Supply Chain Now Radio Episode 302
Prefer to watch the podcast in action rather than just listen? Watch Scott and Greg as they welcome Mike Mills with Blue Ridge to the Supply Chain Now studio in Atlanta, GA.
“Why would you want to move the wrong amount of inventory around more efficiently?”
– Mike Mills, Director of Business Consulting at Blue Ridge
ERP systems and warehouse management systems (WMS) are commonly found in large scale enterprises. Unfortunately, they are just as commonly expected to address challenges and solve problems they were not designed for. This leads to a serious misalignment between expectations and solutions.
These systems are not silver bullets. In fact, the best solutions often come from targeted technology that is selected specifically because it is able to address the unique circumstances in play in a given company or warehouse.
If the supply chain is to consistently support overarching business challenges, one of the primary factors to focus on is the customer experience. Minimizing disruption for customers is often associated with a higher cost to do business, and so companies have to carefully weigh the strengths and weaknesses of any approach they plan to take, optimizing for both cost and customer satisfaction.
In this interview, Mike discusses the following realities with Supply Chain Now Co-hosts Greg White and Scott Luton:
· The difference between functional supply chain planning and a profit-oriented approach that drives corporate objectives
· Fully understanding how min/max and safety stock factors affect inventory management, materials planning, and overhead costs
· How (and why) to avoid the “oversimplification trap” when it comes to supply chain technology and processes
[00:00:05] It’s time for Supply Chain Now Radio Broadcasting Life Supply chain capital of the country, Atlanta, Georgia. Supply Chain Now Radio spotlights the best in all things supply chain the people, the technology, the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good morning. Scott Luton here with you, Liveline Supply chain. Now welcome back to the show. On this episode today, we’re talking shop with a Supply chain technology leader that’s helping companies look around the corner and plan much more successfully. You know, as we’ve been talking, people think W mess or ERP systems can handle supply chain planning. But from what I’ve learned, they can’t. And we’re gonna talk about why. So stay tuned for what promises to increase your Supply chain Accu. One quick programing note before we get started. You can find splotchy now wherever you get your podcast from, including YouTube, Apple, podcasts, Spotify, you name it. We’d love to have you subscribe so you don’t miss a thing. OK, so let’s welcome in my esteemed and fearless co-host on today’s show, Greg White 0, Supply chain tech entrepreneur, trusted advisor. And I got to say it again to undisputed northwest Atlanta tennis champion. We’re talking about tennis coming to the show. So, Greg, how are you doing?
[00:01:24] I’m doing great. Thank you. Not yet undisputed. Still disputed. Legit. We could say legit. You know, I prefer a legit outlet. I just. Though it didn’t get to react. I know. We’ll know in a week or so.
[00:01:39] Yes, we will. We will. So we’ve got a great guest today. And I’ve enjoyed some of the prep conversations that would do with all of our podcast. I’ve learned a ton. I think my IQ is finding a way to kind of increase a little bit here. So let’s welcome in our special guest for today’s show, Mike Mills, director of business consulting in Blue Ridge. Mike, how you doing? Doing well, Scott. Great to have you here. Yeah. You calm your ears must have been on fire because we’ve heard a ton about you and your background and what you’re doing. And I’m looking forward over the next hour to learn a lot more and talk shop. So, Mike, before we start talking shop, before we start talking Supply chain leadership, best practices, certainly supply chain planning best practices. Let’s get know Mike Mills. Yeah. So you started a band, R.E.M. and them. I’m kidding. We were we were talking before it. Yeah, legit stuff. We were talking before we kicked off. Just how often Mike gets those bad jokes, just like the one I’ve added to that thousands of Bauder, you know. Tell us where you grew up. Give us an anecdote or two of your upbringing. It really, you know, when you think of your your your form of formative, formative years. Are you good, grandma?
[00:02:52] Yes. What sticks out? Yeah. So I’m an island boy. I was born in some islands called the Turks and Caicos Islands not too long ago. You would somebody would ask Miura is from, I’d say the Turks and Caicos. And they go, huh? Where’s that? Now everybody wanted to be there. Yeah. Yeah. Yeah. So born in the Turks and Caicos, but grew up in NASA, Bahamas and ended up going to school in Chattanooga, Tennessee. OK.
[00:03:22] Talk about culture shock from the islands to Chattanooga, Tennessee, with a small Christian school up in Chattanooga, Tennessee, called Tennessee Temple University. OK. And born to my father was a is a preacher. You’re a bad guy. Yeah, I think that’s where I get my fire from.
