GAINS On Podcast Ep7: Adapt and Overcome

Joe Davis (00:00):

Hey there, supply chain enthusiasts, business trailblazers and technophiles. Welcome back to your favorite podcast gains on where we delve into the heart of supply chain intricacies with a touch of charm and a heap of expertise. I’m your friendly neighborhood podcast host, Joe Davis, here to take you on yet another enlightening journey. Today we’re joined by the insightful Sean Gildea, President of North American Sales for GAINS, who’s going to shed light on the ever evolving landscape of supply chain management. In this episode, we tackle the big questions. How has COVID-19 reshaped the supply chain? What are the emerging challenges businesses face every day? And how does the role of a chief supply chain officer come into play in this new era? From T-shirt supply woes in Northern China to the struggles of balancing inventory during unprecedented times, we’re covering it all. Sean’s boots on the ground experience and encounters with real world supply chain drama will provide us with an unfiltered look into the complexities of modern supply chain management.

(01:03):

So whether you’re a season pro or just curious about the supply chain world, post-COVID, you’re in for a treat. Buckle up and let’s dive into the deep end of supply chain realities and revelations. Sean, thanks so much for coming to the show.

Sean Gildea:

Appreciate it, Joe. Glad to be on.

 

Joe Davis:

So I thought I’d have you on today. So the concept of the show is I want to learn more about supply chain, I want to learn more about the company, and this is really just an easy way for me to do that. And the idea is if I’m curious, other people are also probably curious? So what I thought I would talk about is you’re out there in sales and you’re boots on the ground, as it were, interacting with GAINS customers every day and potential prospects as well. The question that I have is what sort of things are you seeing? What sort of problems are people having and they’re coming to you with that you see in the field?

 

Sean (1:52):

So it’s an interesting varying degree of issues, problems that customers and or prospects are looking to solve, especially since COVID, supply chain has taken this renewed interest from the executive suite in supply chain. I think of supply chain prior to 2020 as kind of the offensive line that always worked, right? CEOs and CFOs turned a knob and said, I have a supply chain function. And even though there were things that might not have been working perfectly, generally, things were getting to the right place at the right time, and companies were churning out pretty well. Obviously post COVID and during COVID at the same time, things changed. So the ability to get product, the ability to get raw materials, the ability to get finished product to the right place at the right time became much more difficult.

(02:52):

So let me give you an example. So I won’t name any specific company names, but a company that was always sourcing raw material t-shirts through the northern province of China, can’t get those anymore and didn’t really set up a secondary supplier and you know, it was kind of an “Oh sh**” moment for that particular company in that particular supply chain. Prior to COVID, that was never an issue. So companies have taken a renewed interest in making sure they have the right products at the right cost, at the right time, but at the same time, obviously not having that cost impact driven down to their customers. If I have to set up a secondary supplier or a tertiary supplier, what’s the impact on my business? So the role of the chief supply chain officer that didn’t really exist at a lot of companies prior to COVID all of a sudden became this new role. So the chief supply chain officer rolls up to either the CFO or the COO, and that person is now responsible for all things supply chain.

Joe (4:02):

It seems like in this particular case, in COVID especially, it became companies were squeezed in the middle. You had the problem was you had demand either dropped off or increased insanely, and then the problem was the supply had decreased to such a point so that you were really stuck in this no-win situation where you can’t please your customers, you can’t get things from your suppliers, you end up incurring all this additional cost to expedite things on both ends just to keep the lights on.

Sean (4:35):

Agreed. Right. So think of companies, it’s always good to use concrete examples. During COVID or pre COVID, SC Johnson, great example, company that was always producing cleaning products and had a very smooth demand curve. All of a sudden we’re now getting a massive spike in the request for our products, whether those are cleansing wipes or wetware spray downs, paper towels, any type of sanitizing.

(05:04):

And SC Johnson had to scramble especially to supply their most important customers. But then you think of companies that supply bed linens or sheets to hotels, and that demand obviously dropped off the face of the planet. So being able to understand what risks are now sitting in your supply chain is also extremely important. And being able to manage that risk as an organization is obviously going to be extremely important to companies success.

