New Opportunities in Supply Chain

It has been a little bit since I wrote on this blog again.  I was 29 when I wrote my last post and now I am in my thirties (well… 30 to be specific). Work was getting quite crazy and things weren’t exactly at a steady-state to allow me to pull my thoughts away from work and focus on supply chain and beer commentary. Things have probably been made more complicated in recent weeks, but it has also provided me a new perspective.

One new “opportunity” I was given was to supervise an area of our fulfillment operations as we look to move some management around to accommodate a recent departure. I have never managed this type of operation, although I have been close enough to it to understand the basic concepts. When it comes to people management, there are really only a few things to keep in mind in order to allow your people to succeed and recognize you as an effective leader.

I don’t have a good beer to review this time. I have been sticking to the basic Michelob’s and Bud Lights. My appetite has not been satiated but rather flat-lined as I try and spend what free time I have on my kayak or on the golf course; 2 places where good craft brew isn’t readily available. With that said, I am looking forward to trying Log Boat Brewing’s new “Knot Hole” Oktoberfest beer which they claim has zero pumpkin in it for those October Pumpkin Protesters.

As I daydream about my next beer expedition, I do want to discuss my strategy for taking on a new area, department, business, etc. I have been fortunate enough to work in retail distribution, manufacturing (light/heavy), consumer product distribution, among others. Each business is different, but yet everything really is the same. Goods need to arrive on time to a distribution point in the right quantities, and they need to move efficiently through the process to arrive to the customer within an acceptable period of time. With that in mind, employees need to be supported to produce the best results a human can, while also understanding that the employee has their own hopes and aspirations and everyone works for a different reason. Sometimes it is difficult to be efficient while also maintaining the best morale amongst one’s team.

Below are 10 items I try and cover when encountering a new opportunity. I welcome feedback on what others think is important to succeed in supply chain when encountering a new opportunity:

1.       Sketch out a very high-level diagram of what you are taking over; whether it is a warehouse floor or a complex team. Understand how product/communication flows.

2.       Identify key stake holders within the process; who is the “customer” and who is your “supplier”?

3.       Identify the members of the team that have the most influence; whether it is a supervisor or just someone who knows their job better than others. Lean on that person to understand why they are good at what they do. Support them.

4.       Understand technology utilized and identify ways to leverage it to make your employees’ lives easier. Start with a spreadsheet.

5.       Attack low hanging fruit- sometimes the easiest of fixes can change the day to day for an employee on the floor. Remember you are trying to make their lives easier just like you are your own.

6.       Sit with your team and get dirty. Make sure you know what they are going through but most importantly, make sure THEY KNOW that you know what they are going through.

7.       Listen to grievances. Just listen.

8.       Utilizing #1, start to break down the operation or team into separate groups. When you have your groupings, list the main tasks, grievances, and ways to improve. Even a band-aid is better than nothing. Ensure your suppliers/customer are also included.

9.       Create reminders on your calendar to pop in or send emails referencing specific issues/requests/grievances. Refer to #7 if you are unsure.

10.   Ensure you understand how this new opportunity can help you professionally, socially, etc. It is only an opportunity if you make it one.

 

 

Cheers!

Tariff-ic Blog Post about Beer and Supply Chain

I hope everyone is having a great week. I have been busy with work along with Memorial Day weekend and my subsequent vacation to the Florida Keys. I do hope everyone remembered what Memorial Day is all about, and while hotdogs and hamburgers are great, they should be a compliment to celebrating those who we’ve lost in the military, along the way.

With that said, I definitely enjoyed a few cold beverages last weekend on a short 4 night vacation. My wife and I, along with another couple, went down to Key Largo for 2 nights and then further down highway 1 to Key West. I think I might have enjoyed Key Largo the best this trip. Of course, we stopped at my favorite spot between Miami and Key Largo: Alabama Jack’s. If you’ve not visited and plan on heading down to the keys in the future, I would highly recommend going. It isn’t the finest dining, but it has a great atmosphere and it’s on the water.

