GAINS On Podcast Episode 3: Why Supply Chain Design Matters with Matt Morton

Joe Davis (00:00):
Hello, hello, and hello again, supply Chain Pros, business enthusiasts, and those with an insatiable appetite for technology. I’m your host, Joe Davis, and you’re tuning into another riveting episode of GAINS On. Sponsored, as always by GAINS, the brilliant minds behind supply chain solutions that ensure our customers can keep their promises. Whether you’re an industry veteran, a student of the craft, or just someone keen on learning how the modern supply chain works, you’ve come to the right place. So grab your favorite brew, coffee, tea, or other no judgments here and make yourself comfortable. Today we are diving into a crucially, yet often overlooked topic, why supply chain design matters. To navigate this labyrinth of logistics and design, we have a special guest who’s no stranger to innovation and efficiency. Today I am thrilled to introduce Matt Morton, Senior Director of Network Design at GAINS. Matt who co-founded a company to tackle supply chain design with cutting edge technology, recently joined the GAINS family. The man is a walking encyclopedia of everything that makes supply chain tick. Please welcome to GAINS On Matt Morton. Well, Matt, thank you so much for joining us on the GAINS on Podcast. We’re so glad to have you here. You’re the Senior Director of Network Design, is that right?

Matt Morton:
That’s right.

Joe: So you and I met recently, are you a co-founder of 3TO?
Matt (01:25):
Yep, yep. About five years ago, a few of us just were looking at the state of the market and supply chain design and the vendors that were out there and said, you know we can do this better. We can do this with better technology. And then earlier this year we had a chance to come on and be a part of the GAINS family and yeah, it’s been great.
Joe (01:45):
Well, I’m so glad to hear that. I mean, we’re really glad to have you. I know that everybody’s really excited about the design aspects of what you guys do. I guess my first question would be, what is supply chain design?
Matt (01:56):
Yeah so supply chain design is basically designing your supply chain from the ground up or maybe not from the ground up, but it’s the practice of modeling your supply chain in such a way that you’re able to ask detailed questions of that model in order to do medium to long range planning. So it can be things like where do I need distribution centers? How do I need to operate those distribution centers at a high level, strategic capability level? How do I source from my vendors or how do I serve my customers? In what way? From what distribution centers. High level transportation options around mode, intermodal, LTL, parcel. So I mean, at the end of the day, it’s just figuring out what supply chain do I need to accomplish certain goals.
Joe (02:43):
So you said sort of building everything from the ground up is supply chain design, and is it something where you have to do it from the start? So I always come up with the same example for my imaginary supply chain, but as a pet toy manufacturer, I want to get into the pet toy business. Is that when I have to start? Is it the best time to engage supply chain design?
Matt (03:05):
No, we obviously, we have supported a customer, a startup that was doing a fresh supply chain from the ground up. And that’s awesome if you have the luxury to do that. But supply chains have been around longer than the formalized practice of supply chain design. And so bring your supply chain as it is and supply chain design can help make it better. It can help make data-driven decisions around the changes you can make now to improve your supply chain and long-term strategic decisions you can make going out into the future to make your supply chain better, faster. And most importantly, I think more robust to risk and to uncertainty.
Joe (03:45):
So there’s really no bad time to engage supply chain design. So it is the idea, even if it’s not great to begin with, your supply chain is not great or begin with, it can always be better.
Matt (03:55):
Yep, absolutely.
Joe (03:56):
And how does this, I guess the question is, how does that differ from supply chain planning?
Matt (04:01):
Yeah, so supply chain planning, almost all supply chain planning concepts today have the design kind of fixed in. So you have a network and you have customers that you need to serve, and how, what is the best way to plan within that existing infrastructure, that existing network to serve your customers in the best way? So it’s actually most of the time more top of mind to business operators because they’ve got the supply chain that they’ve got and they need to figure out the best way to operate that supply chain. And that’s really the field of planning. And then you can take a step back and say, okay, but if I could change things, and you can change things out into the future, how could this be better? And that’s really where design comes in.
