer, there's "divine discontent" here, meaning we're never happy and we're always looking to provide a better experience.
That was the case in our fulfillment operations a few years back. We knew there had to be a better way to fill orders. That ultimately led to the acquisition of Kiva Systems [a robotics company Amazon bought in 2012 and later renamed Amazon Robotics]. We now use robots to bring goods to human order pickers, instead of sending workers out into the aisles in search of items. And what does that do? It only makes quality better. It improves accuracy and obviously boosts speed, and it's going to improve the delivery experience for our customers.
I should note here that the robots aren't replacing people. When they hear about the tens of thousands of robots we've introduced into Amazon's operations, people will say, "Wow, robots! Where are we going with this? What happens to the people element?" Well, during that same time, we have hired over 300,000 more Amazonians. They're just doing different work now. Using the robots allows our people to focus more on quality.
Q: It sounds like a key to Amazon's success is there's never ever going to be any resting on laurels. So what we did yesterday doesn't matter. Only today matters. Do you think that culture has helped to drive all of this?
A: Oh, that is our culture. If you go to work at Amazon, you'll be challenged to look at things in a whole new way. I mean, we have a bar—a performance bar that you have to clear when you're interviewing at Amazon. We have that bar when it comes to what we want to do in growing out and scaling projects, but ultimately we look at the customer. We say, "Hey, what is the next thing that we have to do?" Think about supply chain. Think about where things are going. People want things faster, but tomorrow, it will be something different.
People have choices now in the supply chain. What are some of those choices? Well, they can choose the day they want their product delivered. And along with choosing when they want it delivered, they can choose where: on this part of the porch or in this milk box or even inside their home or car.
And tomorrow, who knows? You can be somewhere, and we may just fly it to you in a drone. The point is, it's about innovating for the customer through your supply chain and not being apologetic for being divinely discontent.
Q: I'm going to get a little more into the weeds here and ask about Amazon's decision to enter the airfreight business. What made you decide to build your own air fleet? Private truck fleets are very common. Private air fleets not so much. Why go this route rather than simply using the standard commercial air carriers?
A: I love that you said operating an air fleet is not so common, because at Amazon, we love to hear that what we're doing isn't common or normal. But at the end of the day, you know what I am going to say: Everything we do is ultimately driven by the customer experience and our obsession with our customers. In the case of air, this is what we've had to do to ensure we have the capacity we need.
That said, we have a number of great partners that we've worked with from the beginning and continue to work with—partners like UPS, FedEx, and DHL. But we also know that we have to continue to supplement that capacity in order to make sure we can keep up with our projected growth and ultimately, satisfy our customers as we continue to grow. That's why in 2016, we launched Amazon Air and are continuing to expand the operation. In just two short years, the fleet has grown to 38 planes—767s-200s and -300s—that fly millions of packages around the U.S. every day.
Q: It's clear you have a passion for your work at Amazon, so it might be tough for you to give an unbiased answer to this question. But here goes: Is there another company out there that has achieved the scale that could justify a private air fleet?
A: Well, that is a good question. But at Amazon, we don't let ourselves be distracted by what others might be doing. We could spend a lot of time talking about competitors. We could spend a lot of time talking about other companies. Instead, we take all of that energy and talk about the customer.
What we want for our customers is speed, lower costs, and an exceptional delivery experience. Concentrating on that—and not on the competition—allows us to maintain a laser focus on what we have to do. That enables us to be clear on the decisions we have to make, be it building an air fleet or automating our operations or going into drones. Those are things that we do with our customer in mind, not the competition.
Q: Do you see anything on the horizon—for instance, the shortage of labor we hear so much about—that could disrupt your growth and momentum?
A: The macros of the world are the macros of the world, right? We will deal with those things as they come, and we'll solve them. Take the labor shortage you mentioned. Unemployment is obviously at a low right now and the labor market is tight, but we feel really good about the number of Amazonians that we have and the number of Amazonians that we bring on. Why? Because we feel we are a great company to work for.
The real challenge—the thing I personally look at—is the challenge of customer satisfaction. Customers are always going to have something they want and in some cases, they're going to be dissatisfied. But how and why? You have to think about it—that is the key. How do we identify and address the problem before the customer becomes dissatisfied? And along those same lines, how do we anticipate the customer's future needs? Those are the things we think about at Amazon each day.
Q: Do you have any final advice for our readers?
