Whitepaper: Making the Case for Continuous Inventory Right-Sizing

Brian (00:00):
If my prior conversations with today’s panelists are any indication, this should be an entertaining and informative webinar, and I’m glad you’re able to join us today. My name is Brian Strait, and I am editor-in-chief of Supply Chain Management Review, which is part of Peerless Media Supply Chain Group. And I’ll be your host for today’s session on Supply Chain Decisions: How to Drive Results not Disappointments. Today’s event is sponsored by GAINS. If you thought the digital twins, S&OP or extensive digital transformations are the answers to your demand, inventory and supply issues, you may need to rethink your supply chain strategy. Today’s guests are here to explain how inventory intensive companies can become more flexible, adaptable, and achieve better performance in just months. But before I introduce today’s guests, I’d like to go over a few housekeeping items. All attendees are in mute mode.
(00:46):
Everyone will receive a copy of the white paper, Making the Case for Continuous Inventory Right-Sizing, but if you can’t wait for it, it can be downloaded from the resource window at any time during today’s event, and it’ll also be available via QR code at the end of the presentation. Also, you may submit questions at any time during the event by using the Q and A text box on your screen. We will attempt to answer the questions as we go, and also at the conclusion of the event should time permit. So get those questions in. Now let’s get to it. Today’s speakers include Art Mesher, a former Gartner analyst and founder of its supply chain practice. He’s a recognized supply chain thought leader and author of the industry framework, the Three Vs of Supply Chain: Visibility, Variability, and Velocity. Art also founded and launched Integrated Logistics Strategy Services at Gartner.
(01:35):
Today, he sits on the board of directors at GAINS and is the executive director of GAINS Labs. Joining out on the panel is Evan Burgstaler. Evan is Senior Vice President of Global Sales Operations for Banner Engineering, a worldwide provider of solutions for industrial automation. Over a 30 year career, Evan has been involved in product development, plant management, supply chain, quality management, and planning and sales functions. And finally, Dave Shrager, President of GAINS. Dave has more than 20 years of supply chain and enterprise software experience, and has held leadership positions with Coupa and Oracle in addition to its current role with GAINS. To all our guests, I say welcome. And Dave, let me turn the platform over to you.
Dave (02:12):
Great, thank you, Brian. It’s a pleasure to speak with you all today and Art and Evan look forward to this dialogue. So Art, you know, I was thinking back, it was 1998, so 25 years ago you published the Three Vs Visibility, Variability, and Velocity. And, and as we were preparing this discussion today and talking with Evan and their journey with Banner, really, really excited and intriguing to look at how what was published 25 years ago still has an extraordinary relevance in today’s business. If you don’t mind commenting there, Art.
Art (02:44):
Yeah, sure. Thanks Dave. Banner’s just such a great story. You know, 25 years ago when I was, you know, trying to pen this piece for Gartner, I wanted to create something that was, you know, seminal, anthemic, something that would stay the test of time. And I guess 25 years later, we might have got that one pretty good. And it was an anthem for the industry that would really be adopted by everybody. You know, like ERP was, you know, Gartner invented ERP, and you know, the next morning Oracle announced that they were an ERP vendor, and then SAP announced they’re an ERP vendor, and then everybody became an ERP vendor until it was more cool to become a supply chain planning vendor. But you know, the reality is that I wanted to create something that everybody could use.
(03:37):
And here was the issue is everyone was looking at supply chain as a cost, and everyone was looking at, you know, how do you reduce costs? How do you reduce costs? And you’re, you know, I’m like, well, you know, it’s not, you know, total cost of ownership that we should be looking at within the network. We should be looking at total cost of opportunity. We really gotta change our lens from how to save money to how to make more money, and how we can, we use supply chains to make more money. And when we used supply chains to make more money, it changes what matters. So if you think about what was going on when everyone was thinking about costs, everyone was trying to simplify, let’s go standardize with an ERP vendor. Let’s simplify our business processes, and, you know, let’s get rid of variability.
