Stuart William was in one of my former MBA classes at NC State in 2008, and graduated into one of the worst economies ever in May of 2009. Upon graduation, there simply weren’t any jobs available at all! During that period, he networked with as many people as possible, including a fund raising arm at Wake Tech. He met a colleague who worked at Car Quest, and after several interviews, started there. He started in supply planning, overseeing over $100M of spend in batteries and other categories. He then went into global imports for the central purchasing group in Raleigh . He became a director at that point, working with sales planning, inventory planning, and financial planning, and pulling together the Sales and Operations Planning team, as well as introducing new products and eliminating obsolescence. This was a lot of planning, a lot of analytics, and a lot of work. At that time Carquest went up for sale, and this led to a position at Marsh Furniture.
Marsh did not have centralized approach to supply chain management. One of their HR people reached out to me (as they already had a relationship with our Forest Products College), and I put them in touch with Stuart. This was a new era for Marsh, as it involved moving towards a much more centralized approach to SCM.
Marsh is a 110 year old company, with the 3rd generation of leadership. The are a regional make to order kitchen cabinet manufacturer, and have two primary sales channels of modular kitchen and bathroom cabinets. They have 5 MFC retail outlets, and a dealer network. Their primary customers are single family homes and multi-family homes.
During the boom time Marsh had sales in the triple digit millions. But because of their less mature supply chain organization, the net income percentage was in the low single digits. A lot of companies no longer exist in High Point because of the housing crash. In 2009 it lost two-thirds of their sales – and lost money for four years in a row. The company had invested and saved well – they owned their factories and equipment – and had a rainy day fund to make it through. They went from 1000 employees down to less then 300 – and a lot of people lost jobs, but they were able to survive.
In 2013 housing began to come back, and survived. By 2014 and 2016 revenue was back up to almost its previous high point. This also led to new product offerings to survive, including more styles, more product offerings, and greater value. The company grew at an enormous rate of 30-35%, through overtime and labor increases. There was also a transformation in operational flow and how we operated our factory. In 2013 we had $8M of raw material inventory – due to poor purchasing, poor safety stock decisions, and a lot of WIP in the system. Today, we are at 5.5M in inventory, and well over double the sales volume.
Kitchen cabinets are simple – but there are 5 species, 20 colors, and 6 glazes, 30 door sizes, 3 overlay options – which leads to 2500+ cabinet configurations, as well as 7000+ accessories (panels, moldings, etc. When you throw in multiple hardware options, and multiple case construction options, you have the opportunity for a lot of excess inventory to build up in finished goods. In the last year, Stuart has disposed and destroyed all that inventory and taken it off the books. “We would never move that material!”
Stuart discussed the need for a supply chain Swiss Army knife skill set. On any given day, he has to pull one of many tools and skills to deal with the problem du jour. Relationship management, data modeling, problem solving, sourcing analysis, negotiation, data-driven decision-making, metrics development, forecasting, process flow, BOM understanding, MRP/production schedule, Pareto analysis, and information presentations are all key skills that he applies in his CPO role . In short, he has to be able to “figure stuff out” using whatever tools he has in his Swiss Army knife. In supply chain, you can focus in procurement, sourcing, inventory control, logistics, and other off-shoots that occur on a daily basis. The basic approach is to first try to understand what went wrong, and how to fix it. This means having a broad understanding of a number of different supply chain tools and concepts and being able to pull them together to apply the tools to the problem on hand.
Stuart described a great example: “We had a supplier in Myrtle Beach that got hit by Hurricane Michael last week – and we receive material from them every day! But we didn’t more then 2 days of inventory onhand, as we receive daily deliveries by truck. They had both their phone line and internet knocked out. So how am I going to place an order? We have a truck that runs every day – and can we send a thumb drive so they can scan what they are sending us? So we figured out to go to a server – and coordinate with a local lumber mill that did have access to internet nearby, to figure out what we need in an Excel format – so it could be printed out in a format to use. And we had to coordinate with the general manager at the mill that has connectivity who can get it to him! How is the information going to flow – and how much do I need – and how much inventory do I have? We have a secondary source but can’t turn in less than 5 days –and we will run out before then! So that is what I did and recrafted the plan for tomorrow morning. The GM will run over at lunch time and get them the information so they will know what we need, load their information on the thumb drive, and get it back to us with the shipment!”
This is just one of many great examples that illustrate the need for multiple skill sets in supply chain managers that requires a ton of different capabilities. You have to be able to justify assumptions, and be able to defend them appropriately!
Stuart also discussed the importance of using scorecards with their suppliers to establish performance expectations. This dovetailed nicely with the MBA class assignment that involves a supplier scorecard assessment – and his description of scorecards as an essential element of long-term relationships rung well with the approach that students are currently working on in their take home midterm. Thanks Stuart!!