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Build systems, Not silos · Speaking of Supply Chain

0:00
Speaker 1: Can you create Amazon like delivery speeds without building Amazon
0:04
Speaker 1: like fixed infrastructure? Which is a very hard problem to solve,
0:08
Speaker 1: And now lob in a very tenured industry that is
0:13
Speaker 1: heavily focused on capitalized equipment, and your capacity is defined
0:18
Speaker 1: by the quantity of machines that you have within the building,
0:21
Speaker 1: and we mimic that exact same scale. The question is
0:24
Speaker 1: rarely actually, how do we improve X by ten percent?
0:29
Speaker 1: The question that you're really asking is should X even
0:32
Speaker 1: exist in the current form at its end? I think
0:35
Speaker 1: that what people should take away from that is when
0:38
Speaker 1: you stop accepting industry norms at face value, that's when
0:41
Speaker 1: you unlock innovation.
0:47
Speaker 2: Hello and welcome to Speaking of Supply Chain, where we
0:49
Speaker 2: explore trends, current events, and innovations impacting the logistics and
0:53
Speaker 2: supply chain industries. I'm your host, ellen Wood. Supply chains
0:58
Speaker 2: today aren't struggling because they lack tools. They're struggling because
1:01
Speaker 2: those tools aren't always connected by people who see the
1:04
Speaker 2: whole system. Engineers are often trained to optimize within silos,
1:09
Speaker 2: but what the industry desperately needs are problem solvers who
1:12
Speaker 2: can think across functions, constraints, and stakeholders. Today We're going
1:17
Speaker 2: to explore how shifting the way that engineers have historically
1:20
Speaker 2: approached problems could be the key to building more agile,
1:24
Speaker 2: integrated supply chains. Joining me today is Brent Hagen, a
1:27
Speaker 2: leadership developer and operational excellence veteran, to share some insights
1:32
Speaker 2: that have led to the launch of lob, a company
1:34
Speaker 2: that reimagined the logistics of print and mail.
1:37
Speaker 1: Welcome Brent, Hi, thanks for having me today.
1:40
Speaker 2: Of course great to have you here. I'm excited to
1:43
Speaker 2: get to our topic today, which I think is going
1:46
Speaker 2: to be hugely impactful to the conversation. But before we
1:51
Speaker 2: get started, let's get to know you a little bit better.
1:53
Speaker 2: Our question for today for icebreaker is what is a
1:57
Speaker 2: weird food that you have tried and would you eat
1:59
Speaker 2: it again? Yeah?
2:01
Speaker 1: I think when when I give the answer, your your listeners,
2:05
Speaker 1: which I recognize you know, includes a heavy international audience,
2:09
Speaker 1: isn't going to think like the food itself is that weird.
2:13
Speaker 1: I think the context in which I received the food
2:17
Speaker 1: was was pretty unique, and so my answer is goat.
2:22
Speaker 1: Which goat is served all all around the world, but
2:25
Speaker 1: in this in this specific case, I wasn't prepared for
2:29
Speaker 1: what I was getting ready to walk into So I
2:31
Speaker 1: was in Monterey, Mexico, actually doing due diligence on a
2:38
Speaker 1: manufacturing site that that the company at the time I
2:41
Speaker 1: was working for was looking at. And uh, Monterey, Mexico
2:46
Speaker 1: in particular is very famous for its grilled goat. There's
2:49
Speaker 1: a number of those restaurants like all over Monere and
2:54
Speaker 1: so we we went to one supposed to be one
2:56
Speaker 1: of the best in the city and we sit down
3:00
Speaker 1: and I didn't realize like what cuisine we were going
3:02
Speaker 1: to have, and everything was already set up for like
3:05
Speaker 1: the table of eight.
3:06
Speaker 3: There were large dishes of.
3:08
Speaker 1: Tortillas and beans and rice and all these different vegetables
3:12
Speaker 1: and sauces and stuff. And then I was like, oh, cools,
3:16
Speaker 1: Like are they going to bring out you know, different meats,
3:18
Speaker 1: like very ignorant like fajeta trays for each one of
3:21
Speaker 1: us to pull from, Like what is this gonna what
3:23
Speaker 1: is this gonna look like? And they're like, no, no,
3:24
Speaker 1: it would be like one main dish we all pull from.
3:27
Speaker 1: I was like, oh, okay, And they bring out a goat,
3:33
Speaker 1: the entire goat with its head and everything on a
3:36
Speaker 1: large tray, its feet dangling up in the air and
3:39
Speaker 1: then you just kind of picked off what meat you
3:43
Speaker 1: wanted and served it to yourself how however you want it.
3:47
Speaker 1: And I was just I was just not prepared for
3:50
Speaker 1: it to be served to.
3:51
Speaker 3: Me that way, and it was.
3:52
Speaker 1: It was great, you know, I really enjoyed it, and
3:56
Speaker 1: I would I would definitely do it again.
3:58
Speaker 2: I've had goat before, and I've had but I've not
4:01
Speaker 2: had it served roasted whole like that. I have had
4:05
Speaker 2: both lamb and pig served that way, you know, a
4:09
Speaker 2: full roast, and it's it's absolutely delicious, and it's a
4:12
Speaker 2: unique dining experience that you can't replicate it with just
4:16
Speaker 2: like a chicken. It's not the same thing at all.
4:19
Speaker 1: No, it's not even even close, you know. And like
4:22
Speaker 1: there's certain things that you just expect to have the
4:26
Speaker 1: head served with, right like you order a branzino or
4:30
Speaker 1: something like, I'm going to expect to have the entire fish,
4:33
Speaker 1: you know. I think anybody can think back to a
4:35
Speaker 1: Christmas story when the duck is sitting there and it
4:39
Speaker 1: served at the Chinese restaurant.
4:40
Speaker 2: And smiling at me.
