Video: 5 Minutes with Industrial Distribution: Supply Chain Automation Brings Innovation

Jeff (00:07):
I am Jeff Reinke, the Editorial Director at Industrial Media. Thanks for joining us as we discuss how Border States, a leading distributor serving the industrial, construction, and utility industries is working to innovate its supply chain. Border States has grown organically and through mergers and acquisitions since 1952. The company’s core value continues to be the same: to make customers its primary focus. According to the company when their customers need innovative products and supply chain solutions for their applications, Border States experts won’t rest until their customers are taken care of. With this in mind, we’re excited to bring Mike Polansky, Director of Procurement Operations and Purchasing at Border States into the conversation. Mike leads a team overseeing the inventory of 200,000 products and material management for 120 branch locations in 29 states. With over 35 years in distribution supply chain leadership, he’s known for driving innovation, achieving results, and partnering with companies including GAINS. Today we’ll discuss how he’s used automation and optimization from GAINS to reap better results, and make the most of his teams. Mike, thanks so much for joining us. So Mike, we’re here to talk about supply chain and innovation. There’s plenty of challenges out there, but there’s a lot of ’em that are really unique to the distribution side of things. Maybe you could talk me through that a little bit and maybe some areas where we can try to do a little bit better amongst distributors.
Mike (01:28):
Sure. As I’ve been thinking about this, some of the things I think that we need to do better is we need to communicate better. As I’ve been thinking about this in all the years that I’ve been in the industry, we get together and we talk about sales numbers and things of that nature, but some things that we’ve learned, I think going through the pandemic is, is that there’s a lot of things that we could do to improve things by getting together and talk about things such as lead time. That was a huge issue that we saw that came out of the pandemic. The other aspects that we talk about as far as things that we can get together is just build upon that trust. Everyone gets so concerned and caught up in their own little piece in their company, and we need to understand that the success of the supply chain is built upon how well all the different pieces of the supply chain working together do from the manufacturer to the distributor, to the person who buys it from the distributor, all the way down to the ultimate consumer of the product.
(02:35):
When we start thinking in terms of the total supply chain and how each company along the supply chain, their pieces function together, then I think that the total supply chain will operate better. We get so just hyper-focused on our own little pieces that we forget about how our own little piece impacts the whole entire supply chain. We sit down in a room when distributor sits down with a vendor, we need to be thinking about how the two together can work together as a supply chain. When a distributor sits down with a customer, it’s like, what’s the best thing for the supply chain? It can’t be just a distributor thinking about, what am I doing? It has to be what’s the right thing for the supply chain.
Jeff (03:27):
Absolutely. A much bigger picture perspective on things.
Mike (03:30):
Absolutely, and also I think that one of the things that we need to start worrying about and focusing on, and there’s been I think a lot of effort on this, is to attract better talent. We just don’t talk about what we’re doing in this industry. This really kind of came to me here a few years back. I have over 35 years in the industry and here just a couple years ago, I was driving with my youngest daughter. Now mind you, she was born after I started in the industry. She goes, can you just tell me what it is that you do? So she’s grown up here and she’s still, after all those years, she’s grown up in the house and she just didn’t really even understand. If she doesn’t understand, there’s no way we’re doing a great job of telling what a great industry this is.
Jeff (04:20):
Couldn’t agree more. And speaking of telling stories, you guys kind of have an interesting story to tell with a milestone. You recently achieved using GAINS. You guys got a 90% purchase order automation level. Now, tell us a little bit what that means in terms of for your business, for your internal team members and some of the metrics that you guys manage.
Mike (04:39):
Yeah. One of the things that is just really critical for me is to allow the software systems to do the heavy lifting. If you look at what a computer can do, and it doesn’t matter what it is, if you’re driving your car or whatever the case may be, in this case, it’s an inventory management system. It can crunch numbers really fast. It can make a lot of good decisions. If you have good input that goes into it and you trust the system, it can do a lot of heavy lifting. In this particular case, one of the key things that we wanted GAINS, our inventory management a system, to do was to do with that heavy lifting. For us, and in this particular case, it was to us to be able to set the system to release purchase orders for us. We want our buyers to be able to come in the morning and to focus their time on doing other things to spend their time focusing on analytical decisions.
(05:40):
In this particular case, what that means is to transition from more mechanical thinking to more analytical thinking. This is a tough transition. In many cases, we teach buyers to focus on their lines, to take ownership, to take responsibility, and in this case here, it’s to this particular piece of having their line to let it go, to trust the system enough to let that purchase order go that you don’t need to analyze that output of that line when the PO says, it says a quantity of three to let it go and to now spend that time on all those components that drive that quantity of three.
Jeff (06:25):
Yeah, paradigm shifts are never simple, but the benefits in what you can get out of it is obviously huge. Another area that you guys have been working is sort of shifting the mindset or the way you approach things is working with GAINS on some of their machine learning technology that they have in place. Maybe you could talk to us a little bit in terms of what you’ve learned there, how this might be helped with some of your lead time predictions and other impacts.
Mike (06:49):
Yeah. If you look at lead time, what’s one of the core three pieces of how much you buy. As I mentioned earlier in this particular case, we learned a lot of coming out of the pandemic, and that is how crucial lead time is. In working with GAINS, and they’ve just been wonderful to work with, is we realized that we need to do better with our lead time calculations instead of just focusing entirely on historical lead times as far as depending upon buyers to call up a particular vendor and plugging in a value, it’s how can we more wisely use predictive analytics to determine what our lead times will be. In this particular case, we have, we are using about 60 data points and running about 300 different simulations with those data points to try and to determine using, once again, predictive analytics, what lead times will be, and it is the most, some cases, random things.
(07:46):
You’re thinking, well, how can that actually go into what lead times will be? And these could be things in some cases from price to color and just all kinds, just about every material attribute that you can think of that goes into things. And every month it runs through all these analytics and tries to determine, comes up with how well did that particular calculation do? And then once again, and it tests it and it retest it again every month and does it every single month again. And we’ve been running these calculations with GAINS for over a year now and seeing, comparing that to what our actual numbers that we’ve been using and our ERP system and the numbers that we’ve seen after now over a year, and the results that we’re getting are just phenomenal as far as the improved accuracy that we can get in measuring, in this particular case, the numbers that we can get using machine learning results compared to what we’re actually getting. And it is just phenomenal that the results that we’re getting as far as these predictive analytics, it’s really going to be exciting.
Jeff (08:59):
That’s going to do it for today, but for more information on how GAINS can help you manage similar supply chain challenges, you can go to gainsys.wpenginepowered.com. For Mike Polansky, I’m Jeff Reinke, and thanks for joining us for 5 Minutes with Industrial Distribution.