I am honored to have Gary Marion (GM) as my first interview partner for the Supply Chain Ask an Expert Series. You may recognize Gary’s name from the creative guest post he delivered back in November 2014 titled, “The Amazing Supply Chain of Your iPhone Case.” In this article, Gary talked about how an innocent hot dog break by a truck driver could impact the overall effectiveness of supply chain operations.
During his 25+ years of hands-on supply chain management experience, Gary has gathered a wealth of knowledge, specializing in vendor partnerships, price and contract negotiations and supply chain process optimization. Drawing on a phrase from the toilet paper industry, Gary sums up the breadth of his supply chain experience as follows: “From stump to rump.”
Prior to his current role as National Sales Director at Dynaroll, Gary managed supply chain operations at Pfizer, Amgen, Cleveland Golf, Stila Cosmetics and the U.S. Army. Gary is also currently the author and editor for the Logistics and Supply Chain section at about.com, where he regularly provides his readers with entertaining and informative articles.
1. DW: What are the top hurdles in supplier relationship management?
GM: “My approach to SRM is the same as my approach to the other important relationships in my life. Communication, leverage, trust and a strong desire to have your partner succeed – those are all factors that you need to keep front and center – in SRM and in life. The communication needs to flow both ways. If your needs change, let your suppliers know ASAP. They should feel like they can let you know when they’re running up against delays or into quality issues on their line. Leverage to me is critical. In almost every relationship, there’s a clear “who needs whom more” dynamic. If you’re a $20M company with $100,000 spend with a $4B supplier, they have the leverage and they will exercise it. Don’t be surprised if you don’t get great service or delivery from them. But if the tables are turned and you’re the $4B behemoth, that small supplier is going to jump through hoops to keep your business. Neither is a particularly healthy relationship. The nerdy guy never feels comfortable going out with the homecoming queen (until that nerdy guys sells his start up and is now the $4B supplier).
But I haven’t answered your question. Top hurdles to SRM. Trust. (Is my supplier stiffing me or telling me the truth about my late order? Am I going to get my order when my supplier promised?) Communication. (Keep the lines open and flowing both ways.) And you want a supplier (and partner) who is invested in your success. If you can lock those three overarching issues down, your teams can focus on those 3 critical KPI’s, which I’ll address next. Remember, when you’re SRM’ing, your suppliers are CRM’ing.”
2. DW: If you were limited to using just 3 supply chain KPIs, which 3 would you choose and why?
GM: “As promised, the 3 KPI’s. On-time delivery. Cost of quality. Year-over-year COGS efficiency. As a supplier, you know that’s what your customer wants. They want their order on-time. They want it defect-free. And they want to save money. There’s a tendency to say, “I sold this to you for $1 last year, so now this year it’s going to cost you $1.03.” But I want my suppliers to have the mindset of “I’ve been making this for a year now and we’ve figured out a way to be 3% more efficient. So in Year 2, your cost goes from $1 to $.97. My VOSDOSCO (very over-simplified definition of supply chain optimization) is “getting your customer want they want, when they want it and spending the least amount of money accomplishing that” and I think those three KPI’s cover it.”
3. DW: How can the field of supply chain management improve its image and attract new talent?
GM: “Great question. And one that makes us look in the mirror and gasp. Don’t look away. That’s us. The CFO is playing golf with the mayor. Rachel in marketing is being interviewed by CNET. The head of sales is collecting another crystal trophy and soaking in the applause. The perception is that the supply chain phone only rings when something’s late or is about to be late or showed up teal instead of lavender. But the reality is that the CFO, Rachel and the head of sales wouldn’t be getting those accolades if someone in supply chain hadn’t driven the cost down, managed the inventory and delivered it on-time. It’s up to supply chain to grab a seat at the table and get their voice heard. Supply chain is one of the few business functions that impacts sales, manufacturing, R&D, marketing, finance, engineering, etc.
When I first started in supply chain, I used to be greeted with “Oh, you’re the purchasing guy.” The world has changed. Now I’m the guy who can affect the bottom line with one phone call to a supplier. What’s equally as important, as far as I’m concerned, is for us to not take ourselves so seriously (which might be obvious, if anyone’s read my supply chain musings).”
4. DW: What one piece of advice would you give to future SCM graduates?
GM: “Wait, what? There are SCM graduates? People can study this stuff in college? I studied political philosophy because my major didn’t really matter. I knew my ROTC scholarship meant that I’d be jumping out of airplanes after I got my diploma. I guess I’d tell an SCM grad the same thing I’d tell an engineering grad or a newbie attorney. Get your hands dirty. Work in a warehouse. Learn what a pick-and-pack operation is.
The best supply chain pros I’ve worked with understand the 360 of their business. Ask questions. Why is your re-order point set where it’s set? Why do you have safety stock on some parts and not on others? How many lead times are you dealing with? And why does that matter to finance, sales, engineering, QC and everyone else at your company? Don’t live in a silo. Read my blog. And other supply chain writing. And, most importantly – work hard, be kind.”
5. DW: How will the field of supply chain management change in the next 5 years?
GM: “Believe it or not, my first bosses in supply chain cut their teeth in the world of purchasing, distribution and manufacturing in the 1960’s and 1970’s. I’m that old. A metric to them was… I don’t know… I can’t even come up with a quippy retort. Their metrics were called status reports and they provided data on how the company was doing as compared to last year. And they calculated inventory levels using an abacus. (I made that last part up.) Today we live in a world where inventory can be measured in minutes-on-hand and I can project my company’s on-time delivery (within a fraction of a percentage point) for the next quarter and a half. Data access and data delivery will change how supply chain evolves over the next five years.
Real-time supply chain metrics – on your phone and on the production floor – will allow management and employees to know how they’re doing RIGHT NOW. And make adjustments on the fly. There’s no way to get products from one side of the world to the other any faster (unless Elon Musk really applies himself) so right now – making decisions based on real-time data is the future. The distance between tactical decisions and strategic ones will compress. Of course, the facts in my article “How Alien Technology Will Improve Supply Chain Performance” could render all of that moot”
DW: I appreciate you taking the time to share your thoughts with us Gary. As usual, your input is both entertaining and informative!
If you want to take part in our Supply Chain Ask an Expert series, feel free to contact me at david.weaver@inform-software.com