4:42
Speaker 1: He's smiling at me, yeah, and she chops that he
4:44
Speaker 1: chops the head off right there. And goes away like
4:47
Speaker 1: everyone has certain expectations, but if you're not prepared for it,
4:50
Speaker 1: it is just like a Christmas story. It is definitely
4:53
Speaker 1: off putting.
4:55
Speaker 2: You know what mine is is a little similar. So
4:57
Speaker 2: I've I'm a very adventurous eater. They're very a few
5:00
Speaker 2: things that I'm not willing to eat, but I'm always
5:03
Speaker 2: willing to try something. But one thing, and I remember it,
5:06
Speaker 2: and this is this was a first. It wasn't an only.
5:10
Speaker 2: When my parents moved to the South when I was
5:13
Speaker 2: I was already an adult and they moved to southern
5:15
Speaker 2: central Alabama and we went to a crawfish farm and
5:22
Speaker 2: bought live crawfish. And if you've ever been to a
5:25
Speaker 2: crawfish boil or had a crawfish boiled, they're delicious. Obviously,
5:29
Speaker 2: if you like Cajun or Creole cuisine, you might have
5:31
Speaker 2: had crawfish in an atufa or a gumbo. But in
5:36
Speaker 2: order to prepare the crawfish live crawfish for eating is
5:41
Speaker 2: a very unique process and it's it takes hours to do.
5:47
Speaker 2: You wouldn't think it would be that much, but it's
5:50
Speaker 2: it's very involved and so worth it. A crawfish boil
5:55
Speaker 2: is absolutely delicious. But it's one of those things where
5:58
Speaker 2: you know, you have to wonder who the first person
6:01
Speaker 2: that looked at this tiny, little freshwater crustacean and thought,
6:04
Speaker 2: you know, I want to eat that.
6:06
Speaker 1: Yeah, yeah, exactly, Like this definitely feels like it's worth
6:10
Speaker 1: the effort.
6:11
Speaker 2: Exactly. They're so tiny that the reward is so little
6:15
Speaker 2: for the amount of effort that has to go in.
6:17
Speaker 2: You would think a fish or or a goat would
6:20
Speaker 2: be a lot more you know, worthwhile in terms of
6:23
Speaker 2: cost benefit ratio. But the crawfish has its place in
6:27
Speaker 2: my heart, it really does. Crawfish or delicious, Yeah, I agree.
6:32
Speaker 2: So that has absolutely nothing to do with our topic today.
6:36
Speaker 2: Our topic is engineers or you know what, just in general,
6:40
Speaker 2: the supply chain and challenging some very staunchly held beliefs
6:45
Speaker 2: about the way things need to be approached. So you've
6:49
Speaker 2: spent a good portion of your career in operations, driving
6:54
Speaker 2: team performance, professional development, and you know, trying to you know,
6:59
Speaker 2: increase whatever you were trying to do for those companies
7:03
Speaker 2: through your teams. So what types of challenges do you
7:07
Speaker 2: see most commonly in how these these engineers Because you
7:11
Speaker 2: have been working in supply chain and operations. Typically engineering students, graduates,
7:17
Speaker 2: those type of individuals. How did they approach their problem solving?
7:21
Speaker 3: Yeah, I think the most common challenge challenge and again
7:24
Speaker 3: this is in.
7:25
Speaker 1: The framing of like new college graduates, it's the narrow
7:32
Speaker 1: framing in which they will address a problem. You know,
7:35
Speaker 1: engineering grads are generally taught to solve the problem that's
7:38
Speaker 1: put in from front of them right, optimize this line,
7:42
Speaker 1: reduce this defect, improve this throughput metric and they're very
7:48
Speaker 1: very good at isolating those variables. What they have to
7:52
Speaker 1: I think learn over time, and it often involves them
7:56
Speaker 1: having to get into the business in order to do it,
8:00
Speaker 1: is they're not as strong at taking a step back
8:03
Speaker 1: and asking is this even the right problem? And that
8:07
Speaker 1: can lead to you know, even better technical fixes that
8:10
Speaker 1: don't actually that that will move the business even even
8:14
Speaker 1: further forward.
8:15
Speaker 2: That's one thing that at me Boch we're consultants and
8:19
Speaker 2: so that's one of the tenets of what we do
8:22
Speaker 2: is you know, when when someone thinks they have a problem,
8:26
Speaker 2: it really often does take a fresh set of eyes
8:30
Speaker 2: or stepping back away from the problem to really see
8:32
Speaker 2: that bigger picture. Can you think of an example when
8:36
Speaker 2: when one of your students or one of your employees
8:38
Speaker 2: just completely missed that bigger picture.
8:42
Speaker 1: Well, again, I think if you go back to that
8:44
Speaker 1: that throughput issue, right, you tell someone like maybe it's
8:49
Speaker 1: the number of finished goods that need to get out
8:52
Speaker 1: the door. Uh, And they say, Okay, what am I
8:55
Speaker 1: going to do? I'm in I'm going to go to
8:58
Speaker 1: my Theory of Strengths xtbook and say ooh, like I
9:03
Speaker 1: need to fix my bottleneck and I need to improve
9:07
Speaker 1: the cycle time of that bottleneck. And it's like, well,
9:11
Speaker 1: is that the actual problem? Like do you have an
9:13
Speaker 1: appropriate buffer in front of your bottleneck to make sure
9:16
Speaker 1: that your your downtime is minimized?
9:20
Speaker 3: Right?
9:20
Speaker 1: Do you have the within that bottleneck? Do you have
9:23
Speaker 1: the right overall capacity in totality if you improve the
9:27
Speaker 1: cycle time, have you actually fixed the total output? Uh?