A: Stay close to the front lines—the people who are out there doing the work. We have over 550,000 Amazonians out there working for us, and I appreciate every one of them for the work they do every day. As a leader, you have to stay close to that because those people know how important our customers are.
For the past seven years, third-party service provider ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.
Photo courtesy of Dematic
For the past four years, automated solutions provider Dematic has helped support students pursuing careers in the STEM (science, technology, engineering, and mathematics) fields with its FIRST Scholarship program, conducted in partnership with the corporate nonprofit FIRST (For Inspiration and Recognition of Science and Technology). This year’s scholarship recipients include Aman Amjad of Brookfield, Wisconsin, and Lily Hoopes of Bonney Lake, Washington, who were each awarded $5,000 to support their post-secondary education. Dematic also awarded $1,000 scholarships to another 10 students.
Motive, an artificial intelligence (AI)-powered integrated operations platform, has launched an initiative with PGA Tour pro Jason Day to support the Navy SEAL Foundation (NSF). For every birdie Day makes on tour, Motive will make a contribution to the NSF, which provides support for warriors, veterans, and their families. Fans can contribute to the mission by purchasing a Jason Day Tour Edition hat at https://malbongolf.com/products/m-9189-blk-wht-black-motive-rope-hat.
MTS Logistics Inc., a New York-based freight forwarding and logistics company, raised more than $120,000 for autism awareness and acceptance at its 14th annual Bike Tour with MTS for Autism. All proceeds from the June event were donated to New Jersey-based nonprofit Spectrum Works, which provides job training and opportunities for young adults with autism.
The logistics process automation provider Vanderlande has agreed to acquire Siemens Logistics for $325 million, saying its specialty in providing value-added baggage and cargo handling and digital solutions for airport operations will complement Netherlands-based Vanderlande’s business in the warehousing, airports, and parcel sectors.
According to Vanderlande, the global logistics landscape is undergoing significant change, with increasing demand for efficient, automated systems. Vanderlande, which has a strong presence in airport logistics, said it recognizes the evolving trends in the sector and sees tremendous potential for sustained growth. With passenger travel on the rise and airports investing heavily in modernization, the long-term market outlook for airport automation is highly positive.
To meet that growing demand, the proposed transaction will significantly enhance customer value by providing accelerated access to advanced technologies, improving global presence for better local service, and creating further customer value through synergies in technology development, Vanderlande said.
In a statement, Nuremberg, Germany-based Siemens Logistics said that merging with Vanderlande would “have no operational impact on ongoing or new projects,” but that it would offer its current customers and employees significant development and value-add potential.
"As a distinguished provider of solutions for airport logistics, Siemens Logistics enjoys a first-class reputation in the baggage and air-cargo handling areas. Together with Vanderlande and our committed global teams, we look forward to bringing fresh impetus to the airport industry and to supporting our customers' business with future-oriented technologies," Michael Schneider, CEO of Siemens Logistics, said in a release.
The initiative is the culmination of the companies’ close working relationship for the past five years and represents their unified strength. “We recognized that going to market under a cadre of names was not helping our customers understand our complete turn-key services and approach,” Scott Lee, CEO of Systems in Motion, said in a release. “Operating as one voice, and one company, Systems in Motion will move forward to continue offering superior industrial automation.”
Systems in Motion provides material handling systems for warehousing, fulfillment, distribution, and manufacturing companies. The firm plans to complete a rebranded web site in January of 2025.
I recently came across a report showing that 86% of CEOs around the world see resiliency problems in their supply chains, and that business leaders are spending more time than ever tackling supply chain-related challenges. Initially I was surprised, thinking that the lessons learned from the Covid-19 pandemic surely prepared industry leaders for just about anything, helping to bake risk and resiliency planning into corporate strategies for companies of all sizes.
But then I thought about the growing number of issues that can affect supply chains today—more frequent severe weather events, accelerating cybersecurity threats, and the tangle of emerging demands and regulations around decarbonization, to name just a few. The level of potential problems seems to be increasing at lightning speed, making it difficult, if not impossible, to plan for every imaginable scenario.
What is it Mike Tyson said? Everyone has a plan until they get punched in the mouth.