(04:24):
Let’s try to eliminate as much variability as possible and have everything be as standardized as possible. But the reality is if you really wanna optimize the opportunity to make more money, you need to embrace variability, and you need to harness visibility, and you need to compete on velocity. And many companies fail to harness variability, and they don’t even understand the notion of competition with velocity. And when I hear Banner’s story and I hear what they do and their competitive advantage and where that comes from, and how they use that to drive revenue in their supply chain, you know, they’re just, it’s such a quintessential example of, you know, what I was talking about 25 years ago. And it’s just great to see. And for those of you who are about to hear Evan, you will notice, maybe, that Evan and I have the same accent.
(05:25):
They call that Minnesotan. And, uh, you know, so Evan is Minnesotan and I am Minnesotan, and we’re both Vikings fans. So we apologize for all of that upfront. It is totally coincidence though. But it’s a great story. And, you know, they, they use supply chain to compete. They don’t look at it to lower costs. They look at it as how does it drive revenue? And it’s all about speed, and they’re very successful. They’re a mid-market company that that goes up against Goliaths and beats ’em every day because they’re quick and they’re nimble and they’re extremely well run. So with that backdrop, you know, I think, you know, I think you got a lot to learn from Evan today. He’s got a great story, and look forward to having him share it with everyone.
Dave (06:18):
Sure. So to give a little bit of a handoff then for Evan and Banner Engineering in particular, you know, as I, Evan, I remember talking to you a number of months ago in the original discussion around, you know, what you were looking to accomplish, how you were looking to get there. And this session really was titled How to Drive Results and Not Disappointments. And you get a lot of things a little bit different from what we see in the marketplace in terms of being ready to embrace technology, but technology and a relationship with that vendor being only one part of the equation. Do you mind sharing a little bit of the perspective and the background of, of how you started this initiative and your journey to compete more with velocity in regards to your supply chain?
Evan (07:02):
Sure. Thanks Dave. Yeah, when we started our process into looking for a platform to assist us in what we were trying to accomplish, which was forecast demand planning, you know, inventory optimization and other things, you know, in that area, we started out with number one, we fully understood our process, what we were trying to accomplish. We were doing it all manually first. And you learn a lot by doing it that way. Now, certain companies maybe can’t because of, of size, but we were able to do that. You don’t spend a lot of time, a lot of money, trying to figure out a new process this way. We were able to take our manual processes and ensure our data was good, because as everybody knows, if you, if you’re working with bad data, you’re gonna get bad results. We felt very comfortable with the data we were using in our process to evaluate.
(08:09):
And as we went to the market to see what was there for various options, various tools that could assist us in what, in our goals, we were able to very clearly ask questions. Number one, does it, does the processes and what the offerings look like really match up with what we wanted? And were we gonna get the outcomes that we, that we expected? You know, not being beholden to maybe the sales pitch or the marketing information, right? That’s all good and that’s how you learn. But that’s how we set up this whole project to start with. And it’s been very successful.
Dave (08:49):
Yeah. So, you know, leading into our first question that we had today as we were talking as a group and planning this session, know how are companies thinking differently about supply chain decisioning in order to adapt to the changing marketing conditions? You know, Art mentioned this at the beginning and one of the admirable things that we learned more about your business and candidly, how a mid-size business really takes on companies much larger and delivers a higher outcome for its customers, better service, is extraordinarily well run. You know, your world has changed a little bit in the last few years and the last I checked, world conditions continue to change every single day. You know, how have you thought differently about the way you compete today versus what you looked like five years ago and the systems and processes you need to support that?
Evan (09:37):
Yeah, you know, and you’re right, this has been probably, like I said, I’ve been in this business about 30 years. This is, this is the most, probably erratic period of time, right? In that, in my career here at Banner. And the change for us is to make sure that what we are doing around our supply chain side, right, our planning, our strategy, number one, has to align with our corporate strategy, right? At the corporate level, you have, you’re working with risk, you’ve got geo geopolitical risk. Yes, you’re looking at costs, you’re looking at service to the customer. You’re looking at where are you’re going to manufacture to service those customers. All those things come into play. And to ensure that you have continuity in the decisions that you’re making at the supply chain group level, if you’re not connected to that corporate level to make sure you’re going in the same direction, we were lucky enough to have that kind of communication, that type of coordination, collaboration, that it allows us to keep the supply chain side going in the right direction and being a part of what our competitive advantage is. Because supply chain is a piece of it all, is what it is, right? And we just have to make sure that it has an aligning strategy to the rest of the company.