9:31
Speaker 1: And then on top of that, again like just starting
9:34
Speaker 1: with that fixed mind, that that fixed point and saying
9:37
Speaker 1: like I need to improve my bottleneck. Well, most traditionally
9:42
Speaker 1: your bottleneck is somewhere within your middle processes like almost
9:46
Speaker 1: pretty pretty holistically, and so what have you done downstream
9:50
Speaker 1: as a result of that? Have you just created the
9:53
Speaker 1: next bottleneck? You know, do you have your staffing balanced?
9:55
Speaker 1: As as a result of that, all of these questions,
9:59
Speaker 1: you know, to have to be asked, how does.
10:02
Speaker 2: This mindset of you know, not taking this problem at
10:06
Speaker 2: face value, and how does that translate into the business
10:12
Speaker 2: and innovation for startups?
10:14
Speaker 1: Yeah, I definitely think that the same concept which we're
10:17
Speaker 1: talking to about the context of an engineer and how
10:21
Speaker 1: they should think have a system's approach to it directly
10:24
Speaker 1: applies to a business as well. You know, it's startups
10:27
Speaker 1: like deliver where we're solving a very specific and very
10:31
Speaker 1: hard problem. On our thesis in that space was cold
10:34
Speaker 1: we create Amazon like delivery speeds without having Amazon like
10:40
Speaker 1: fixed infrastructure, which, as everyone all the way up to
10:45
Speaker 1: Target has proven very very hard to mimic. Right, Walmart's
10:49
Speaker 1: maybe the only use case where they're like, yeah, I
10:52
Speaker 1: think we've got this figured out, you know, as a
10:54
Speaker 1: direct competitor, and now at lob answering the same question
11:00
Speaker 1: in a different industry, which is can we create scale
11:04
Speaker 1: without fixed cost and leverage in hair and technology?
11:07
Speaker 3: So with that, when you look.
11:09
Speaker 1: At those two problems, it's rarely like how do we
11:12
Speaker 1: improve X by ten percent? The true disruptors in the
11:16
Speaker 1: space are saying should X even exist? Because those are
11:20
Speaker 1: the things that are going to accelerate an industry forward
11:25
Speaker 1: and not just accepting some sort of industry norm at
11:28
Speaker 1: its face value.
11:30
Speaker 2: Well, and I see your point that trying to replicate
11:33
Speaker 2: what these giants do. I mean, we're talking about Amazon
11:36
Speaker 2: and Walmart and Target, and that's I mean, these are
11:39
Speaker 2: not startups. These are huge, huge corporations that have the
11:44
Speaker 2: means to be able to try these different things out
11:47
Speaker 2: or do something a little bit differently. But when we're
11:49
Speaker 2: talking about startups like like Loob, you know what other
11:54
Speaker 2: parallels do you see between this approach, this evolution of
11:59
Speaker 2: this approach of of looking beyond face value and how
12:04
Speaker 2: did that influence what you did with LOB and reimagining
12:08
Speaker 2: that print and mail supply chain.
12:10
Speaker 1: Yeah, what's what's interesting is you talk about like finding
12:15
Speaker 1: the right role at the right time for me personally
12:18
Speaker 1: and the journey that I've had and how it supports
12:21
Speaker 1: where LOB is today. You know, I started off working
12:25
Speaker 1: for the Eat Incorporation, a top tier manufacturing company, in
12:29
Speaker 1: a development program where they really taught me how to
12:33
Speaker 1: develop some of the thinking I have today moving into
12:36
Speaker 1: private equity, building first and third party supply chains, all
12:40
Speaker 1: of which lean sic Sigma being a foundation of almost
12:43
Speaker 1: every job that I've ever had, whether I was using
12:48
Speaker 1: those tools or teaching people how to deploy those tools,
12:52
Speaker 1: and then moving into Amazon, where scale is absolutely everything,
12:56
Speaker 1: and how do you automate and standardized processes to the
12:59
Speaker 1: to the degree to where you're measuring things defect injection
13:04
Speaker 1: by the one hundred thousandth of a of a decimal place.
13:07
Speaker 1: So coming into into to LOB, it takes all of
13:11
Speaker 1: those experiences and says like, what do we really have here?
13:15
Speaker 1: LOB was the original api UH in the in the industry,
13:20
Speaker 1: and it's something that that we're very proud of. And
13:23
Speaker 1: what came as a result of developing that API in
13:27
Speaker 1: a venture backed environment was saying like how do we
13:30
Speaker 1: keep fixed costs down? So they a very robust third
13:36
Speaker 1: party manufacturing network was built. And one of the pieces
13:40
Speaker 1: that you can often run into when building a network
13:43
Speaker 1: of its of of that scale, is building it building
13:49
Speaker 1: too much of it actually.
13:51
Speaker 2: So over engineering the problem.
13:53
Speaker 1: Yeah, yeah, exactly what what ends that ends up happening?
13:56
Speaker 1: What what you hear is like very common across any industry.
14:01
Speaker 1: That operates with third party manufacturers, like, oh, we've got
14:05
Speaker 1: fifty seven partners in our network. We've got one hundred partners.
14:08
Speaker 1: And people think that that scale is like a battle card,
14:12
Speaker 1: you know that that just sounds great and it does
14:14
Speaker 1: like it reads incredibly well on a pitch deck. What
14:17
Speaker 1: they often won't recognize is the quality that comes as
14:22
Speaker 1: a result of that. Your ability to have any sort
14:26
Speaker 1: of quality conformance standard is almost impossible. You've got contracts
14:31
Speaker 1: out the law zoo that you have to manage through.