[00:03:45] Yes. And said and you’re exceptional and order skill. Well, your ability to convert your prospects. And that’s all about origin Miura. It feels like it.
[00:03:54] You know, a body out make it in these meetings day after day after they sign and baptized mother.
[00:04:02] My mother was is a schoolteacher. So that’s that’s, you know, a little bit of background. Think about myself.
[00:04:12] So if I can. So you’re your father. Preacher. Your mother, a school teacher. That’s part of the fabric of the country.
[00:04:20] What’s one thing that sticks with you today that that they imparted upon you? And there’s probably a there. But what’s one thing that really sticks out? It’s thousands. You know, one thing that sticks out is treat people with respect and always treat people with respect. And that is a lesson that I carry throughout my life. It’s it’s truly been helped me to be successful in in and put me where I am today. Yeah.
[00:04:49] Awesome. OK, so let’s switch gears. Let’s talk more about kind of your professional background. So what kind of preceded your current role here? Lu Rich.
[00:04:58] Yeah. So like. Hold the role of director of business consulting here at Blue Ridge, been with Blue Ridge for about 14 years since it became Blue Ridge.
[00:05:08] Right. You’re a founder. Yeah. 2007. Time flies when you’re having fun. Yes.
[00:05:15] But prior to that was with E-3 Corporation for a number of years and then moved on to JDA software. During the after the acquisition of E-3 by JDA back in 2000. Both organizations I was involved in the as a consultant in the educational side of things. And that role has allowed me to work with thousands of buyers all over the world. And I’ve been able to to see and understand the challenges that these organizations are feeling today of different industries, different buyers, different countries. And you get a firsthand understanding of of the challenges as well as the opportunities. Right. That these guys are facing today. Another firsthand view of this was prior to jumping into the software side of things was, oh, working with a large furniture organization right out of college and also working with a sporting goods retailer. So have firsthand knowledge of of all of these types of challenges that companies are facing today.
[00:06:25] Mm hmm. Yeah. I mean, you were a practitioner. Yeah. Right. I mean, you’re. So while you’re involved in technology, you’re really practitioner first. That’s exactly. And and use that expertise to shape and and deploy technology.
[00:06:39] So when I’m talking to buyers and talking to these different organizations, you’re not talking to someone that came out of banking world and somebody taught them how to say this.
[00:06:48] Right. Right. It’s first team lived it and lived it. Yeah. So now we’re going to bring you on the planning side at Sports Authority. On the planning side, they’re also spent some. You did both side. That’s right. Planning and forecasting and replenishment.
[00:07:03] Yeah. Mm hmm. I can imagine how impactful that is in the conversations because you’ve been there and done that. Yeah. Rather than coming straight strictly from technology. Nothing wrong with that. But you have different experience. That’s exactly right. So you can really relate to the lot of folks here. We are collaborate and working with. So as I was trying to take notes fast and furiously on the pre-show conversation we were having, one of the things that you are talking about is this when it comes to supply chain retail or a real supply chain sorry I added a T there real supply chain planning solutions. This notion of a functional approach versus a profit oriented approach. Tell us what the heck we are talking about.
[00:07:43] Yeah. You know, when I think of Supply chain planning solutions, I think exactly that. Right. There’s a functional approach, meaning, you know, completing the process as efficiently with the given time and the tools that are available to you. And also the ability to be able to react to exceptional demand to avoid kind of out of stocks and avoid excess inventory. That’s that’s on the functional side. But there’s also a profit oriented approach to supply chain planning as well. And that is having the tools to drive towards those corporate objectives. Yeah. We’ll talk more about that as we start to move this discussion. Right.
[00:08:28] What’s good, I think. I think as you as you think about it from that perspective, yeah. Functional is a lot about fundamentals and responding. That’s right. And the approach you’re talking about, that you advocate the profit oriented approach, it’s more about preempting and financially optimized. Right. Right. And, you know, in the past, technology was really only able to respond. I mean, anyone out there who’s done planning or if you’ve got your if you’ve got your note taking device. Right. Think Min Max, you’ve probably heard the term Min Max, right? You’ve probably heard the term safety stock. You’ve got to consider things that that can impact your ability to to keep goods in stock and functional approach is really just very basic and most often responsive to the speak and keeping basic.
[00:09:21] Let’s establish some fundamentals. Yeah. For our listeners that may not have the wealth of experience you’ll have here around the table. Min Max and safety stock. So. Yes, yes. No you go ahead. Yes.