Joe (5:35):

It seems to me that we talk a lot about the situations, you brought up the hotel linens, which is a great example, of the companies that were stuck trying to catch up and not be able to meet their supply and not be able to meet their demand. But we don’t hear a lot or we don’t talk a lot about, mainly because it doesn’t affect the customers directly as much as it affects the companies themselves, of having all this stuff that you now can’t move.

Sean (06:01):

Correct. Yeah, I mean, carrying inventory became just as much a problem as under carrying inventory. So companies like Walmart, grocers in general. So grocers, you think of a supply chain in terms of we’re the end customer. You walk into a Walmart, I’m going to pull a bottle of Coke off the shelf. Sure, I’m going to bring that to the register. I’m going to check it out, I’m going to bring it home. The backend of getting that bottle of Coca-Cola to the shelf is a lot more complex than people think. Raw materials are sourced globally. So when you think of a company like Coca-Cola, we have the plastic raw material that has to come in. We have the actual mix that has to come in. That mix is probably held to certain regulations depending on what country around the world is sourcing that product. So a bottle of Coca-Cola in Mexico might look a little different than a bottle of Coca-Cola say in Argentina.

(06:57):

So again, managing those types of variations as a supply chain, it’s the same SKU, it just looks a little different depending on where you are.

Joe (7:07)

In thinking about the different types of issues that supply chain has seen and kind of continues to see, I know there are a lot of different factors that go into that, and it’s not always the same factor. We’ve been having the issues with the labor crisis, we’ve been having technology issues. What are you seeing the most up when people come to you when you have these discussions, when you approach folks as a salesperson for GAINS, what are you seeing most often? Is there one thing that’s like, oh, we have too much or too little inventory, or we can’t balance inventory? Or is it we have too many different systems that we can’t …? I mean, what sort of things are you seeing?

Sean (07:42):

So it’s interesting when most of the conversations that we start, or a prospect comes to us, the easiest thing to blame is the demand plan. That’s the easiest thing to blame because we’re going to sit there and we’re going to say, our demand plan was off X percent. If we can squeeze together the demand plan, you know maybe that helps us track down through the supply chain. But it’s more complex than that, right? Well, demand plan may be off here or there, just like anything else. It’s a plan, right? So we all know in plans, things go wrong. So when you talk about combining the demand plan along with the inventory optimization plan, along with the replenishment planning, the supply chain team, and that’s very important that you need to work these things together. A buyer and a planner need to be on the same page, and that warehouse director and that distribution manager all need to be on the same page of what the plan looks like, driven all the way down from the demand plan through shipment to customer.

(08:44):

So again, you had mentioned it previously, over carrying inventory is just as dangerous as under carrying inventory because if I have too many of this SKU, now I can’t bring in SKU that’s actually selling so out of stock on that SKU, but I have no room in the warehouse.

Joe:
Yeah, and you can’t afford it. Warehouse has all your capital tied up and stuff you can’t use.

Sean:

Correct. So then that’s when you start to see companies, especially in retail, mark down product. So it’s again, when you look at how the team, of a supply chain team is put together, from that chief supply chain officer all the way down to the dock worker who’s offloading pallets, every single member of that team is extremely important because it’s a timely function. Think of the supply chain, like a heartbeat. It’s got to keep going. Whereas a finance organization can be a brain, and if something happens that kind of stops, that’s not going to stop your business. But if the supply chain stops, that’s sure is heck going to stop your business real fast.

Joe (9:46)

And you can talk about how supply chain sort of touches all of these different departments. And really, I think before COVID, I think a lot of folks kind of thought of it as a more siloed thing. Purchasing does purchasing thing and this department is this thing. But now like you’re saying, because it is the heartbeat, right? Because it is that blood flow of product is going through the company. Do you find in your discussions that people are looking for ways to bring people together, speak the same language and understand that better? Are people beginning to understand that more?

Sean (10:25):

Yes and no. I would say the more mature organizations are starting to see that and realize that. And when I say mature, that doesn’t necessarily mean bigger, right? When I say mature, it’s the organizations that have taken a look at where they are in the maturity curve and understand that these things are all interconnected. There’s still companies that come to us and say, we just want a demand planning platform.