14:34
Speaker 1: Each partner in that relationship is very different and you
14:37
Speaker 1: have to manage those those interactions, and so that sheer
14:39
Speaker 1: scale introduces unnecessary volatility, and so the problem absolutely absolutely
14:47
Speaker 1: complexity in every different form, Like each one of those
14:51
Speaker 1: is a new technology integration, each one of those is
14:54
Speaker 1: a different cadence in which you're interacting with them. But
14:58
Speaker 1: the problem that when I write that we wanted to
15:00
Speaker 1: begin to solve is not just how do we have
15:02
Speaker 1: a robust manufacturing network, how do we have a robust
15:07
Speaker 1: supply chain that leverages an industry where frankly, most of
15:14
Speaker 1: the industry was built in a way that solving a
15:21
Speaker 1: scale problem that was much larger than it is today. Right,
15:24
Speaker 1: we know within direct mail manufacturing there's been a retraction
15:28
Speaker 1: in that overall industry and the logistics that supports it.
15:33
Speaker 3: Also that's been the same way.
15:35
Speaker 1: And you see that that consolidation happening, right, And when
15:39
Speaker 1: PE often enters into those equations, that's when you see that, right,
15:42
Speaker 1: and their ability to begin to merge those And so
15:45
Speaker 1: what I wanted to say is like, there's no doubt
15:49
Speaker 1: that there's excess capacity sitting across the industry in multiple
15:54
Speaker 1: different ways, and so we don't need to replicate the
15:58
Speaker 1: size of a Goali. We can replicate the size of
16:04
Speaker 1: that goliath. Leveraging technology instead of cash investment and focus
16:09
Speaker 1: every dollar we spend on technology and not the next
16:12
Speaker 1: piece of equipment that we need to buy.
16:15
Speaker 3: And it was it was my.
16:16
Speaker 1: Experience and the development over those years in systems thinking
16:20
Speaker 1: and understanding constraints and understanding third parties and contract negotiations
16:26
Speaker 1: and all of it that really led to this moment.
16:29
Speaker 2: Those are some of those rigid structures that you identified
16:32
Speaker 2: in the traditional print and mail supply chains that you
16:37
Speaker 2: knew you wanted to change. But what were some of
16:40
Speaker 2: the potential that you saw by doing it differently, because
16:43
Speaker 2: I know a lot of times these these innovations or
16:46
Speaker 2: these innovative concepts get shot down at even at the
16:51
Speaker 2: idea level, because there's there's not enough potential, there's not
16:56
Speaker 2: enough improvement, there's not enough ROI in order to change
17:01
Speaker 2: the status quo.
17:03
Speaker 1: Yeah, I think often what people will go back to
17:07
Speaker 1: like the ROI conversation and they'll say like, yeah, is
17:11
Speaker 1: this justified? What it often comes down to is people
17:16
Speaker 1: think it's really hard, So do I actually want to
17:19
Speaker 1: do it?
17:19
Speaker 3: You know? And I'll give you a really great example.
17:23
Speaker 1: We had a robust manufacturing network when when I was here,
17:28
Speaker 1: when I first got here, and we were probably like
17:32
Speaker 1: two percent or a little bit more of total revenue
17:36
Speaker 1: of any one of our manufacturing partners. And it's enough
17:40
Speaker 1: where it's like, man, they would prefer you didn't go away,
17:43
Speaker 1: but if you did, you know, it's kind of like.
17:45
Speaker 3: Nah, you know.
17:46
Speaker 1: And so what I really wanted to do was have
17:49
Speaker 1: like table stakes there, like we need you and you
17:52
Speaker 1: need us, and how do we build a roadmap together?
17:55
Speaker 1: And so that was that was pretty solvable. You know,
17:57
Speaker 1: that's not that's not like new world old thinking, but
18:00
Speaker 1: it did have a meaningful impact to what we were
18:03
Speaker 1: trying to save for the dollars that we were trying
18:06
Speaker 1: to save and the reliability that we were trying to create.
18:09
Speaker 1: But when you look at the greater environment that we
18:12
Speaker 1: began to see is we were handing all complexity to
18:15
Speaker 1: those third parties and saying, just tell it how much
18:18
Speaker 1: it costs, and you go figure out how to get
18:21
Speaker 1: this in the in the inbox and it in home,
18:25
Speaker 1: and it doesn't. It just doesn't work like that, and
18:27
Speaker 1: you're paying margin on every single transaction, every mental effort
18:31
Speaker 1: that that somebody puts puts into it. So we saw
18:33
Speaker 1: siloed plants, we saw very opaque logistics where your data
18:40
Speaker 1: is a black box. It's spending as much time with
18:43
Speaker 1: your logistics providers as it is with the USPS. It's
18:47
Speaker 1: it's still itself. And we saw a lack of price
18:51
Speaker 1: competitiveness within the marketplace for how you negotiate how you
18:55
Speaker 1: can negotiate those rates. And so I started to ask like, hey,
19:00
Speaker 1: like why can't we take the patents that we have
19:02
Speaker 1: on the manufacturing side and build our own logistics network
19:06
Speaker 1: that solves this problem right, and we'll use third party
19:09
Speaker 1: logistics providers and connect them through our technology where they're
19:12
Speaker 1: all interacting and queued in a way that they're not
19:17
Speaker 1: used to doing, and the industry hasn't happened or hasn't
19:21
Speaker 1: historically wanted.
19:22
Speaker 3: To do it.
19:23
Speaker 1: And the answer I basically got was, well, that's really hard,
19:27
Speaker 1: and it's like, well that's why we're here, right Like,
19:30
Speaker 1: we're here to solve like really hard problems. And if
19:33
Speaker 1: it's that hard of a problem, like, boy, does that
19:35
Speaker 1: sound really interesting?
19:37
Speaker 3: You know?
19:38
Speaker 1: And that's that's where we're really beginning to differentiate ourselves, right,
19:42
Speaker 1: Like we have very transparent pricing. Now, we have visibility
19:47
Speaker 1: to the full life cycle of the mail piece all
19:50
Speaker 1: the way to the to the person's mailbox, which is
19:54
Speaker 1: which is fairly unheard of, and we've broken down all
19:58
Speaker 1: of those silos in the twin.
20:01
Speaker 3: You know.
