Chain of Thought

Scrooge's Partner Was Right: “Mankind is My Business.”

In this era of management by social media, business people risk losing critical people skills. Maybe that's why the Warehousing Education and Research Council's (WERC's) annual Conference was so well attended this week. More than 1,000 logistics professionals got a chance to network the old fashioned way. I got the impression that many of these attendees hadn't been to one of these for a while and were relieved to have an opportunity to compare challenges and trade ideas with colleagues face to face. It was a good reminder that this is a skill that needs to be cultivated for the good of their businesses as well.

This theme came up repeatedly during the education sessions. For example, in a presentation on supply chain flexibility, the relationship between consumer electronics manufacturer Samsung and its 3PL service provider MIQ Logistics was analyzed. David Griffith, MIQ's senior vice president of logistics, noted that his team sat shoulder to shoulder with Samsung's people to understand their business activity. It's not just a matter of product flows, but of talent chemistry.

“Whether we use permanent or contingent labor depends on the location,” he said. “We've become good students of Samsung's supply chain. We're good at mixing labor on the floor so it's like a faucet—turning it on and off. We look at shift structure, mix of product touched and the mix of expertise needed to control it. We have to be careful about who we assign to handle sensitive products.”

Mike Rapske, Samsung's director of operations, talked about how the manufacturer/retailer relationship has changed in recent times, noting that vendor compliance with many stores has become punitive. This translates to a zero tolerance for errors on his side. That has shaped his relationship with 3PLs.

“Our goal is to minimize returns by focusing on order preparation and shipping accuracy,” he said. “MIQ runs four DCs for us.”

While the success of that relationship was the focus of this presentation, Rapske made it clear that the length of contracts with its 3PLs varies—running from 18 months to four years.

“We renew quite often to keep the 3PLs hungry,” he said.

Although economic volatility has put a strain on business relationships in supply chains, it has also opened opportunities. That was the case for Random House, the famed book publisher. In her session addressing the theory of business constraints, Annette Danek-Akey, the company's vice president of fulfillment, noted that the growing popularity of e-books has presented a threat for the professionals responsible for keeping the printed word alive in the publishing world. Danek-Akey said that her organization ships a million books a day, and the return rate is 30-35%. Nevertheless, she sees the bright side of e-books. Her supply chain is faster now, with smaller orders coming to the warehouse. Returns are shrinking. And with more capacity in her facility, her team can act as a 3PL, offering distribution services to other publishers while bringing in new revenue.

Another example of making lemonade from lemons was found in a session on customization. As vice president of operations at the Sports Licensed Division of Adidas, Joe Cripe is responsible for a half-billion-dollar branch of this $16 billion division. His organization stores, customizes and ships t-shirts and jerseys for sports organizations. The NFL was his biggest customer, representing half of his business. That business went to a competitor recently.

Cripe's team discovered the bright side. For one thing, he doesn't have to pay that 20% royalty the NFL demanded any more. Plus, just as Random House used its extra capacity to its advantage, Cripe's organization found opportunity in serving other markets, like high schools and colleges. Quality is tied to getting the color and logo positioning just right. Five percent of what associates pick, print and pack is audited for quality.

Cripe said people adding value is the key to success in his business, even more than cost effectiveness and warehouse efficiency. After all, they keep an inventory of 15 million t-shirts at the ready to react to sporting news and events that can happen in a flash and cause sudden demand for team- or player-oriented shirts. Two staffers are responsible for staying on top of those trends in the news so they can react quickly. Such passionate talent is also required on the fulfillment side. This is a 24 x 7 operation that requires weekend work. That's why he hires people who are sports fans.

“Everyone is geared toward service,” he said. “These people can understand why we do the things we do.”

Steve Szilagyi summed up the people aspects of business success during his lunch presentation. He's senior vice president of distribution for Lowe's Companies, and he outlined the success his company is enjoying through its outreach program. So far, 374 people with disabilities are employed in various Lowe's distribution facilities. He made clear this isn't charity work. It is the opportunity to tap talent and passion in people and to help them be successful—and therefore help his company's business succeed. Szilagyi said that these employees rise to the challenge. He cited Robert as an example. He loads trucks. He's also blind and deaf—yet he happens to be his team's best communicator.

Having a positive attitude is a lightning rod for results, Szilagyi said. It boils down to doing the right thing, doing the best you can and treating others the way you want to be treated.

The golden rule sometimes gets lost in our developing culture of social media. So I'm glad there are still opportunities like the WERC conference for supply chain managers and officers to remind each other that being a person is job one.

Related Editorial:

Mild but Manageable Recession in 2013?

FHA Awards $2.5 Million to Promote Transportation Careers

Maybe Service is Rocket Science

Where Has All the Talent Gone?

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