Dave (11:06):
It’s, it’s really interesting in just listening this and Art tying back to, you know, supply chain being often viewed as a cost rather than as a competitive advantage. And to hear how Evan and Banner have leveraged not only the competency of supply chain, but the tools. Art, you talk regularly about variability and companies either embracing variability or candidly running away from it. You know, how do you think companies have adjusted in the you know, last few years as it relates to an extraordinary amount of variability? Have they gotten better or have they really retrenched back in, and run away from variability?
Art (11:45):
Well, I mean, it, it depends. You know, you had some people running around telling all the CPG companies to reduce their SKUs, and then God made the Kashi Bar, and then someone made something with sunflower oats, and then somebody made something else without milk, and then somebody put your picture on an M&M. So, you know, a personalized M&M kind of went the opposite of reducing SKUs, and people learn that personalization and speed of new product introductions matter. COVID created a couple buzzwords. One was resiliency because the supplier that you were counting on couldn’t deliver. So you need, so you know what resiliency means? I think Evan will attest to this. It means you better have three suppliers instead of one. I mean, you know, we don’t have to get into a bunch of complex mathematics on forecasting allocation, stockouts and supplier availability and constraints and factories, and, you know, we can play a lot of math games around all of that, but you know, what have alternative supplier two and three is not a bad strategy and maybe a little less math.
(12:52):
But then that requires a different flexibility around engineering and quality. And, um, but I think that, you know, there is an advantage that comes from those that can compete with speed and velocity. The question is where and how. So I think, you know, maybe I’ll ask a question to Evan, which is, if you look back five years ago, how would you compare your time to new product introduction or your time to develop aftermarket support products? How would you compare that to today? What is different on your velocity as it relates to either getting a new product into market or creating additional products and services around an existing product? What’s changed for you guys?
Evan (13:45):
Well, I think what has changed, of course, was what the pandemic caused with the huge run up in demand in many areas servicing different parts of, you know, serving basically a different economy, right? I mean, all of a sudden you have all this influx of money that’s being spent on different products that people want creating all kinds of demand, all kinds of manufacturing pressure. But what has changed for us is we have been able to truly use speed in design and differentiation of product to capture that surge in market that happened, right? Well, why would you change back once you’ve figured that out, right? Our design velocity is absolutely a competitive advantage. There’s no doubt about that. And we are set up to continue on with that. There’s just no reason to change back, but you’re right about the piece that the rest of the company has to flow with it, right? You can’t have one group running at a hundred miles an hour and the rest of ’em at 30, that that just isn’t gonna work. You’re gonna have a train wreck eventually.
Art (14:58):
I say you can’t jump on a treadmill running when you’re standing still.
Evan (15:03):
That’s right. That’s exactly right.
Art (15:04):
Creates a problem when you get on.
Evan (15:05):
There’s lots of videos out there that show what shows what happens
Art (15:10):
Or dogs.
Evan (15:12):
Yeah, exactly right. So, yeah, I mean, it happens. It’s driven a lot from the product development side, but once you start forcing things through the pipeline at a much higher rate, everyone has to react differently. You have to re-look at your processes, you have to re-look at your standards of what you thought was the right way to do things before, and you throw ’em out the window and you start over again. But if you’re not doing that, how can you ever get any better?
Art (15:41):
So Evan, it’s interesting because, you know, a lot of people wake up every day and just say, I have a demand problem, and I wish I could just figure out, I just gotta forecast better. And you, you guys have figured out, no, it’s really a supply issue, and how do you really create speed of new products is not about forecasting, it’s about supply and supply management and design, and yeah. You know, the industry likes to talk about forecast, forecast, sensing, blah, blah, blah, and you guys kind of like reject that. You’re like, no, wait a minute, you know, we’re about taking components in supply and making really cool stuff for people and making sure we can do that with speed. Very different from, you know, the forecasting noise. So maybe some, how do you, how do you keep everyone straight when they pick up a magazine and read AI demand planning, and how do you get, you know, your organization focused on what matters?