20:01
Speaker 2: It makes me think of this cartoon that I'm sure
20:04
Speaker 2: people have seen all over the place, and it's this
20:07
Speaker 2: this speaker standing up in front of a crowd of people,
20:10
Speaker 2: alleged to be maybe a politician or something, and he
20:12
Speaker 2: says who wants change? And everyone raiins their hands. He says,
20:15
Speaker 2: who wants to be the change? And everyone has their
20:18
Speaker 2: hands down, No one wants to be the one to
20:21
Speaker 2: have to do the effort and the work in bringing
20:25
Speaker 2: those innovations to life. And I mean you've talked to
20:29
Speaker 2: us a little bit about what, you know, one of
20:31
Speaker 2: those assumptions that you had had. Are there any other
20:33
Speaker 2: industry assumptions that you challenged with this this idea, this
20:38
Speaker 2: mindset of not accepting what has historically been done the
20:43
Speaker 2: way it's been done.
20:44
Speaker 3: Yeah, great, great question.
20:46
Speaker 1: First of all, I've always wanted to be the change
20:49
Speaker 1: like it. Just just to comment, I've had a number
20:53
Speaker 1: of managers, including our CEO now just like who said,
20:57
Speaker 1: like you're always looking for the next hill to charge,
20:59
Speaker 1: aren't you? And it's like yeah, like why not, Like
21:02
Speaker 1: we're here, like let's let's.
21:04
Speaker 3: Go and do it. We might as well. But to
21:07
Speaker 3: answer your question, there's there's been a number of thoughts.
21:10
Speaker 1: That that are things that we've executed on that we've
21:15
Speaker 1: challenged over time. The first one is at the industry level,
21:20
Speaker 1: it is taught to the customer base that as it
21:23
Speaker 1: relates to postage cost, that postages postage and it's a
21:28
Speaker 1: pass through and it just really isn't the case, right,
21:32
Speaker 1: Like you can very accurately model postage cost and understand
21:38
Speaker 1: the benefits of saturation not just at the individual customer
21:43
Speaker 1: campaign level, but actually the macro level, begin to predictively
21:49
Speaker 1: model what that postage is going to cost and lower
21:53
Speaker 1: lower that overall postage that that someone pays. And so
21:57
Speaker 1: that's that's one that we're work looking really hard to
22:01
Speaker 1: educate the entire industry on is like, don't don't allow
22:06
Speaker 1: your vendor to tell you that it's that it's a
22:09
Speaker 1: pass through.
22:09
Speaker 3: Like, yes, it's a.
22:10
Speaker 1: Pass through in the sense that whatever bill comes out,
22:13
Speaker 1: like that's what we're gonna need to pay, But let's
22:16
Speaker 1: not assume that that's like the best and final price, because
22:19
Speaker 1: there are ways in which we can we can generate
22:21
Speaker 1: favorabilities for you in the long term through a robust
22:25
Speaker 1: collaboration between customer, UH and and vendor. And that's been
22:30
Speaker 1: a challenging assumption. I think the the second one I
22:35
Speaker 1: touched on this a little bit more UH previously, but
22:39
Speaker 1: i'll touch on it now. UH was understanding that you
22:43
Speaker 1: don't have to necessarily inherently tie fixed infrastructure into overall capacity,
22:49
Speaker 1: you know, and so as as this industry continues to
22:53
Speaker 1: grow and and morph and change, one of the things
22:57
Speaker 1: that's that's coming through is is something that's called zone
23:01
Speaker 1: based pricing. Zone based pricing is an initiative by the
23:05
Speaker 1: USPS to mimic that of parcel where it begins to
23:11
Speaker 1: look at the cost from the destination it's going to
23:14
Speaker 1: to the entry point, so it more accurately reflects the
23:17
Speaker 1: actual cost structure that the USPS is inherent inheriting that
23:21
Speaker 1: doesn't exist in direct mail, which might surprise a lot
23:25
Speaker 1: of people, right, Like a postage stamp is a postage stamp,
23:28
Speaker 1: and it always kind of it always kind of costs
23:31
Speaker 1: the same. But that's again like that's something that we're
23:36
Speaker 1: trying to change, and zone based pricing also begins to
23:39
Speaker 1: inherently influence that as well. So you think about from
23:41
Speaker 1: an industry perspective, what does that mean for your small
23:46
Speaker 1: to medium sized, regionally based manufacturers to operate at a
23:51
Speaker 1: national campaign level. Just like in the parcel world, they're
23:54
Speaker 1: going to have to think very specifically about how they
23:57
Speaker 1: begin to target geographies and what that means to not
24:02
Speaker 1: have their cost explode. And so that's one where like
24:09
Speaker 1: our APIs are incredibly well suited to solve those problems
24:13
Speaker 1: as well as like our nationally built network which focuses
24:17
Speaker 1: on the ability to route the closest to the receivers
24:22
Speaker 1: as possible. That's really kind of a fundamental shift within
24:26
Speaker 1: the industry. Even your businesses that have fifty to seventy
24:31
Speaker 1: sites around the United States or more, you know, or
24:33
Speaker 1: maybe they even have ten. Quite often what you see
24:36
Speaker 1: is even at a national campaign, they're not targeting. They're
24:41
Speaker 1: not intelligently routing that to say like how can I
24:44
Speaker 1: get it in home the fastest. They're sending all of
24:48
Speaker 1: it to a singular site and then worrying about the
24:51
Speaker 1: logistics problems later. And so what you begin to see
24:55
Speaker 1: is if I'm a marketer, for example, and I'm measuring attribution,
24:59
Speaker 1: which attribution from a marketing standpoint, direct mail still has
25:03
Speaker 1: one of the most favorable rois tied to it, even
25:06
Speaker 1: at a really great expense. They're saying, man, my channel
25:10
Speaker 1: is broken, like this is really expensive and it's really slow. Well,
25:13
Speaker 1: it doesn't need to be either one of those things, right,
25:15
Speaker 1: Like we've created a supply chain problem where a supply
25:18
Speaker 1: chain problem doesn't need to exist.