It has never been more important to be able to pivot and adjust to challenges that can throw you off your game. The report I referenced—the “2024 Supply Chain Barometer” from procurement, supply chain, and sustainability consulting firm Proxima—makes the case for just that. The company surveyed 3,000 CEOs from the United Kingdom, Europe, and the United States and found that the growing complexities in global supply chains necessitate a laser-sharp focus on this area of the business. One example: Rightshoring, which is the process of moving business operations to the best location, means companies are redesigning and reconfiguring their supply chains like never before. The study found that large numbers of CEOs are grappling with the various subsets of rightshoring: 44% said they are planning to or have already undertaken onshoring, for instance; 41% said they are planning to or have undertaken nearshoring; 41% said they are planning to or have undertaken friendshoring; and 35% said they are planning to or have undertaken offshoring.
But that’s not all. CEOs are also struggling to deal with the rise of artificial intelligence (AI) and its application to business processes, the potential for abuse and labor rights issues in their supply chains, and a growing number of barriers to their companies’ decarbonization efforts. For instance:
Nearly all of those surveyed (99%) said they are either using or considering the use of AI in their supply chains, with 82% saying they are planning new initiatives this year;
More than 60% said they are concerned about the potential for human or labor rights issues in their supply chains;
And virtually all (99%) said they face barriers to decarbonization, with 30% pointing to the complexity of the work required as the biggest barrier.
Those are big issues to contend with, so it’s no surprise that 96% of the CEOs Proxima surveyed said they are dedicating equal (41%) or more time (55%) to supply chain issues this year than last year. And changing economic conditions are adding to the complexity, according to the report.
“As inflation fell throughout last year, there were glimmers of markets stabilizing,” the authors wrote. “The reality, though, has been that global market dynamics are shifting. With no clear-set position for them to land in, CEOs must continue to navigate their organizations through an ever-changing landscape. Just 4% of CEOs foresee the amount of time spent on supply chain-related topics decreasing in the year ahead.”
Simon Geale, executive vice president and chief procurement officer at Proxima, added some perspective.
“It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads,” he wrote. “The results of this year’s Barometer show that business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address.”
Perhaps the extra focus on supply chain issues will help organizations improve their ability to roll with the punches and overcome resiliency challenges in the year ahead. Only time will tell.
Investing in artificial intelligence (AI) is a top priority for supply chain leaders as they develop their organization’s technology roadmap, according to data from research and consulting firm Gartner.
AI—including machine learning—and Generative AI (GenAI) ranked as the top two priorities for digital supply chain investments globally among more than 400 supply chain leaders surveyed earlier this year. But key differences apply regionally and by job responsibility, according to the research.
Twenty percent of the survey’s respondents said they are prioritizing investments in traditional AI—which analyzes data, identifies patterns, and makes predictions. Virtual assistants like Siri and Alexa are common examples. Slightly less (17%) said they are prioritizing investments in GenAI, which takes the process a step further by learning patterns and using them to generate text, images, and so forth. OpenAI’s ChatGPT is the most common example.
Despite that overall focus, AI lagged as a priority in Western Europe, where connected industry objectives remain paramount, according to Gartner. The survey also found that business-led roles are much less enthusiastic than their IT counterparts when it comes to prioritizing the technology.
“While enthusiasm for both traditional AI and GenAI remain high on an absolute level within supply chain, the prioritization varies greatly between different roles, geographies, and industries,” Michael Dominy, VP analyst in Gartner’s Supply Chain practice, said in a statement announcing the survey results. “European respondents were more likely to prioritize technologies that align with Industry 4.0 objectives, such as smart manufacturing. In addition to region differences, certain industries prioritize specific use cases, such as robotics or machine learning, which are currently viewed as more pragmatic investments than GenAI.”
The survey also found that:
Twenty-six percent of North American respondents identified AI, including machine learning, as their top priority, compared to 14% of Western Europeans.
Fourteen percent of Western European respondents identified robots in manufacturing as their top choice compared to just 1% of North American respondents.
Geographical variances generally correlated with industry-specific priorities; regions with a higher proportion of manufacturing respondents were less likely to select AI or GenAI as a top digital priority.
Digging deeper into job responsibilities, just 12% of respondents with business-focused roles indicated GenAI as a top priority, compared to 28% of IT roles. The data may indicate that GenAI use cases are perceived as less tangible and directly tied to core supply chain processes, according to Gartner.
“Business-led roles are traditionally more comfortable with prioritizing established technologies, and the survey data suggests that these business-led roles still question whether GenAI can deliver an adequate return on investment,” said Dominy. “However, multiple industries including retail, industrial manufacturers and high-tech manufacturers have already made GenAI their top investment priority.”