[00:09:33] The whole point of safety stock is just in case inventory. Right. We hear a lot about just in time inventory and all these things. Just in case inventory is what if a delivery is late or what if we get a sales spike or, you know, something like that occurs? What if. What if Corona virus hits the ability to deliver? Right. Things like that. So it’s inventory you keep just in case you need it. That’s safety stuff. Yeah. And then the min max is really it’s hey, it’s really this fundamental. It’s a number you very often put on paper or in a spreadsheet that says when I get to this amount them in by up to this amount the max. So it could be 1 and 3 when I get to one by till I get to 3. And there are many, many companies out there whose process of managing their inventory is that basic.
[00:10:26] And there’s no sign there’s no real science that goes yet to that. Min Max kind’s a lot of guys feel they’re at a gut feel. You know, as far as the safety side is concerned, a lot of the companies that we’re working with today, they kind of use this linear approach to safety stock. Right. So we keep X amount of days of supply or. Yes. All times. Right. Ryder. They break it up by ABC ABC item. Yeah. The A’s get this much and the bees get that much less and CS get that much. And it’s just woefully inadequate as far as we’re concerned.
[00:10:58] And as it relates to safety, stock safety or quick. Yes, safety, stock view a little bit differently than it was viewed, say, 10 years ago. They could put it if it’s mismanaged. Right. You’re not making any money on what you’re keeping in safety stock.
[00:11:14] Well, that’s really I mean, that goes to the approach that Mike is talking about.
[00:11:18] This profit is profit oriented and writes is a perfect segue way back in that question. Right. And then, you know, profit oriented approach is also kind of leveraging these predictive predictive technology that’s out of date.
[00:11:32] Right. Right. Right. And it’s solely meant to kind of avoid customer disruptions and overuse of safety stock. That’s right. That’s exactly right.
[00:11:42] It is really driving you towards that fine line of how much risk do I want to take? Because if you you know, if you want your customer experience to be that we want to have the goods 100 percent of the time. Most companies can’t afford to keep that level of inventory because demand fluctuates. Right. And and if you want to keep if you want to keep in stock 100 percent of the time, if you’ve ever sold 100 hundred units in a day, you have to keep one hundred units of saison stock that, you know, the coronavirus is is a touchy situation.
[00:12:19] And we’ve got to keep in mind the families. And so my folks have been disrupted. However, just taking a business example out of that, we’ve averaged at least about some stores that did not have enough masks on hand for this huge spike.
[00:12:33] Yeah, that’s going to be every store. Me that Qantas. Yeah. Got you. Like that. It’s literally impossible to predict something like corona virus. Right. Because first of all, that the spread of Corona virus is not as big as the perceived impact of Corona virus. And people, for instance, are buying masks for the wrong reason. They’re trying to buy masks to keep themselves from getting the virus. And actually, those masks don’t do that at all. The masks only help if you have the virus so that you don’t, you know, reject it. So, I mean, think about that. There isn’t enough artificial intelligence or actual intelligence or human intelligence yet yet to predict something like that. Right. I mean, that that is literally an unpredictable situation. But there are situations that are just below that level of impact.
[00:13:25] No one can predict on a much less serious note, chicken for Super Bowl or even playoffs. Chicken Wings. I’m sorry. Yes. You know, having been in the food business, we had to make sure the stores, the restaurants had plenty of chicken wings on hand, more so during that two week stretch than the time a year. So that’s much more predictable and ended up that way.
[00:13:47] But it is a significant spike and a lot depends on the popularity of the teams in the soup. That’s right. Like was one of them not in the Super Bowl for, say, 50 years. And people wanted to see them win.
[00:13:59] I don’t know who that go, chiefs. All right. Q So getting back to the discussion at hand, Gregan, I know you’re also talking about why Dubie Mass or ERP doesn’t work, right?
[00:14:11] Well, yeah. So, I mean, this hasn’t been a discussion that Mike and I have had as supply chain professionals for, let’s just say, more than two decades.
[00:14:20] What you say. Right. Let’s agree to not say anymore. Yeah.
[00:14:23] Leave a little more than two decades in. And it’s because as practitioners, both of us fell into this trap of of thinking that had a warehouse management system, AWP Mass or enterprise resource planning system ERP, which is a fancy way of saying your accounting and finance system, thinking that those solutions can really solve those problems. And there’s two foundational problems there. One is. An ERP is more of a manufacturing or finance type solution, and, you know, the business problems the Blue Ridge solves are for distributors and retailers. And and while a lot of people try to say, hey, it’s good enough for manufacturing, it’ll work downstream, the dynamics of the supply chain are so different downstream that that it doesn’t work. And then the W-M s is really just a solution that tracks and moves and positions. You’re in inventory inside the four walls of a warehouse. Once it’s arrived. Now there are some other capabilities that allow you to position it in the right warehouse, but usually doesn’t also translate this. It doesn’t also translate into the right amount in the right way warehouse. So but anyway, there those are the probably the two biggest issues in in addressing Supply chain planning with W-M s and ERP. I mean, I don’t know. What do you.