25:20
Speaker 2: That's so interesting. What kind of pushback or naysayers resistance
25:28
Speaker 2: do you get and who is it who is it from?
25:30
Speaker 2: Is this from the you know, the stakeholders sitting at
25:33
Speaker 2: the table. Is it from clients who don't believe that
25:36
Speaker 2: this type of change is possible within the industry? You know,
25:41
Speaker 2: who are your biggest detractors?
25:44
Speaker 1: Yeah, I think when you look at it from like
25:47
Speaker 1: an enterprise sales perspective, we certainly have competitors that have
25:51
Speaker 1: been in the industry, some of them.
25:52
Speaker 3: For literally over one hundred years, who will.
25:56
Speaker 1: Often say, like, you know, they can't build true scale,
26:00
Speaker 1: and if they can build true scale, you can't have
26:03
Speaker 1: quality conformance at scale because it's a nationally distributed network,
26:09
Speaker 1: or they can't be price competitive because they don't control
26:14
Speaker 1: the supply chain. And I'll admit, you know, we don't
26:19
Speaker 1: control like the heaviest overhead cost associated with managing fixed infrastructure, right,
26:26
Speaker 1: which doesn't allow us to have pricing volatility that some
26:29
Speaker 1: might have. That's actually a benefit, right, Like a customer
26:33
Speaker 1: knows what they're going to get from us, and they
26:35
Speaker 1: get that every time. As as it relates to the
26:38
Speaker 1: quality piece we've created quality at scale, there are very
26:42
Speaker 1: few quality things that like a traditional manufacturer is doing
26:46
Speaker 1: that that we're not doing. The differences. We have technology
26:49
Speaker 1: embedded into ours in a way that that that they
26:53
Speaker 1: probably don't and that but that's something that we've had
26:55
Speaker 1: to prove over time, right Like, once that's out there,
26:58
Speaker 1: once that's out there, you're fighting against that, Like there's
27:00
Speaker 1: just no doubt about it. And so that's something that
27:02
Speaker 1: we've had to continue to improve over time. And it's
27:05
Speaker 1: definitely been a journey, there's no doubt. Like we talked
27:07
Speaker 1: about it, you know, when I got here, we had
27:10
Speaker 1: thirty partners across the country. We have like eight now,
27:15
Speaker 1: you know. And so I would agree that within a
27:18
Speaker 1: network that large, quality conformances is a huge issue. But
27:23
Speaker 1: those those are really kind of the main challenges. And
27:27
Speaker 1: fortunately for us, I think that we've gotten enough street
27:31
Speaker 1: cred over time. When we build the next thing and
27:34
Speaker 1: embed technology into it, people ask about it, you know,
27:39
Speaker 1: And that's that's definitely a reflection of our staying power
27:43
Speaker 1: within the industry and that we've been able to prove
27:47
Speaker 1: that we do know what we're doing. We still get
27:49
Speaker 1: them wrong sometimes, right, not everyone that's a thousand, but
27:53
Speaker 1: we learn from those things and we iterate from them
27:56
Speaker 1: to the point where you know, some of those competitors
27:59
Speaker 1: that we're talking about. They're calling us asking how we're
28:02
Speaker 1: doing things too, you know, and so so it feel good. Yeah, absolutely,
28:07
Speaker 1: Well that's when you know when you're doing something right,
28:09
Speaker 1: you know, and they're like, hey, like have you thought
28:11
Speaker 1: about working with us on this? And it's like, no,
28:13
Speaker 1: not really, but apparently you're thinking about us, and that
28:16
Speaker 1: feels really good, you know. And so.
28:19
Speaker 3: You know, that's that's when.
28:20
Speaker 1: You know like something's really clicking, like they're thinking about you.
28:23
Speaker 1: They show up on your webinars on LinkedIn or something
28:25
Speaker 1: that you're hosting a side it's like, okay, like we
28:28
Speaker 1: were making noise here and that's good. That's a good
28:30
Speaker 1: feeling exactly.
28:33
Speaker 2: And so we've talked about this. We started out talking
28:36
Speaker 2: about engineers and recent graduates and you know, as they're
28:41
Speaker 2: entering the job market and looking at solving some of
28:44
Speaker 2: their first big problems, and then kind of adjusted the
28:47
Speaker 2: conversation to talk about LOB. But let's let's bring it
28:50
Speaker 2: back to them, because you've got all this experience and
28:54
Speaker 2: you know, challenging status quos, you know, disrupting antiquated system
29:00
Speaker 2: How can other engineering leaders coach their teams to step
29:05
Speaker 2: back and see that that broader system the same way
29:09
Speaker 2: you have in order to encourage and engage that innovation.
29:14
Speaker 3: Yeah, a lot of.