(10:49):

That’s fine. We can provide that. But we believe there’s more value to your business to not just take a look at the demand plan, but also look at your network design. We think we should take a look at how are your trucks being routed? We think you should take a look at your inventory plan. Are your safety stock levels at the right position? Are they too high or too low? So a demand plan doesn’t take those things into account. It’s a demand plan. But when you look at the demand plan connected to our safety stock levels, connected to our replenishment planning process, are we getting discounts from our suppliers? Are we buying too much or too little at once? So they’re all interconnected, and that’s where, again, obviously having a system on the backend to augment. Generally, companies in the past have created bolt-on programs to ERP systems and said, oh, well this bolt-on Excel spreadsheet is how the supply chain team works. It’s not a sustainable way of managing your business as you continue to grow.

Joe (11:51):

So when we talk about supply chain optimization, that’s sort of a blanket term, but really that blanket term sort of covers everything that you just laid out. We’re going to look at the logistics. We’re going to look at where your distribution centers are. We’re going to look at your suppliers. Are they varied enough? We’re going to look at all of that and find the best way to do that for your particular organization.

Sean (12:14):

Right. And when you have options in the marketplace, and this is where several of the insight folks, so you think of folks like Laura Cecere who put together all the pieces of the puzzle for a potential consumer of supply chain products to say, okay, do we do this all in SAP and Oracle? Is that our best method of doing so?

(12:40):

Or do we manage the ERP side of our business in SAP and Oracle, and do we go buy a supply chain planning system from a company like GAINS? Do we buy a vehicle routing solution from a company like Roadnet? And how do those pieces of puzzle put together? So one of the things we haven’t mentioned in this conversation is IT is just as important a part of the organization for supply chain, especially when we think of the interconnectedness of warehouses and robotics. So other things that are getting more advanced. So the IT team plays a major role in evaluating what solutions every company is going to use. In my world, obviously we talk about we want customers to be successful, we want the implementation to be successful, but you don’t think of the little things that an IT organization is going to think of. So when we talk about integration between systems, when we talk about connectivity, I’m writing simple enough, but some warehouses out in the boondocks of different locations in the United States aren’t going to have great internet connectivity.

(13:44):

So how do we solve that problem? Right? So again, when you think of all the different ways that an organization functions, and like I said, the heartbeat of the supply chain, all those folks are working together really hard every day to put product out there. Like I said, you’d be surprised at how complex some supply chains can be.

Joe (14:08):

Yeah, it is sort of overwhelming. The more that I think about it, the more that I learn about this, it’s the less I know. The more I dig into supply chain, the more I realize how it’s complex, and I’m a little further away from understanding it. But that complexity, I mean to think that there are companies out there that are managing that amount of complexity and they’re still doing it, pencil and paper, Excel spreadsheet, is really, really mind blowing. So what’s our, what sort of benefits do you get by bringing in GAINS?

(14:42):

I mean, obviously there’s a time benefit, right? But what sort of other benefits do you realize from bringing something like GAINS in?

Sean (14:49):

Yeah, I mean, just like any other chain planning software company, GAINS has its secret sauce in the algorithm. So what our data scientists have worked on and put together for years. So you have two options as an organization. You can throw people at it. You can continue to do pen and paper and Excel, and that’s fine, but you’re going to probably be hiring a lot more people, and you’re going to be asking a lot of expertise and brainpower. And then when those people leave the organization to replace someone like that is extremely difficult to do. One of the questions I ask in a lot of my sales cycles and a lot of the folks I talk to is that all of a sudden, every executive starts pointing to one person.

(15:34):

So, oh, this is the person that takes care of it. This is the person that takes care of that. So then I say to them, well, what do you do tomorrow? Again, we live in an imperfect world. Things happen. What happens if Joe drops dead of a heart attack tomorrow? What do you know? How are you going to make sense of that data? You only have one guy who always how to make sense of that data. So you need to have systems in place, a lot for controls and risk, as well as when you look at growth, I have to weigh the options. Does it make sense for me to buy systems and not hire as many people? Or does it make sense for me to hire more people and not add as many systems? And that’s a trade off. Every executive needs to sit in a room and understand, right? Look at the cost benefit analysis, right?