Evan (16:36):
Well, and I think what I’m gonna go back to the question Dave asked is, what are you trying to accomplish? Because if we keep our eye on the ball of what our strategy is, how we want to compete, we are constantly looking for ways to enhance that. Whether it is a tool such as GAINS, whether it is of that tool or whatever tool, but we, you don’t allow that tool to control where you’re going and your desired end result is. And I think that’s the key. So we always have people that are looking for the latest and greatest. You have to keep your eye on the technology, some technology, some plates, there’s gonna be something really cool, right? That you’re gonna wanna adapt, or partially adapt, and you have to keep an eye on those things. You have to keep an eye on the new technology, but you can’t stray from the direction you want to go, or you’re gonna look like a frayed-out broom at the end going all different directions, right? And you’re not really going anywhere. So we’ve been very lucky because we’re, well, well run, well managed that, and we have a good leadership team. We help keep ourselves on a straight and narrow and keep us moving forward so we can keep providing new opportunities for customers. You know, solving problems is the name of the game, right? Helping our customers become more efficient, add value to their process, and that that’s how we do it. That’s our success.
Dave (18:04):
Yeah. So I changed the slide as we were talking because, you know, this idea of, of achieving performance faster is, is not just about the systems, it’s about, it’s about an organizational culture that drives rapid decision making, that drives collaboration. But candidly, as Art you articulated a moment ago is focused on the issues that matter. And in, so, you know, Evan, in your example, when we spoke earlier, and I do recall this from the past, you were very well organized as you began this. You had your data organized, you understood what you were trying to accomplish, you understood supply chain as a, as a competitive advantage, not just as a cost and a, and a must do, but a need to do to win and compete. You know, not everybody, not everybody gets to that same understanding as they go into these projects. You know, now that you’ve, not only gone through the, the process of identifying competitive advantage, but then bringing in technology and starting to execute on results. What would you recommend in terms of other companies that might be participating today? The things that they could do to help achieve performance faster?
Evan (19:12):
Well, if, if we focus that on the supply chain side to, of course, to start with is when we’re, when you are looking at products and iterations of products, you have to consider your, the effect that your supply chain has to be able to keep up with you, number one. And Art had mentioned, yeah, you, you, it’s pretty tough to be single sourced now in, in our world, right? With electronics and various things. Sometimes you kind of are single source, do you, you use certain components where, yeah, somebody has something very unique and you utilize it and you go, so you try to minimize that as much as possible. And you deal with that with all your typical, you know, supply chain planning things and parameters. You deal with it that way. But when you’re looking at your supply chain in general, you’ve gotta look at who do you want to do business with and do they fit the model that you need?
(20:07):
In our case, they gotta be speedy, they gotta be able to react like we can react, they gotta be able to change, they gotta be able to handle a ton of variability in components, right? We’re not just gonna give you something and you run 500 million of them and you’re done, right? That’s, that’s a model that some, some suppliers like, and that’s all they like, but that doesn’t fit, you know, every customer in that particular case. So we have to kind of balance speed of that supplier, quality of that supplier, cost of that supplier, and then we, you gotta consider the geopolitics, you gotta consider location and all those various things. That all then allows us to be able to say, Hey, we can rely on our supply chain to keep up with the rest of our business. And that, that’s how you become successful. In my eyes, you’ve gotta have that piece really running well and in alignment with, uh, the rest of the organization, namely, you know, design and on the design side. So,
Art (21:09):
Yeah. Sorry. Well, I was just gonna say that it seems to me that one of the essences is that there is this high degree of self-awareness within Banner. It knows who it is, it knows why its customers do business with them, it knows what it wants out of its suppliers. And it has a high degree of self-awareness, that I, must say I don’t see a lot. I mean, most of the time, you know, the phone call I get being the ex Garner guy is, Hey, we wanna pick a vendor, who should we go with? And the first question I say is, well, what’s your strategy? And they’re like, well, what do you mean? Uh, on time in full? Uh, you know, uh, uh, uh, we need, and, and here you have a very high degree of self-awareness. And I guess the question is, how did you get there? I mean, you got a CEO who woke up and got hit over the head, that supply chain matters, or did you know, what was the effort? What did it take Evan to get this kind of corporate wide awareness of what really mattered here? Because I do think it’s unique. I think there’s probably people on the phone saying, I just wish everyone in my company realized why this mattered,
Evan (22:31):
. Well, I think it comes with the, the origin and the history of Banner. It’s always been a design. It’s a, it’s been a product based company, right? We’ve been trying to solve problems since the, the owner of our company, very founder, Bob Fairfield, started, and he’s a designer, right? He wanted to solve problems for customers, right? So that when you take that piece, and that’s kind of what drives the company as a product development engine, right? I think that changes your focus. There’s a big difference between that and a marketing company, right? I mean, there’s just two different things.