29:15
Speaker 1: It goes goes down to the way in which you're
29:18
Speaker 1: talking to your team about the problem that they're trying
29:21
Speaker 1: to solve. You know, if you tell this this can
29:25
Speaker 1: be true at any level, but especially new college graduates
29:31
Speaker 1: and especially like lower line level engineers. If you say, like,
29:36
Speaker 1: go fix problem, they're going to repeat like, I go
29:39
Speaker 1: fix problem, right, and then they're going to go to
29:41
Speaker 1: that like and then they're going to go fix that problem,
29:44
Speaker 1: you know, And that's what they do and they're incredibly
29:46
Speaker 1: good at it. What's really important is to coach to
29:50
Speaker 1: outcomes like we need to fix this problem, we believe
29:54
Speaker 1: because it's going to result in this outcome, right, more
29:58
Speaker 1: product through the building, or more efficient just overall value
30:03
Speaker 1: stream or a fixed a variable cost reduction of why
30:09
Speaker 1: as a result of applying X. And so you start
30:12
Speaker 1: to coach to that outcome that begins to have them
30:17
Speaker 1: have a system's approach to that and say like, oh, okay,
30:22
Speaker 1: well let's go back to the original example that we
30:24
Speaker 1: talked about. If you fix your bottleneck within like a
30:27
Speaker 1: traditional fixed manufacturing structure. What's going to happen is if
30:34
Speaker 1: I have fixed that, I'm now consuming more product upstream,
30:40
Speaker 1: and so have I created Have I created downtime upstream
30:45
Speaker 1: that I didn't intend? And so you've now turned your
30:48
Speaker 1: indirect variable cost the person that's sitting in front of
30:52
Speaker 1: that machine. You now have an indirect cost that was
30:55
Speaker 1: set that's now are a direct cost that's now an
30:57
Speaker 1: indirect cost because you have to have them go do
30:59
Speaker 1: something else else that isn't driving value back to the
31:02
Speaker 1: part that they just created, because now they have downtime. Right, Like,
31:04
Speaker 1: you don't need them producing as fast or you need
31:07
Speaker 1: them producing faster. So it's going to be it's going
31:10
Speaker 1: to be one or the other. Yeah, And if they're
31:13
Speaker 1: producing faster, can you consume it faster? Within that that
31:18
Speaker 1: bottle neck? Now maybe I have another bottle neck. I
31:20
Speaker 1: create it, and if I can't get it out the
31:23
Speaker 1: door fast enough, I e I'm not selling it fast enough.
31:26
Speaker 3: What have I done.
31:27
Speaker 1: I've put the cash that I had in my bank
31:29
Speaker 1: account and I've now put it on a shelf and
31:32
Speaker 1: it's going to sit in the form of inventory. And
31:34
Speaker 1: now I've created a whole new issue, right so like,
31:37
Speaker 1: what actual thing are you trying to fix? Because it's
31:40
Speaker 1: never just like I go fix problem like it you
31:44
Speaker 1: have to look at the entire you have to look
31:46
Speaker 1: at the entire system. And that can be very challenging
31:51
Speaker 1: in very, very large companies because it often can be
31:55
Speaker 1: opaque of like what actual problem, like are we solving
31:58
Speaker 1: and who's it for? And what's the deliver you know
32:00
Speaker 1: when you think about it, like going all the way
32:02
Speaker 1: back to basic principles. Uh, in college, we we should
32:07
Speaker 1: be teaching them these these things like they should understand
32:11
Speaker 1: when I build a system, understand the financial cost associated
32:16
Speaker 1: with doing that sort of thing. They should understand operational
32:20
Speaker 1: use cases and that sort of thing, not just let's
32:24
Speaker 1: design the next the next neat thing. And that's not
32:29
Speaker 1: for every engineer, Like I'll be the I'll be the
32:31
Speaker 1: first one to admit and so I'll stop right there.
32:35
Speaker 2: No, No, that's great. Well, and you you mentioned you
32:38
Speaker 2: know obviously, uh, we're talking about college grads and and
32:43
Speaker 2: you know, newer engineers into the workforce, we call them
32:47
Speaker 2: analysts at our organization. You know, that's that's the entry
32:50
Speaker 2: level position. And you know, I also struggle with this,
32:54
Speaker 2: and it's because I'm the marketing person. It's mainly in
32:57
Speaker 2: in the regard of, you know, trying to showcase what
33:00
Speaker 2: we're doing, where if I ask them to tell me
33:02
Speaker 2: what they did on a project, they are very formulaic
33:05
Speaker 2: and they will list every single step that they took
33:07
Speaker 2: and I'm like, no, how did we solve the customer's problem?
33:11
Speaker 1: Well, that's where it starts, right, Like, every every problem
33:14
Speaker 1: that you're solving with in there goes back to solving
33:18
Speaker 1: a customer problem, like it's.
33:19
Speaker 3: Why, it's why we all exist.
33:22
Speaker 1: You know, And that sort of framing can really start
33:27
Speaker 1: to contextualize things for people. I love having my team
33:32
Speaker 1: on customer calls because it is way harder to say
33:36
Speaker 1: no to that customer to their face than it is
33:40
Speaker 1: for an account executive to be like, our customers sure
33:43
Speaker 1: would like it if you did this, No, right, Like, no,
33:47
Speaker 1: that's okay, And it's like, well, why don't we get
33:49
Speaker 1: on the call and let's understand their pain point and
33:52
Speaker 1: you tell them why you don't think this could work,
33:55
Speaker 1: And they're almost never going to do that, right, They're
33:56
Speaker 1: gonna be like, oh, like that's really hard, and I
34:01
Speaker 1: I same for an engineer, you know, and what that
34:04
Speaker 1: delivers in the long term is just so valuable.
34:09
Speaker 2: Well, and I think we need to at least point
34:12
Speaker 2: out briefly that you have a very solid background in engineering,
34:18
Speaker 2: being an engineering graduate of Purdue University, which is well
34:23
Speaker 2: known for its engineering program.
34:25
Speaker 3: Go boiler Makers.
34:27
Speaker 2: So I guess my last question to you would be,
34:30
Speaker 2: you know, having been through that experience yourself, having seen
34:34
Speaker 2: what you have seen throughout your career, if you could
34:37
Speaker 2: redesign a portion of an engineering curriculum, what would you
34:42
Speaker 2: change or add?
34:44
Speaker 1: I would love to add, and I did this actually,
34:47
Speaker 1: and I can explain this about what I did in school.
34:52
Speaker 1: But first of all, boiler up for sure, very excited
34:56
Speaker 1: for this year's coming basketball season. Schedule ca out yesterday
35:01
Speaker 1: and I've already got dates circled for where I'm going
35:03
Speaker 1: to see them.