[00:15:47] Yeah. You know, this this topic within itself is an interesting topic. You know, when Andrew first came to me with this, like, wow, this is perfect. Right. And the reason why I say that is because our sales guys today at Blue Ridge are being asked this question constantly. And in their ass, they’re being ask another question on top of that and that question is, all right. Should I install a new WOMEX system first? Oh, boy. Or should I install an ERP first before I do supply chain planning? Right. Yeah. And that’s an age old quiz. It’s an age old question, but it’s an age old question. But we’re still being faced with that decision today. Yeah. And Greg, you’re right. Right. When you start to break it down and you start to think of what a WME system does and what an ERP system does, then the answer is pretty simple. Right. They’re they’re more geared for manufacturing, like you pointed out. But if you start to think about the complexities of of what a retail and distributor facing today like hub and spoke management. Right. Where you dealing with these multiple echelons? How do you manage that?
[00:17:07] Right. So you might want to explain that to folks. This whole multi-national.
[00:17:10] Yeah, multi, multi echelon inventory optimization by Blue Ridge is a solution that helps us to manage the demand signal from the lower echelon, be it a branch or a store fulfillment center, co-development center backup to an upper echelon, which could be a regional DC ascensions central distribution center and backup to the supplier.
[00:17:33] And when you’re starting to think about the limitations and the capabilities of of an ERP system, what they’re basically doing in an ERP system today, Scott is just rolling up forecasts from that lower echelon and using that forecast as the ordering signal backup to supply chain once again.
[00:17:55] So if you sold 5 or 5, is that what you’re slaughterer 5? OK.
[00:17:59] Right. And you know how inadequate that is. Right. It needs to understand a lot more than just, hey, I’m selling 5 down at my lower echelons of order. 5. Back up. Yeah, because it’s not as simple as that. Right. Because it comes in a box at twelve box of twelve. Right. Right. And not only am I ordering that item right. I’m ordering other items along with that item. And it needs to understand that when I do place an order back up the supply that I have to buy truckloads or container loads. Right. So it’s a lot more complex. An ERP system and it’s systems at its core cannot handle that.
[00:18:39] So that goes back to the question you were asking about safety stock, because we just outlined a scenario where you really need five. But you have to buy 12. So you just bought seven pieces of safety stock. That’s right. So your solution needs to figure that you’re going to buy into safety stock when it’s calculating how much safety stock you need to meet the customer experience you want to have. So you can see I bet eyes are glazing over all over the world right now. You can see how quickly it gets that complex. And you know, one way that I simplify it is what you sold has almost nothing to do with what you’re going to order from your supplier. That’s exactly right. Because of these supply chain constraints and the translation of that demand as you go upstream. All right.
[00:19:27] So you have to be aware of those complexities and manage those your kind of speaking to a trap of incorrect thinking and planning. Right. Oversimplification. Yes, yes. Yes, yes. Yes. So how do you avoid it? Well, first off, how do you fall into the trap?
[00:19:46] What what does that trap exist? Yeah. You know, a lot of times when we’re in these sales cycles, you know, we find we quickly find out that there is a mandate from upper management that says go look for a system. Right. And and the lack of proper vetting isn’t there. Right. No, they don’t. They don’t properly vet the solution to find out a couple of things. The capabilities and the limitations. It doesn’t really fit their business. Right.
[00:20:19] I think a lot of people in business struggle to understand those relatively basic complexities that we’ve just discussed. Yes. It’s so easy to say ERP is where you need to go. And that mandate from on high comes down and people go. OK. OK.
[00:20:36] You can look for one, especially in this environment. Where were executives and the folks on high? They’re looking to put invest in the latest Technical Rod technology platforms. That’s that can present to be the magic wand to the business. I mean, there is that there’s a reason why these technology firms are growing left and right.
[00:20:55] Well, there’s only one word I would extract from that. And that’s the latest. They are not looking to X to to invest in the latest. They’re looking to invest in the simplest. What you see so often is I want one solution that does everything, everything. And what you’ve got with ERP is it’s a mile wide and it’s an inch deep. It’s very deep in terms of finance. It’s very deep, in fact. And in terms of manufacturing planning. Yeah, but it’s almost nonexistent. In fact, a lot of times what they do is they apply manufacturing, planning to distribution and retail. And we’ve already talked about the fallacies there.