While in Key West I tried a new beer called a “Key Billy” from “Brew Hub” brewery. “Brew Hub” is a sort of co-op that allows smaller brewers to utilize the hub’s facilities to brew, package, and distribute their beer.  Key Billy was actually fairly prevalent throughout our trip. It seems, at least initially, this beer has caught on pretty well. It is an “American Amber Ale” and I really like it. It is brewed with lime juice so it has a nice finish with just a little bit of sour (but not even close to a sour ale). It seems like the kind of beer I would drink if I was on the boat fishing, or maybe while sitting on the beach, or perhaps chasing chickens throughout the streets of Key West. Either way, I would highly recommend it as a good drinking beer this summer and to support a new project that benefits small brewers. The more beer you drink the more you support small business, so just keep drinking.

I mention beer with the idea that one might want to have one before they keep reading and hear about the tariff woes our country faces as we have a “trade war” with China. The Trump Administration recently hit us with a “4th list” of items that will receive a 25% tariff from China (meaning essentially EVERYTHING from China will have a 25% tariff attached to it). This is causing serious anguish to some recognizable companies. Both Kohl’s and Nike have noted that this tariff will have dire effects on their business. The same can be said about smaller importers, as well. Remember that due to economies of scale, it is very possible that the 25% in additional expense to some smaller importers could erase their entire profit margin as they lack the large-scale supply chain to keep costs down. These tariffs, should they continue, will no doubt leave a lasting impression and will almost definitely put some companies out of business.

It seems that with all the news coverage emphasizing the negatives of the tariffs, there might not be any positives. I would have to disagree. The tariffs push American companies to source elsewhere. Imagine if you only bought your beer from one liquor store, but they sometimes didn’t have it, and other times the quality was bad, which resulted in boring evenings with lack of said beers. Now, imagine they raised their prices by 25% allowing a new liquor store to pop up down the street to undercut the old store’s prices and become a player in your Friday night beer consumption. Perhaps the new liquor store’s name is “India’s Brews” or “Vietnam Package”. The tariffs are doing the same; promoting new trading partners (i.e. India or Vietnam) allowing for more competition in the market.

Using another example, let’s assume that perhaps you are a supplier to your favorite liquor store in one facet or another, but while you buy a couple 6 packs of craft brew from them every week, they only choose to utilize you for your product on rare occasions. There would seem to be a trade imbalance here. You can either start buying your craft beer at another location who does utilize your services more frequently, or you could even brew your owe! The tariffs will allow the U.S. to (presumably) help to correct the trade imbalance with China (buy less from China, more from other countries or manufacture in the U.S.).

Perhaps the biggest reason (at least per the administration) these tariffs are being pushed is to force China to start recognizing U.S. intellectual property protection. China has long had suppliers pushing out knock offs of some of the United States’ more well-known brands. Recently, a bigger focus has been put on eliminating the loss of IP via technological innovation. It is feared that Chinese companies will continue to steal the technological makeup of products (of which, in many cases, they are producing in Asia) and copy those products for distribution under a new Chinese business name. This is one of many specific reasons the Trump Administration has identified as important in the trade talks.

In the end, I’m not rallying for the tariffs, but rather just pointing out some positives that might get lost along the way. It is obvious the tariffs are having a huge impact to companies’ bottom lines and severely hurting the American Farmer. The Chinese have placed retaliatory tariffs on US Exports of soy beans and other crops, stifling export activities and resulting in large quantities being stored until this trade war can be sorted out. It will be interesting to see how this progresses. As supply chain people, it would be wise to understand alternative suppliers, ensure your supply chain can handle cross border imports from Mexico, communicate tariff implications to your sales teams, and be vigilant in all other regards to ensure your supply chain is nimble enough to accommodate change while staying efficient to offset increased expense in other areas. If all else fails, just drink a beer!

 Cheers!

Featured Beer: www.brewhub.com

Jammin' to Blockchain ?

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“Denim Jean & The Jammers”

From Logboat Brewing Co.

Good evening all, I hope your week has been filled with many pleasantries and numerous high-fives from your fellow supply-chain peers, complete with a significant volume of back-slapping and excessive complementing. For all of us other professionals in the real world, T.G.I.F tomorrow!

I have been very busy at work recently and feel I am losing some steam. That is why I decided to indulge in some delicious wings and beer recently at the local college’s favorite watering hole. I feel I am an expert when it comes to wings and am always on the look out for a good one. Some day I will write a blog entry on the supply chain of the chicken wing and the up and downs of the poultry market. It is why Buffalo Wild wings went from a “6 piece wing” to a completely ambiguous “snack” or “small”. It was the worst thing to happen to my Thursday night in years.  