35:04
Speaker 3: But I think.
35:07
Speaker 1: One of the issues within the university system itself can
35:10
Speaker 1: often be the lack of cross collaboration between schools schools
35:15
Speaker 1: within the university itself. Right, So, like you take Purdue
35:18
Speaker 1: for example, which obviously, like I feel, especially like you
35:21
Speaker 1: can already see you know, the jersey up there, but
35:25
Speaker 1: is near and dear to my heart, and I operate
35:27
Speaker 1: with the Daniel School of Business pretty frequently. I operate
35:30
Speaker 1: with the College of Technology really frequently, which is where
35:34
Speaker 1: I actually graduated from. Some of my best friends were
35:38
Speaker 1: in Ease. Those schools almost never interact really only outside
35:45
Speaker 1: of collaborative clubs and that sort of thing, And I
35:48
Speaker 1: think finding ways in which to make those groups come
35:52
Speaker 1: together and build cases together could be really really interesting.
35:57
Speaker 3: And so one of this.
36:00
Speaker 1: That I did when I was in school, I was
36:03
Speaker 1: the head of two different associations. One was the Produe
36:06
Speaker 1: Consulting Club, and then the other one was called APEX,
36:11
Speaker 1: which is the Association for Operations Management, which has changed
36:14
Speaker 1: its name a couple of different times now, but as
36:15
Speaker 1: a global professional organization, and all the members of those
36:21
Speaker 1: organizations were never just from one discipline, and so we
36:25
Speaker 1: would end up going in case studies where you had
36:28
Speaker 1: to fix like a supply chain problem, you had to
36:31
Speaker 1: understand the financial impact of what you were doing. In
36:34
Speaker 1: some cases you had to be able to market that.
36:38
Speaker 3: But then it.
36:38
Speaker 1: Always came back to like operationally, like what problem were
36:42
Speaker 1: you solving? Like those sort of of cross functional things,
36:46
Speaker 1: one begin to have different thinkers begin to interact with
36:51
Speaker 1: each other far more often than they're probably going to
36:54
Speaker 1: either in college or right out of school. And it
36:58
Speaker 1: also begins to apply like contextual understanding of you know,
37:03
Speaker 1: long term, this is this is what business impact you're
37:06
Speaker 1: going to going to have. I'll give you an example.
37:08
Speaker 1: So when when I was in the Eaton Development program,
37:15
Speaker 1: at the end of that journey, you present on why
37:20
Speaker 1: they've invested so much in you over your last two
37:22
Speaker 1: and a half years, and you do it in front
37:25
Speaker 1: of your peers that you spent the last two and
37:26
Speaker 1: a half years moving around the country with and talking
37:31
Speaker 1: about the cool projects that that you've solved, and but
37:34
Speaker 1: this is a very expensive thing for eating at the time,
37:37
Speaker 1: and you present this to kind of the board of
37:40
Speaker 1: trustees for that that program, and what they're really doing
37:45
Speaker 1: is they're starting to place you on where does this
37:49
Speaker 1: person fit in at like what problems should we have
37:53
Speaker 1: them now go solve? What are problems within the business?
37:57
Speaker 1: What are they the future leader of? And I heard
38:00
Speaker 1: one of them say, and the executive's pretty well known,
38:03
Speaker 1: so I'm definitely not going to say is his name
38:04
Speaker 1: and he's an easy LinkedIn search away, but he said
38:07
Speaker 1: this is the type of guy and he wasn't pointing
38:10
Speaker 1: to me, I was actually sitting like awkwardly behind him.
38:12
Speaker 1: He was like, this is the type of guy that
38:14
Speaker 1: you put in a basement and you tell him to
38:16
Speaker 1: go invent something. There's nothing wrong, there's nothing wrong with
38:22
Speaker 1: being that type of engineer. It's just it's unlikely that
38:25
Speaker 1: everyone in that class is that brilliant mind, right. It's
38:30
Speaker 1: way more likely that they're going to be put in
38:32
Speaker 1: a situation where they have to solve cross functional business
38:35
Speaker 1: problems with people they don't that don't directly work for them.
38:39
Speaker 1: And we should start that as early in their career
38:42
Speaker 1: and as early in their educational journey as possible.
38:45
Speaker 2: Absolutely, and we're seeing that in all sorts of organizations
38:49
Speaker 2: as we support them. I'm sure you've seen it as well,
38:53
Speaker 2: when we start talking about the different stakeholders and those
38:56
Speaker 2: silos that they're working in, those different business units, and
38:59
Speaker 2: the difficulty of getting them to come together and align
39:02
Speaker 2: on a solution that rising tides raise all ships. I've
39:07
Speaker 2: used that a lot recently. I don't know why that
39:11
Speaker 2: phrase seems to have been applying to so many different
39:14
Speaker 2: aspects of my life right now, but I mean, truly,
39:17
Speaker 2: when they're able to come to the table and talk
39:20
Speaker 2: to each other and see things from different perspectives. The
39:24
Speaker 2: solutions come that much more easily.
39:27
Speaker 3: Yeah, absolutely so.
39:29
Speaker 2: As supply chains evolve from fragmented operations to integrated ecosystems,
39:35
Speaker 2: the ability to zoom out and rethink the system is
39:38
Speaker 2: no longer optional. It's strategic. Thank you so much Brent
39:42
Speaker 2: for joining us today and sharing some of your insights
39:45
Speaker 2: on both the way that engineers approach problems but also
39:50
Speaker 2: the way that supply chains can use that thinking to
39:53
Speaker 2: reimagine solutions.
39:55
Speaker 3: Thank you for having me. I really appreciate the time.
39:57
Speaker 3: This is great.
39:59
Speaker 2: To our listeners out there, thank you so much for
40:01
Speaker 2: listening until next time. Thank you for tuning in to
40:05
Speaker 2: speaking of supply chain