Joe (04:47):
Is that something that’s become more common recently just because of the way that everything’s been shaken up with the pandemic and labor crisis? I mean, I could go on and on about the problems that supply chain has been facing, but have you seen more of an interest in supply chain design as a result of the recent difficulties?
Matt (05:03):
Yeah, absolutely. Supply chain design really becomes super apparent to businesses in periods that are chaotic. So either high growth, slower than anticipated growth or big macro environmental changes that are happening. That’s where it really becomes apparent when everything is kind of status quo, it can fall off the radar, not that it should, but definitely becomes apparent to businesses that maybe they weren’t set up in the best way to anticipate change.
Joe (05:33):
It’s that classic, if it ain’t broke, don’t fix it sort of methodology, right that’s served us so well. One of the things that you said is served in a time of chaos. And for me, I mean I imagine something like an acquisition or a merger might be that, is that more of a supply chain planning task sort of merging two supply chains or is that more of a supply chain design? Or is it both?
Matt (06:01):
Yeah, it’s one the mean, and that gets into the beauty of us coming together with GAINS, but it’s a quintessential network design problem, where you’ve got two separate networks and you’re trying to figure out how to bring them together and where the efficiencies are. And even a plan, even if you knew high level how you wanted to bring them together, a plan, a step-by-step plan you can come to in order to make that change management process reasonable. But it also, I think planning is lockstep in there because you might want to figure out after I make these changes, what is the effect on my planning? And that’s something that a company now like GAINS is uniquely equipped to handle.
Joe (06:46):
So what are the advantages of having that sort of unified philosophy like a company like GAINS handling both the supply chain planning part of it, but also the supply chain design part of it? I imagine a unified theme can only be a positive thing, right?
Matt (07:03):
Absolutely. And that’s the grand vision that we’re working toward. I mean, the reality is that supply chains are super complicated and no tool can answer every question, can consider every single little variable of your supply chain in one kind of paradigm. And so to get at the really big questions of how your supply chain should be and could be operating, you’ve got to make some simplifying assumptions along the way a lot of times for the large and complex supply chains. And then on the planning side, you’ve really got to drill down into detail that lets you see how I’m going to operate on a day-to-day basis. But it doesn’t let you ask those big high level questions. So a company like GAINS that does both is kind of uniquely positioned to be able to drive workflows that cross both of those. And so you can let design decisions and design scenarios affect planning and then even take the results directly out of a design scenario and run planning scenarios and vice versa, take results out of planning scenarios and drive design scenarios. And it really gives you a holistic look that has not really been available before in order to just make better decisions.
Joe (08:21):
So it seems to me sort of having that unified vision, knowing that it’s the same language being used, you’re not having to hand anything off, there’s no sort of transition period between GAINS and another planning solution for example, or a GAINS solution and a GAINS design that’s sort of the similar language, similar philosophies running through that. Do you find that that just sort of makes things go smoother?
Matt (08:48):
Yeah, 100%. It really helps drive the interaction points. So a company that does both is kind of uniquely situated to be able to speak both languages, to understand the pain points in both problem solving paradigms and really get at what is the value add of being able to do both and being able to consider both in one continuous workflow.
Joe (09:12):
So it’s sort of like working on an old car, it makes the most sense to buy the parts that are going to fit ahead of time so that if you get an aftermarket part or a third party part that you may not know that they line up exactly as they need to be. There may be some adjustments, but if you’ve got somebody doing your planning and your design, then you know all the pieces fit together. Would you say that’s fair?
Matt (09:35):
Yeah, absolutely. It would be like I can make assumptions about how I would operate a potential new network at a high level, how the replenishment would happen, how the inventory would happen, but until I actually have that network and then have it all set up in my planning system, I’m not going to know whether those assumptions that I made on the design side are going to hold.