Art (23:10):
Yeah, for sure.
Evan (23:12):
So we’re just on the other side. We’re on the side of, we understand what our customers are looking for, what problems they’re trying to solve, and we’re trying to help them solve them easier, better, faster, cheaper. That’s, that’s what it comes down to. And thus, how do you then find those problems and those customers? Well, you also got, you wanna solve ’em some product, right? Well, if you don’t have the product, you need to get it there very quickly, right? You wanna, you want to take advantage of the opportunity before the competition finds out, figures it out, right? And jumps in there someplace along the way. So you, you have to build that into your process that you’re that agile, you’re fast. And again, as you back all the way through, you will be none of those. If you’re not aligned from the bottom up, you know, and all the things that make, you know, supply chains through manufacturing and, and right out go it, you know? And what does that also mean? That also means, you kind of talked about it earlier about variability. That means we’re not afraid to have different iterations and models of products, right? That fit different applications, different customers, various things like that. Now, every manufacturer out there knows, I would just love, I wish I had one model I could turn the machine on and just let it run. And we just sell that model, right? That’s what everybody wants. That’s the holy grail.
Art (24:32):
And the replacement screws
Evan (24:34):
exactly , and it doesn’t happen, right? So you have to then be good about how you handle variability all the way through the process, how you build, how you design product, build, building blocks, various things like that to keep your efficiencies up and all the other things which helps your supply chain sites, helps your supply chain plan planning also helps your forecasting side and your demand planning side. So you can’t talk about one piece of the chain without talking about the rest in my eyes.
Dave (25:10):
Yeah. Evan, working with you as, as the, the opportunity to partner with you on this project. One of the things that we clearly notated early is, is how well organized you were. And, and sometimes you see that, but other times you don’t. And it’s refreshing to understand and work with a company such as yourself that is very focused on understanding that the outcome isn’t, um, back to, do we forecast better? Do we plan this better? Do we plan that better? It’s the inner relation of all of these different actions. One comment, and this is more for the audience in general when we talk about speed, is as Evan and his team were extremely well organized when we began to work with them both, not only from a process and competitive understanding of their business, but from a data understanding. I know not all of you have that same opportunity.
(25:57):
And, you know, every client’s a little bit different. But one thing we certainly learn, learned as a vendor working through this implementation is that when you have the right partner, both from a customer and vendor relationship, you’re organized around the problem, you have a reasonable understanding of your data, and there’s a team commitment to get done, get that done efficiently, that you can go quite, quite fast and quite effectively. So not only have you driven speed throughout your own organization, in all candor, thank you for helping us drive speed in this actual implementation. It’s our team in particular, you know, we always of course, do, you know, check-ins throughout the process. Technology goes in, sometimes it goes in perfectly, sometimes it takes a little bit longer. I think our team’s perspective of this project was you, was that you were extraordinarily well organized.
(26:44):
And I think that organization is one of the things that led to speed. So, you know, one of the questions we had as a team was you know, when we talk about the opportunities that come with technology and automation and decisions that could be made for you versus the people and the process and the personal interaction that needs to be included in the process. You know, do you have a perspective on automation now that you’re further along and many of the decisions that you might have had to put your hands on in the past are different? And I want to, I want to make one comment. You said this a moment ago at the beginning of the session, which is some of the companies on this call may not have, they might have bigger solutions, they may not have the opportunities to start from scratch.
(27:29):
Our experience still is, you know, 30 years into supply chain planning technology or 25 years now into supply chain planning technology, that the biggest planning technology in the world still is Microsoft Excel for a lot of organizations, , particularly the larger ones, and, and who might have ERP systems and are trying to plan their business at adequate speed, but are really held back. So now that you’ve gotten further down in the journey, you know, what is your perspective on the trade off between the decisions you are removing from your day-to-day people interaction and the need for your folks to always have their hands and pulse on the business and improve how you interact with your customers and win business?