I had a new beer tonight that was quite tasty. It was a “Denim Jean & The Jammers” IPA from Logboat Brewing. If you remember, I mentioned Logboat’s “Snapper” in a previous post. They are a local brewery so my wife brings home their beers from time to time. I’d challenge anyone in the comments or on LinkedIn to mention if they’ve ever had this beer. I’m curious how far its reach extends. This one is a limited brew and I like it a lot. It is sweet and taste a little fruity, but it’s not overpowering. I would recommend this to anyone who wants a subtle IPA with an attractive gold color who wants to have something to enjoy to wind down the evening. It’s another good sipping beer and makes me want to round up “Momo” and “Denim Jean” to start my own folk band. Until that happens, I think I will stick to logistics!

I wanted to give a brief overview of block chain this evening and am curious what others might think about it. When I was in school, even as recent as 2015 when I received my MBA, blockchain was more of a theory rather than something that was being implemented This was about the time people really started getting into bitcoin. I think a lot has changed. Recently I read where FedEx executives were calling on mandated blockchain technology for international goods. This would allow paperless packages moving internationally, while also allowing for the tracking/prevention of counterfeit goods.

For those that don’t know what blockchain is, it is a public, digital ledger system that can be used to trace back the purchase of goods and services to understand where the transaction derived from and who was a part of it (along with other pieces of information). To put it in simplest forms, assume that we suddenly all used bitcoin to purchase all goods and services. Each time you purchase goods, your transaction is recorded since your bitcoin required a digital transaction occur. You essentially are purchasing a “block” in the chain of that good. Your block has information about when you bought and further information about when the good might be sold. The block uses this information to create a unique identifier called a “hash”. Blocks are connected via information derived from each of the connecting blocks.  No one can change your block because if they change your block, it would change the block in front and behind yours. This is how it is secure.

The benefit of blockchain in supply chain are endless. When I first started to hear about blockchain, it was to endorse corporate sourcing responsibility. If you are a coffee shop or a diamond retailer, you can ensure the specific goods you are selling were sourced responsibly. Blockchain will also promote data transparency to make things more efficient. Image all of the PO’s, and weigh certificates, and BOLs, and everything in the middle all having a link to one another on some sort of platform. Blockchain could offer the potential for supply chain data to become more accessible and allow for the ability to connect it and trace it back on a much larger scale.

After reviewing some articles on blockchain, it seems to me the best way to explain its benefits is that it will allow an avenue to understand how goods and services are connected, all via digital means rather than paper trails. I think this is very cool but, like many respectable analysts, I have my doubts about it. While I think there will inevitably be more of this technology around, I also think it will take many years for industry to adopt it and many more to utilize it at scale.

While not the most exciting topic, I think it important to start to become familiar with emerging technologies and improvements within our industry. Supply Chain is evolving daily and it’s just one of many reasons why there is never a dull moment in my life!

Cheers!

Featured beer: www.logboatbrewing.com

The Future of Trucking....Freight Futures?

Good Evening and Happy Master’s Week! As I write this weeks’ entry, I’m sipping on a Normal Pils which is (you guessed it) a Pilsner brewed by Destihl Brewery in Bloomington/Normal, IL. I grew up in that area of Illinois and have seen Destihl’s beers since I was of age to consume their different beverages. I also spent many an evening at their restaurant and brew pub in Champaign, IL where I lived for some time.  I’ve had friends comment that they’ve found Destihl’s beers in restaurants and bars as far as California! It amazes me a little mid-west brewery could enter a market as far away and as complex as California’s, but I’m sure the market barriers of entry into California aren’t that difficult; one probably only needs to ensure the can/bottle has been recycled, the water to make it was not stolen from fish, the truck that got it to the store was only ran by renewable electricity, the lab the beverage recipe was produced in never employed rodents, no Hollywood actors were offended during the beer production, etc. (Only Kidding).  My wife thought it appropriate to pick up a 6 pack at their amazing new brewery/tasting room on our way back from Chicago for a wedding last weekend. I am glad she did as she is out of town this weekend and it’s just myself and Hank and Harry. I will enjoy the Normal Pils and they will enjoy their normal biscuits! Here is a picture of Hank and Harry and my Normal Pils.