Joe (09:58):
So you had mentioned modeling when we began to talk about this. Can you tell me a little bit about that? I know modeling sort of from, that’s how you would take a look at a map and stick pins in it and say, this goes here and that goes there. Or am I oversimplifying?
Matt (10:12):
I mean, a map is a good example of a model. So just like you’ve got a little circle on a map that represents a city in our design software, you would have a record in a database that would represent a site or a distribution center. And so we provide a very flexible but easy to learn way to model your supply chain in our system. And so that you’ve got things like what sites do you have active, what customers do you have active, what products are flowing through your network? Things like bills of material, how are products getting made, where are they allowed to get made? And then detailed constraints about your supply chain. So if you’ve got different modes of transportation, maybe you might say I have to have a certain amount of volume aggregated on a transportation lane in order to be able to make use of a full truckload mode or a rail mode or in a similar vein, you might have a customer that and that this customer really can only afford to be served by a single distribution center.
Matt (11:11):
They can’t be getting multiple trucks a week from different distribution centers. So you can very easily make a constraint that says, this customer can only receive from a single distribution center. That’s what we mean by modeling your supply chain. It’s modeling the physical infrastructure and it’s modeling the actual constraints that govern how products flow in your supply chain. And then it gives you the ability to toy with that. So adding facilities, the potential to add new facilities, the potential to break constraints and see how impactful is this constraint on my cost structure? How is it impactful on the risk that I overall have within my supply chain? And so there’s broad flexibility there in how you set up your supply chain and then how you ask questions of your supply chain afterward.
Joe (11:54):
So if I’m getting this right, supply chain planning versus supply chain design, right? Supply chain design, I would set that up ahead of time and say, I want my distribution network to operate like this. My supplier sends stuff by rail to my main distribution hub. I then break that down and put that on trucks and send that to the various regions that I serve. And that’s sort of how it operates. But then supply chain planning would be if there is a sinkhole that swallows up I 75, then the supply chain planning is like, okay, how do we reroute around that? How do we make changes around that
Matt (12:33):
Within the given infrastructure.
Joe (12:35):
Within the given infrastructure, right? o it really is you build this infrastructure and decide what goes into it, then you hit the gas and it starts running, and then you plan throughout to, if problems arise, that’s the planning part, but the design is this is how it’s going to operate ideally.
Matt (12:53):
Yep, exactly. And then there’s a little bit of interesting interplay because I think on the planning side, you’ve got that ability to say, oh, if a problem happens, what should I do – to a point? And then I think a very common use case in the design world is also is much bigger scenarios than that. So not just a sinkhole on 75 and I need to figure out how to reroute that, but it’s like if a hurricane hits my import distribution center on the east coast, how do I completely serve customers from a different way than, I can’t serve from that distribution center? I have to get it from somewhere else. So a very common use case in the design world is those policies of, if something major happens and there’s a major disruption in my supply chain, what plans can I have in place ahead of time to combat those major disruptions, port closures, hurricanes, things like that.
Joe (13:47):
So it’s kind of like a fire drill if something goes wrong, this is what we will do in the event of this incident. That’s supply chain planning. And so supply chain design would be, if there is a fire, we’re all going to meet at this place. So pick up your laptop and your house keys and walk to X. That’s the design.
Matt (14:10):
The actual detailed execution plan is going to be in the planning side, but the high level of like, oh, we lost a building, generally how do we serve customers now that we’ve lost this building? What’s the cheapest alternative backup plan at a high level? And then if that disaster were to happen, then you’d switch on those service lanes and then your planning system, once those service lanes were activated, your planning system would tell you detailed execution policies.
Joe (14:43):
That makes a lot of sense. So modeling is a big part of it. This all sounds really, really complex and it sounds really involved. So in your opinion, if I were going to start this process, where would I begin? Would that be calling you?