[00:21:31] So because those the solutions have no concept of basic things to your point. Great. Like supply constraints. Right. Yeah. Building to truck loads. It has no concept of kind of this auto cycle optimization. In other words, do I have enough inventory to last me until the next time I need to buy well or join the ordering or drawn ordering.
[00:21:56] Right. Because it’s a lot of times in manufacturing if you need this one part to conduct production, even though you buy five or 10 parts from a supplier, you buy that one part because you’re not you’re building to a production schedule as a manufacturer, not responding to demand. And as a retailer, you might buy five hundred or a thousand items. And it makes sense if you’re gonna fill a truck or a pallet or whatever to buy as many of those items as you can from that particular supplier.
[00:22:27] So in the pre-show, we’re talking about from a cost perspective, the danger of moving around the wrong inventory. Yeah, right. Whether it’s a wrong product or a wrong amount. Yeah, yeah, yeah. Yeah. We’ll talk about that. And also because Greg, I know your background. I know both of you all have practicioner. You were. Yeah. In merchandising and in supply drives. You can both pass speak to this first hand. But but tell us more Waddy. The obvious question is why is that the wrong thing to do? Yeah. Any examples you might have? Yeah, sure.
[00:23:00] You want to? Yeah. You know, we always, you know, wrvs. Right? And we always laugh. Get a chuckle out of this. Why do you want to move the wrong amount of inventory around? More efficient.
[00:23:17] Yeah, right. Well, that’s the answer to the question.
[00:23:20] Why? Why would you not do w mass before takes. I’m sure you’re planning. Right. Right. Because chances are good. Almost 100 percent of the time that you have the wrong level levels of inventory. And then then you go an engineer physically, physically engineer a warehouse based on the presumptions and the information that you’ve got from those levels of inventory. And then you go and right size your inventory and you’ve got to re-engineer, physically re-engineer the warehouse or build new warehouses and then you’re installing w w a mess again.
[00:23:55] Right. Yeah. And then as far as an ERP is concerned, what you find out, you install the ERP and then six months later you realize you know better off than you were before. Service is still in the tank. Access is higher than ever. Right. Right. And you have no visibility into why it’s like. Yeah, that’s exactly right. Because like you pointed out, it’s a mile wide and an inch deep. Yeah. Versus Supply chain, which I kind of think of it. You know, it’s a foot wide and three miles down. Yeah. Yeah.
[00:24:27] So let me ask you about this, because what you have referred to a couple of times is, is ERP is not a one size fits all. It’s not going to magically make your problem disappear. What I’m hearing you’ll speak to the value of is customized solutions that could either bolt on to current earpiece or what we’ll just that cut customization about the power customization.
[00:24:56] I would say targeted. I would say targeted because customization. This is just my personal preference, Mike. I believe this to customization is a dirty word. And it comes because people think immediately money. Well. And and also customization means my technology is distinctly different from Mike’s technology, even though we have very similar problem. OK, so think of it as targeted. So let’s just take two examples. If you’re talking about ERP, ERP typically is not very deep. It historically has not been very deep in warehouse management or in retail and distribution planning. And those are two areas where it pays to go very deep. And that’s why companies like Blue Ridge, like Manhattan, like other companies that have products in those verticals exist is because there’s not enough depth there. So they’re targeted in those areas. And and they do things like on the WME size, they optimize labor, minimize labor, optimize efficiencies within the four walls or in supply chain planning, which Blue Ridge does, they optimize the economics and the execution. And the planning of of inventories and supplies and demand in in distribution and retail. So I like targeted. Yeah, because. Because a customized solution. I mean, and that’s the problem with a lot of ERP is they are heavily customized. They’re difficult to impossible to sustain because you’ve got this one piece of code that is really core to your business that no one else has. And the person who wrote it is long since gone from whatever consulting firm built it to the next consulting firm.
[00:26:41] So targeting and do you say economically optimizing?
[00:26:45] Yes. Mandoline, all kinds of jargon. Celan, technologist, Lu.
[00:26:50] Well, I mean, that’s that’s the that’s the difference between that functional net profit oriented approach that once you reach a level of maturity of having solved the functional issues, which, you know, Mike and I and and lots of folks in in the Supply chain planning industry did decades ago. Yeah. Then you start working on economic jerai economically optimizing and so many people and you know, we see this every day. Scott, so many people are still trying to solve the functional issue that they aren’t even thinking yet about. The profit profit oriented. Yeah. And the economic optimization.