Evan (28:11):
Sure. Well, the, the place for the, the person, you know, the personal interaction is absolutely in my view as supplier, locating and building a relationship, owning that relationship, managing and maintaining that relationship, right? At some point people have to make decisions. The machine’s not gonna make a decision on, boy, that supplier just isn’t cutting it, right? I mean, you have to have that person doing that work. That’s, that’s my view. Where we want to be able to automate is, is just at the transactional level, right?
Art (28:50):
PO automation, workflow automation
Evan (28:52):
Yeah. We go from point A to point B to point C. Yep. Uh, yeah, we don’t need a person to do that. Yes, person, you can check the exceptions. We want you to deal with the exceptions in the process, and that’s where there’s some value. That’s where you can spend a lot of time and a lot of money trying to automate that part of it where there’s just, there’s not that much return. That, that’s, it. Just, that’s where you get into the, the deep pockets part, right? Where you go down the rabbit hole and you can no longer find your way out on some of these projects. So you’ve gotta be very careful. We don’t get into that. And we’ve been very successful where we’re placing automation in places where, where it makes complete sense, but you have that backup of the exceptions that the person can handle. Because you can train them, you can talk with them, they can understand your strategy. To build that all into some automation is very difficult and very time consuming, and not adding really that much value and not growing your business because of it, right? You’re, the whole goal here is to grow revenue, right? Grow your business. And that doesn’t necessarily lead itself to that.
Dave (30:15):
So it sounds like leveraging automation to take the manual day-to-day non-value added interactions out of the, out of those people’s times and really focus them on what matters.
Evan (30:25):
Yep. You know, the other, the other piece around the automation that allows is where you can be in a kind of a continuous mode. So we talked a little bit earlier about, you know, S&OP and we were kinda laughing about, what do you call it? S&OP or SI&OP and this and that. But, you know, it’s a formal process. You could say that, you know Art you kind of said, well, yeah, maybe it’s a little, you know, sometimes outdated or this or that. But what it really is, is it creates a continuous flow of communication, points of decision, points of review points. That’s really the goal of it, right? Right. If you don’t create a cadence of some, some method, you’re going to not, you tend to, it’s really easy to say, well, we’ll get to that next month.
(31:14):
Right? Right. Well, all of a sudden you got months down the road and you haven’t done and reviewed the data and where you’re going. So that’s another piece that the automation allows us to kind of make this a continuous cycle of what we’re doing here. And you don’t just have a start point and an end point. It’s just this continuous circle just continuing going around and around. And that’s where we see the benefit in the platform, you know, in the GAINS platform that, you know, working with Dave, you know, you and the team, and that, that’s where that value is seen on our part for sure.
Dave (31:51):
So Art do you have any interesting anecdote around S&OP and some stories from the past? I’ll get out of the way, if you don’t mind sharing that with the group.
Art (31:59):
Well, look, I mean, you know, S&OP is what it is. It, it collaboration is great as long as you’re not collaborating over a bunch of bad decisions. Um, you know, and the network has, the network matters, right? So, you know, like S&OP is really good, but it really doesn’t address design scenario planning is interesting, but most today’s scenario planning really ex accepts a network as defined versus using any other network or any other rental network or, you know, today’s networks, you don’t have to go build things with real estate. You can go get a virtual network overnight on almost anything anywhere. And, so, you know, I kind of, I think we all believe that design and design flow and how supply flows from a design level is important. And as many times where S&OP starts somewhere that’s long after those decisions are made. (33:04):
But if you really wanna optimize your supply chain, that those decisions and policy matter a lot. Yeah. So, you know, we share a vision of, we call it design and planning execution because we understand that plans are constantly iterative. The forecast is only a piece of a planning process. That’s, you know, the S&OP behavior, you know, but we envision, you know, something a little different. I wanna make a comment though, about something Evan said that I think is really important for people to understand, is that relationships are actually the strongest currency of failure insurance. Oh. So you gotta really think about what I just said. But in a marketplace where everything is online, you go buy something and it doesn’t work, you know, only too bad, all right? You go to the store, to the guy you see every day, and you buy something from this guy you see every day, and it doesn’t work.