Matt (15:01):
Yeah, absolutely. I mean, my email’s always open, LinkedIn’s always open for people wanting to reach out that way. But going through gainsys.wpenginepowered.com, there’s a lot of ways and options for you to engage with us, and it’s as simple as do you have some data? Do you have someone who can explain the data? And we can partner right there with you to start that journey of building a model and moving forward to gaining insights about your supply chain.
Joe (15:26):
So Matt, you said that you had co-founded your own company because you were able to offer something that wasn’t being offered in the market. So you saw a need. And what was the need that you saw that made you decide like, okay, I need to take a different approach at this.
Matt (15:43):
Yeah there were a couple. First of all, and probably most important, it was just the companies that were out there providing service in this space were big behemoths and they just had a software and they’d sell it to you and they weren’t too bothered whether you bought it or not. And the service kind of reflected that. And so this is a space where it takes some knowledge in order to operate these things. And as you’re trying to build competencies, as you’re trying to maintain competency across your team, over time it was very clear that there was a lacking of a company that would help bridge that gap. And so that was one. And the other one was just on the technology. The companies that were existing and out there, they were built on older technology. There’s been a lot of advances in the last 10 years, especially in the space of cloud computing. And so being able to really redesign a design solution from the ground up with newer technology, but also keeping in mind that we wanted it to be a user-driven experience, a modeler-first approach is kind of the ethos we use. And those were the two main driving factors.
Joe (16:56):
A lot of what we see a lot in supply chain that sort of set it and forget it mindset, we have a software, go ahead and design your network with it and we wish you the best of luck. As opposed to if you have questions, we’re here, if you need to make adjustments we’re here. That sort of thing.
Matt (17:11):
Exactly. Yeah, exactly.
Joe (17:13):
Oh that’s great. The more I learn about supply chain and the way that the supply chain industry operates, there are so few organizations that partner with you sort of sit down and like, Hey, we’re in this together. We’re offering a level of service and personal attention that you don’t get from just clicking the help chat in your software or the question mark icon in the upper right hand corner of your ERP.
Matt (17:36):
Yeah, absolutely. It’s one of those spaces where once you have people who can do it, the more people learn about supply chain design, the more valuable they become outside of the realm of supply chain design because having people who understand that holistic, how the supply chain operates and the main cost drivers and service drivers end-to-end across your supply chain, that’s the kind of things people learn when they’re doing supply chain design in earnest, and that makes them very valuable in all places across supply chain. And so the personnel issue is one that has plagued the space and will continue to plague the space.
Joe (18:17):
Oh, yeah. Well, that’s one of my favorite topics to labor and supply chain, and so I think I’d love to talk about that with you at a future date. But I want to thank you so much, Matt Morgan for coming and joining us here on GAINS On, I learned a lot. I hope everybody else out there learned a lot too. We look forward to hearing from you soon.
Matt (18:34):
Appreciate it, Joe. Pleasure being on.
Joe (18:36):
And there we have it, folks, your crash course and the importance of supply chain design. This week we learned from Matt that supply chain design isn’t just for newcomers building their supply chain from scratch. It’s an ongoing process, more like a living, breathing, evolving organism, and that good supply chain design can be a game changer, whether you’re dealing with where to place your next distribution center, figuring out the most efficient sourcing options or adapting to challenges like the next supply chain crisis. From reducing costs to increasing efficiency and profitability, a well-designed supply chain is not an option, it’s a business imperative. A hardy thank you to Matt Morton for demystifying what often seems like a tangled web and showing us how supply chain design can make your operations efficient, agile, and resilient in the face of risks and uncertainties. For those of you who want to nerd out even more, make sure to check out our accompanying blog posts for a deep dive in today’s topic.
Joe (19:34):
Trust us, it’s worth the read. Thank you as always for joining us today. Remember to keep learning, keep questioning, and remember in this rapidly changing world, we’re all in this together. This is your friendly neighborhood podcast host Joe Davis signing off from another episode of GAINS On. Until next time!
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