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Hank and Harry Like Beer Too!

No Beer for Corgis!

 

Anyway, I usually really like pilsners but I find they require a good pilsner glass to really allow for the full experience. Out of a can I think they taste pretty flat. I also am a big supporter of avoiding a can when drinking beer unless you are consuming something at the same level (or below) of Bud Light. This beer is good but out of the can it produces a frothy foam with no real underlying carbonation. It also is a little cloudy when my experience with pilsners is usually they are much clearer and refreshing. I would recommend this to someone who doesn’t like champagne but prefers a dry wine. You’re getting some interesting flavors, somewhat grassy, but it hits you immediately and there isn’t much “sparkle” like a typical lager. I’m no beer snob so I find it very drinkable, but I would probably prefer some other pilsners that I’ve had before I went searching for this one. 

Now that I’ve mentioned the important stuff, today I wanted to talk about the new Truckload Freight Futures market that was recently opened a couple of weeks ago. To be very honest, aside from the basic finance classes I received when getting my MBA a few years back, I’ve really not delved into the whole “futures market” thing and how it effects participants, the market, and possibly myself. I figured many others who’ve heard the news are probably experiencing the same confusion. Or, like they say in Normal, Illinois, CORNfusion!

Recently, I did some research to try and figure out what the freight futures markets means for me. To put it simply, futures are contracts for goods/services bought and sold before they are actually ready to be consumed. Futures of agriculture commodities, oil, energy, and even ocean transportation are traded on future markets. My buddy, Joe, is an economist who currently resides in the Normal, IL area (3rd mention of Normal, IL…what??) and once suggested we start a Beer futures market, but he eventually assumed the market couldn’t handle the volatility based on what our weekend plans were! Of course, that was years ago, and Joe is a successful economist with other things on his mind now, so what does he really know? You know what they say about economists- They assume everything…except responsibility! 

Anyway, Freight Waves, DAT, and exchange “Nodal” partnered up to create a new freight futures market. Futures provide a way for participants in the industry being traded (and outsiders) to hedge their business by purchasing contracts that agree on a price for a particular transaction in the future, and that transaction’s price can go up or down before the contract expires. Within the market, there is theoretically a “buyer” and a “seller” of the contract. The seller (let’s say a trucking company) offers a trucking lane at a certain rate to be sold at a certain time. A buyer could see the rate and think that it is fairly attractive for that time of the year. The buyer could buy the contract with a set expiration date, and if the price of that lane goes up (per DAT’s freight index), they could sell the contract for the new price and make a profit.

On the other hand, trucking companies could sell the contract at a guaranteed price in a time when the market might be volatile. Let’s say JB HUNT sold a contract that was from Chicago to Atlanta for $1.66/mile on April 22nd.  If, on April 20th, a severe storm in Northern Illinois causes capacity constraints, and rates sky rocket to $1.80/mile, JB HUNT just saved themselves some $ while also maintaining a level of cost predictability.

With all this in mind, futures came about with the idea that there is an underlying asset for sale. For the case of freight futures, I am not sure who is backing that asset or how it could be “Delivered”. There are stories of retail investors securing livestock contracts and letting them expire as the buyer, resulting in a truckload of hogs being delivered to their office. I am not sure what would happen if an investor did the same with a truckload lane. I’d prefer not to have a JB HUNT driver showing up at my house for his next load trying to park his rig behind my neighbor’s mini van! You know what you get when a JB HUNT truck leaves a truck stop?- 2 parking spaces! Just kidding, just kidding!!- I’ve heard that joke referring to just about every major trucking line. I used to work for JB HUNT so I thought I would yank a few chains.

All in all, a futures market for trucking is supposed to allow for some stability in the market with less rate fluctuation. If the market is allowed to predict price levels, it should, theoretically, be less reactive to events that could cause significant volatility. If you are interested in seeing the current rates based on the DAT index, they can be found here: https://www.dat.com/industry-trends/trucking-freight-futures/ .

I’m off to watch some more of the Master’s! Until next time, Cheers!

 

Featured Beer: www.destihl.com