(34:07):
The guy says, come on in, I’ll give you a new one. You know what? Don’t worry about. It doesn’t matter if it’s on warranty or not. You’re my favorite customer. I’m gonna take care of you. You know, my, my my my my, my uncle owned a steamship line called Salt Chuck, and we sailed containers from Seattle to Alaska. And one day the sea land vessel broke down and was listing, and his customers were calling, and he said, I’m sending a ship out there and I’m gonna go unload all those containers. And I said to him, they’re your competition. Like, let the ship sink for crying out loud, you know? And he said, aren’t my customers have frayed on that ship? Now, they may have made a bad decision to give my competitors some business, but I’m gonna go out there right now and I’m gonna cover his failure because I have a relationship with him.
(34:58):
And then when it comes to allocation next year, I’m gonna stare him in the eye and said, whose relationship took care of you? Where, and what do you have to say about my price now? Do you want me to cover you again, or do you wanna work my price down? So you see the difference between the lowest price and a good price is the failure insurance that comes from solid relationships. And Evan said something else, we don’t wanna just give a manufacturer one item. We want to give them a bundle of items. And that is also about relationships, and that’s also about quality management. So there’s some real things to learn here about what Evan is saying, because the pop press will tell you, you know, automate the supply thing, just go to down some catalog and have some AI system go pick a supplier and send them an order. And this is the farthest thing from the truth in terms of what makes these guys really successful. So I just wanted to add a comment on that. A question has come in about, I see here it says, how do you integrate the corporate real estate departments to support the optimization of supply chain? Um, interesting question. I don’t know, I, I’m jumping ahead a little bit on q and a, but I just saw it come through, so mm-hmm. .
Speaker 2 (36:17):
Yeah. I mean, Evan, do you, in your, in your experiences, have you had to enter into decisions around engaging your real estate department? Uh, you guys are a mid-size company that’s been growing rapidly. Is that, is that entered into your equation?
Speaker 4 (36:33):
You know, um, I would say in, in, well, first of all, in our case, we don’t have a corporate real estate department
Speaker 4 (36:42):
Sure. That’s the very first thing.
Speaker 2 (36:43):
Yeah, exactly.
Speaker 4 (36:44):
Yeah. So, um, and I guess when it comes to, if you’re talking about brick and mortar and various things like that, um, you know, do they play well? It’s about the investment, right? You, you have to invest with these suppliers, you have to be comfortable with the, the business terms and their, their condition and, you know, the credit worthiness and all of the various things that are happening. So, uh, I guess if that’s what the question is, uh, yeah, it we’re, you know, we’re, our finance departments are involved with all the right things, just like any other company, right? You have to, you have to make sure that you’re doing business with people on the up and up. You have to deal with, of course, all of the standards and the regulations, uh, out there about, you know, uh, who they’re hiring and child labor and all those things, which are right, right? You gotta deal with that, uh, and all those things. So that’s all part of the evaluation and the establishment of our supply
Speaker 2 (37:43):
Chain. Yeah, I mean, for, from our perspective, from the gains perspective, we, we do enter into this conversation quite a, quite a bit with particularly our larger customers. And, um, and the answer simply is, is, is yes. How do you do, how do you, and must you, you know this, back to this concept of design and planning execution, often enough, you know, there are decisions made around the network and the capacities and the constraints of the network. And, you know, you think about s and o p and demand and forecast and delivery, and you work with the, in the constraints of the network and this opportunity to continually reevaluate how you flow your products, how you source your products, where you build, how you build, especially in a day and age where you have, um, a much more flexibility than you have in the past to reshape your network, to alter your network, to lease space, to lease manufacturing, to source from additional locations.
(38:38):
There, there needs to be a continual involvement of corporate real estate when assets, when decisions around serving such assets through your own resources or through other parties, resources, um, need to be made. And candidly, the unlock in many of our client’s supply chain is in those strategic decisions, but not only the decisions at a strategy level, but tied into the day-to-day planning. So we look at things with, there’s another customer right now, I, I won’t mention them out of courtesy, um, on this call, but we’re actively looking at a five year plan where they’re considering alternative real estates as they continue to manage their growth, but they’re looking at the flow of product within their organization and how that would affect their day-to-day operational cadence, how they plan their business, how they, how they design their business, and then how the business would actually operate if these outcomes come into play.