[00:27:25] So so in all of this, let’s talk about the customer experience because we’ve really kind of talked mostly about kind of within the four walls or within the business, you know, getting getting planning much more accurate, economically, optimizing it. Let’s talk about that customer experience. Where does that fall when companies embrace the right planning solutions?
[00:27:46] Consumer customer. Yes. Yes, sorry. Yeah. Yeah. I mean, you know, it it goes to that goal oriented aspect of the solution of saying this is what we can afford to fulfill on the first pass to our customers and then working back from those goals into how the system operates to do that.
[00:28:06] So, yeah. And that you know, when you start to talk about the customer experience, then you’ve got to pull in the conversation back to safety stock, right? Yeah. Having the right amount of safety stock to meet the goals that’s going to allow you to have a good customer experience. Right. You’ve got to involve that in e-commerce.
[00:28:23] Yeah, exactly. And you know, if your solution is advanced enough, you set those goals and let them work with and against one another. Yes, we can afford this much inventory, but we also want this customer experience for those of you who are just listening. I’m holding my hands in the air. But, you know, we want we want a certain level of customer experience. But we can only afford a certain level of of inventory. And then you let the solution. And again, this is where that economic and profit optimization comes in. Yeah. Let the solution solve for that and then works backwards in how to how to, you know, what what you can afford, how you build and then how you execute that plan as well because. Yeah, that’s an important part of it is Muj.
[00:29:08] But what you need tools that kind of supports that whole customer experience, right. You need tools to be able to set the level of customer experience that you desire. Yes. But then on the other hand, you want to be able to understand, can you afford that level? Yeah, right. So you need a tool that says here’s the customer experience goals that I desire. Here’s what’s here’s what it’s going to cost me. And then I’d like to know something else I’d like to understand if I have the inventory more available to meet those goals. Yes. What’s the additional sales that I tend to become?
[00:29:48] Yeah. Right. Good point, isn’t it? Is it worth it. And is it worth it. Yeah. Right. So I did not think this is the first of out of almost 300 episodes. We’re gonna reference Edgar Allan Poe. Right. Tell-Tale Heart. Remember that in grade school. Yeah. So you know what he said. Yes, sir. It’s where I remember the raven. It’s where their murder. It just might take you back. The murderer has killed. I think his significant other and has buried her under the planks of his flooring. And the heart is still beating. And the whole thing is about how the heart drives this guy crazy or in a way. So Edgar Allan Poe works his way into Supply chain. Oh, wow. Only you could do it as a resident. Well, this is where this why that’s relevant. You know, we like asking. We like having our guests put on the Antar consultant hat. Right. There’s some we already reference that there’s technology. It is the technology golden era right now for platforms for you name it, Bolt owns it. There’s so much money going into the space, so many companies looking to better compete in the e-commerce era. So what are the telltale signs? Michael, why have you put your antique insulted head on? But I help a lot of our listeners that maybe looking to invest or do the telltale signs that a solution that you’re looking at is not right.
[00:31:06] Yeah. Good questions, guy. That is. Yeah. And in my experience, what I’ve seen is most make the mistake of selecting a solution, that is to what we’ve been talking about, more manufacturing oriented. Right. And going with a solution provider that through acquisition has acquired different software companies, have cobbled some solution together in a truly when you start to peel back the onion, it doesn’t really fit their business. All right. So if you are a retailer or a distributor of finished goods. All right. You need a solution that’s heavy in demand planning. Demand forecasting, supply planning. All right. And as far as you know, on this topic of forecasting, you really need a solution that is able to accurately forecast the customer and. Right. Forecast the customer. What you mean by that? Here’s what I mean. Being able to segment demand what’s real from what’s not, what’s causal demand that came from some type of demand shaping activity, a promotion organization or an event. Yeah. And and separate that from the stochastic forecast. What what? What was that. Yeah.
[00:32:27] You got a stochastic. I love that word on my fate. What does that mean. Or the slug jerai. Yeah, that’s the testicle forecast. That’s demand. You really can’t can’t predict because there’s not enough data around it. That’s exactly. And you just kind of throw it in this bucket and go average it. That’s it. Stochastic for you. OK. Let’s stochastic essentially means random. OK. Nice. But what you need is it sounds much cooler than random. Does that sound smarter than I really? Stochastic Lee referencing authors primary literature. OK. Right. You’ll never have to use the word random every day.