Joe (16:23):

It is. It is. It’s going to cost you. If you do, it’s going to cost you. If you don’t, right, it’s going to cost you. And if you keep doing it the way you’ve been doing it, it’s going to cost you in the terms of, like you said, having to hire more people and retain that talent. And we had Matt Morton on the show, we were talking about brain drain. He was talking about just that, where people come in and they build up this enormous skill and this enormous talent in your supply chain, and now they are of huge value to somebody else’s supply chain, and their investment is then to poach your person, and you’re left holding in the bag.

Sean (17:00)

And it happens quite often, especially in the supply chain space. I can think of a very concrete example. We sold a system to a company and less than a year later, the person that brought that system in left and went to another organization because now we had immense value to say, I’ve implemented an enterprise supply chain planning system. And I mean power to that individual, he got more money and did what he wanted to do, but then that previous organization that he left is kind of left holding the bag. So obviously we’re helping them fill that gap. But that is a challenge that happens. And that’s, that’s not just a supply chain problem. That’s a problem for every group, right, but especially in supply chain, I find that what I call the Big Brains, right? So the people that do network design, the people that do network optimization, there is a high degree of, one: most of them have PhDs, right? That’s the first thing. And then second, most organizations only have one or two of those people.

(18:04):

So to lose that person is an extreme value loss. So most network design, network optimization groups, I call them groups, they’re typically called COEs, Centers of Excellence. So I won’t name specific names, but there’s a manufacturer that’s a $10 billion company that only has five people globally that do network.

Joe:

Wow.

Sean:

And that COE does everything for the entire network design around the globe. So when you think about losing one, right? You’re losing 20% of that group when you add is just one. And replacing them is typically very difficult as well. Now, not as much in supply chain with warehouse and distribution, but if you have a highly qualified chief supply chain officer or an SVP of supply chain or country managers. So I think of distribution, if you have a country manager or a region manager that leaves, that person has a lot of knowledge about how that region’s supply chain works.

(19:09):

So to replace that person, whether it’s promoting someone internally that you think can do the job or trying to take someone from another organization externally, that’s going to take you time, that’s going to take you money, and you’re probably going to lose a few percentage points here or there.

Joe (19:22)

Well, Sean, thank you so much for coming to the show. I really appreciate you coming on and appreciate your time. And it’s again, yeah, another great unique perspective on supply chain. So thanks again for coming.

Sean (19:34):

Yeah, appreciate it. Thanks, Joe.

Joe (19:35):

You bet. And just like that, we’ve come to the end of another fascinating episode of GAINS On. A huge thank you to Sean Gildea for joining us and sharing his invaluable insights into the ever-changing dynamics of the supply chain world. Today we journeyed through the trenches of supply chain management, exploring the myriad challenges and opportunities that have emerged in this post pandemic era.

(19:57):

We hope this episode has given you a deeper understanding of the critical role supply chain plays in the heartbeat of businesses, and the importance of adaptability and foresight in this sector. It’s clear that in the world of supply chain, every decision, every role, and every challenge is interlinked, painting a complex but intriguing picture of business operations. Remember, the supply chain isn’t just a business function, it is the lifeblood that keeps the corporate world pulsing. So keep your eyes open, your mind sharp, and your strategies flexible. Thanks for tuning into GAINS On, don’t forget to check out our blog for a more in-depth discussion and insights. And remember, we’re all in this together. I’m Joe Davis signing off and saying, stay curious, stay informed, and stay tuned for more episodes that connect the dots in the world of supply chain management. Until next time. Want to stay connected with all things gains and continue to explore the exhilarating world of supply chain planning and design?

(20:57):

Then don’t forget to follow GAINS on LinkedIn where you can be part of our growing and vibrant professional community. And for more content, engaging posts and updates, don’t forget to like and subscribe to GAINS On on YouTube. Trust us, you won’t want to miss what we’re sharing. If today’s podcast episode left you hungry for even more insights, we’ve got you covered. Every episode of GAINS On is accompanied by a detailed blog post for those who wish to dive deeper into the topic. Whether you’re looking to expand your knowledge or find that special morsel of information, our blogs are designed with you in mind. Visit GAINSystems.com for more. All the links you need to be found in the description below. Thanks once again for tuning into GAINS On. And remember, we are here to help you decode the world of supply chains, one episode at a time.