(39:34):
And they’re, they’re candidly considering a variety of scenarios, because while they have projections for five year growth, they don’t really know exactly where their land on those projections. So not only understanding how the network should look or how the planning environment would behave, but all of the different continual opportunities that might exist if they were to alter that configuration. So, you know, where does real estate sit in that, generally speaking, you know, in this case, um, they’re considering, uh, investments right now, they’re looking at multiple sites for potential locations, and it’s an active participant, but in this customer’s case, that participant participation is a little bit behind the scenario rather than in front of it. Um, is that a norm? Not always, but we do see that from time to time. So I hope for the individual who asked that question, that helps a little bit. And if not, glad to discuss with you after this call.
Speaker 3 (40:26):v Yeah, there, we, we have, we have a, we have a tool, uh, which is a network design optimization tool, which specifically looks at where should you put your plants and your warehouses, and what customers should be served, and what suppliers should be served out of plants and warehouses, and how to optimize those flows. Um, and when we’re in the capital decision making process in a boardroom, uh, the real estate people are involved. Um, what I would say though, generally speaking, is owning less and renting more is the trend. Um, the di divesting of corporate real estate in order to have greater flexibility is definitely a trend. Um, I, you don’t really have to own your own warehouses. You can go get them if you need to, but if you want tight control over your manufacturing, then you’re gonna own your facilities. Um, but I will also say that almost 50% of all consumer grids are now outsourced to contract manufacturers.
(41:25):
So, um, what you need to own, uh, and how much you own, uh, is changing significantly as we’re able to, you know, rent more work with third parties. You know, the contract manufacturing world is way more sophisticated than it used to be. Um, and that takes the burden off of having to sometimes own things. But there’s a scientific method to understanding this, and there’s a set of tools. Now, we don’t do this for Evan, but there’s a set of tools that you can use to analyze this. And if this is, if this person was asking the question, you know, wants to learn more, Dave, I’m sure we’ll be more than glad to Speaker 2 (42:00): Be glad to follow up after the session. Absolutely.
Speaker 4 (42:03):
Yeah. And what you guys are, what you guys are talking about there, that’s the part where some automation definitely helps, right? Because you have so many variables, right? And, uh, with the technology that, that you’ve developed, that that’s a benefit. There’s no doubt about that. Uh, we have looked at it, just not at that point have, don’t need to go there. We have another focus, but definitely good tools.
Speaker 2 (42:25):
Yeah. And our experience there in particular, Evan, which is, is especially more relevant than with more complexity in the supply chain, is, is not only making the decision of how to flow your product and where to store your product and how much, but looking at that all the time and looking for the, the inefficiencies in the combination of design and planning, and it’s one of the reasons why we’re invested so heavily in, in this segment. It’s a, it’s a very exciting dialogue. Um, and it, and it does take the foundational efforts that someone such as yourself has put in place to start to get your arms around it. But you can attack the problem from either angle. So I, for the individual who asked that question, there’s a few more out there, but I don’t think we’re gonna have time for today. Um, I’m glad to follow up with you afterwards.
(43:09):
Um, just really quickly here, I want to, um, you know, thank everyone for joining us today. And Evan in particular, you know, it’s been a tremendous experience partnering with you in this journey over the past year or so, actually, not quite that much yet, but get, but getting there. And, um, you know, we’ve, we’ve appreciated your willingness to share your story, your willingness to work collaboratively with our team, uh, for the rest of the people on, on the call. I believe you see a couple of things here, which is first off, you know, go ahead and download that, making the case some continuous inventory, right sizing, if it’s a topic of interest. Um, there’s a, there’s a QR scanner here as well. And, um, and with that, we’ll hand this back to Brian and look to wrap up the meeting.
Speaker 1 (43:51):
Thank you, David. Uh, and thank you Art and, uh, David, both of you for your insights and a special thank you, obviously to Evan for sharing banner’s journey with us today. Um, wonderful discussion, great insights. Uh, I hope everybody took a lot away from it. Um, and I think it’s proof that you can drive improvement in your supply chain if you just ask the right questions and approach it in the proper way. Um, as a reminder, as David said, um, all attendees will receive the white paper making the case for fluid inventory right sizing. Um, you can download that right now. Uh, if you use the QR code, that’s certainly on, on the screen right now, um, you can do that. Uh, wanna thank each of you, each of our panelists for, uh, participating today as well as our sponsor, GAINS, and of course, a special thank you for all of you for taking time of your day today to watch. Uh, we hope you enjoyed it. And, uh, I thank you all. Uh, this concludes today’s event.