[00:33:04] You need a solution that gives you that ability and you need a forecasting system that has the ability to analyze each customer transaction. There are solutions out there like Blewitt’s that does that as the ability that’s heavy. It’s huge because if you think about all of the goodness that you can pull from each customer transaction. Yeah. Then you start to not only understand how much, but why and when other items bought with certain items.
[00:33:37] Right. What influences that purchase? I mean we wouldn’t think so much about it. We use that term influencer. Yeah. In so many ways today. I mean, you could see where the weather or corona virus has clearly influenced. There’s no. Yeah, that’s a really good point cause there’s really no history of people buying the amount of masks. So stochastic averaging man doesn’t work. That’s right. But the ability to identify an event and identify the kind of impact that it has and then use that for future reference. That’s that’s the causal that’s as causal aspect.
[00:34:15] And then the lost sales aspect. Right. A good forecasting system that’s worth its salt needs to understand what I would have sold if I had the product. And include that in the forecast as well.
[00:34:29] I was talking to a company that does something very similar to what Blue Ridge does. And they hadn’t thought of that. Yeah, they hadn’t. And I mean, they and they use A.I. and everything, but they had not thought of, you know, how often you have this discussion where it’s kind of a self-fulfilling prophecy. Yeah. Retailer orders 100. The distributor or the manufacturer supplies 70 then, you know. And their forecast goes down. Yeah. And then they are only able to supply 70. Right. So that is a really important aspect of it. What would I have sold or what would customers have bought if the product.
[00:35:09] If we’d had it. Exactly right. Right. Because to your point, Greg, you need a system that isn’t going to ratchet your forecast down in protests. Ryder tax, you stabilizes the forecast. Right. So when you’re starting to think of of solutions that meet your business, got to have those core things like we just mentioned.
[00:35:29] So can I go back to that? Yeah. Customer transaction. Yeah. So I think.
[00:35:35] What’s interesting about that is that an ERP, because it’s manufacturing oriented, isn’t really tuned into that at all, because the manufacturers don’t get the customer transaction at any right unless they’re doing D to see when in that case they’re really a retailer. That’s right. But so that is a really unique segment of demand for distributors and retailers. And that is super powerful because I think about the creepy ways that we can be tracked as consumers these days. You know, a retailer can know where you came from, literally your IP sometimes jerai direct your address. You know what you passed on your way there. So even if wearables even if it was even if it was virtual, you know, the ads you passed, you know, what search terms you used, what was on the page when you bought, they could have influenced all of that. Yeah. That those that can become really strong indicators of what makes a person buy. Right. Justin Bieber tweeted about it.
[00:36:34] Twelve year old girls want to buy a dress. All right. All right.
[00:36:37] So let’s let’s as we start to wrap up today’s interview with Mike Mills of Blue Ridge, one of the one of the ways we love to finish these conversations kind of go broader. Right. Think about the wide world of supply chain or really the global business air that would that we live in. What are some of the developments or trends or topics that are really on your radar more than others in the global business world right now?
[00:37:02] Yeah. You know, in. In all my ventures around these different companies, what you just got back in town yesterday?
[00:37:12] Yeah, yeah, I was up in Toronto for a couple. Nice. Yeah. Nice.
[00:37:19] Nice from the Bahamas. He thinks it’s cold here.
[00:37:22] I know when the fan blows, but this whole topic of of of sales and operations planning. Right. Yeah. More and more we’re seeing there’s a need for a tool that helps them to manage that process. A lot of P S a._p. Yeah. You know, s an open you know, a lot of it has been done through kind of water cooler conversations or was working with a company late last week. And this company has built a massive spreadsheet with tons of formulas to help to manage this whole process. And I always, you know, sitting there listening and watching them gloat over his work. And I’m thinking he wrote the formulas. He’s maintaining the spreadsheet. He better not win the lottery. Steve, Right. Right. Because no one else knows how to use this. Exactly. It’s not. It’s not systematize. Right.
[00:38:25] You’re speaking kind of. It’s informal S&P. Exactly. Get to folks at the WaterCooler. They happen to be in two different silos and they happen to talk about what’s going on in their respective business environments. That type of if we call it S&P, that’s pretty prevalent. Yeah. And across industry and even in this day and age. Right now, it’s amazing. More and more of it. Right. Really?
[00:38:47] I had a conversation with this guy on the merchandising side, on the planning side. And we told him that there is a promotion that we’re going to run. We told him about it, but he forgot it. Right. Just because. Because his word of mouth. So we need it. We needed to have seen companies are needing more and more need tools that help the men in that process, because we all know that supply chains are becoming more and more complex. And the need to have a collaborative forecast as well as capacity plans is more and more necessary.
[00:39:21] But not only that. Right. You need to be able to have a tool that can help you collaborate on and forecast, but then kind of match that up against the annual operating brand of the business as well. Right. Are we trending as much as we know about the forecast? Is it trending towards the company’s overall goals and objectives? Yeah. So there’s a need for that. And then the other thing that I’ve, you know, is reading the other day was the whole Amazon effect. Right. Amazon is now starting to private label items and it’s just causing chaos. So imagine this. You’ve got a retailing distributor and you sell products on Amazon. And now Amazon is actually offering the same types of products back to your customers on their label. On their label. Yeah. Right. And they have all the data to help them to understand what your customers need. Yeah. Right. And it is wreaking havoc on the bottom lines of these organizations. Politicians is now starting to take note, isn’t become involved in this. But that’s one of the things that I’ve seen that I think is is is kind of scary.
[00:40:27] And brands are flooding away from Amazon because of that. I mean, we talk a lot about this, the rise of this. I won’t go into detail here, but we talk a lot about the rise of this. Anyone but Amazon, class of ABH. Right. To combat FBA Ryder fulfilled by Amazon because companies don’t feel safe on Amazon anymore. And it’s there’s a potential for this to be the race, a race to the bottom where Amazon is just a private label, marketplace. marketplace. Right. I mean, I think they’re big enough. They’ll see that and catch it. But they’re headed that way. And interesting that you mentioned manual or spreadsheet planning. And then Amazon, because this is not a luxury anymore. If you if you don’t have a sustainable and and a and a scalable solution, if you’re using spreadsheets, you are going to get crushed. That’s exactly where I quote the great philosopher Big Tom Callahan from Tommy Boy. You’re either growing, right, Chris Farley movie or you’re either growing or you’re dying. There ain’t no third direction, no stand and still. Yeah, right. Yeah. You know, moving forward. Are you moving back? Yeah. And Amazon is coming for everyone. And now it’s not just Amazon, Shopify and and Alibaba and other companies are gearing up to enable this kind of commerce as well. And you can’t afford to be proud of your spreadsheet while you sit in your dark corner and figure out how can I add 50 cells to this thing so no one else can do it. Exactly. You have to enable with people and processes and technology technology. Absolutely right. People want stuff when they want it. Right. Yeah. You know, nobody’s willing to wait anymore. Right. You can’t afford to forget. That’s a scary scenario. Yeah, that was a stark realization right there. Yeah. You can’t afford to forget it.
[00:42:12] So one more fact. This is this one was we can talk about all that. We all feed off this stuff. I love this stuff. But but I was at a supply chain conference late last year and I heard this this that this fact. It’s predicted that in 2020, there’s going to be a shortfall of truck drivers, upwards of 160000 this year. This year alone.
[00:42:41] Right. Last year didn’t help with a bunch of a bunch of trucking companies going out of business. Right.
[00:42:45] And so imagine what that’s going to do to the Supply chain. Yeah, right. So. Kind of given a Blue Ridge plug here, right? You need a system like Blue Ridge that can predict those lead times and forecast those lead times along with forecasting or calculating, rather, the variability of those lead. Yes. Back to this old safety stock. How reliable is your vendor? How reliable is the vendor going to? You don’t want to miss a window of opportunity? No.
[00:43:17] I need the safety stock to be able to manage my lead times and have the product there to protect the customer experience. So that was an interesting fact that I heard 160000 truck drivers and they went on to say that, you know, truck drivers are starting to get paid more than pilots, which there is also a shortage of that.
[00:43:38] Yeah. The pilots are. Exactly. And that impacts supply chain just as much, you know as well. One hundred six thousand. Wow. Well, you know, as we always talk about in the automation, you know, where there’s money, there’s a way. Yeah. Yeah. And as valuable and we’re talking in a show way back during Trucker Truck Drivers Appreciation Week, remember. Yeah. We talked about how truck drivers are now technologists. Right. They’re problem solvers. Now, while there’s certain elements and they’re currently being going on right now as we speak. Right, Elaine Halls, where automation, there might be someone in the cab. But you have machines driving trucks that all the other nuances and all of the problems at these at these truck drivers or these technologies are solving. We haven’t we can’t replace that yet. Right. All right. So we’ll see where that goes from here, Betty. All right. So let’s make sure that folks know how to connect with you, Mike, and learn more about Blue Ridge because you’ve got some really neat guns yet. Blueprint coming up. Big annual conference, right? Yeah. You got thought leaders supply chain. practicioners, super users. Lots of good informations is exchanged each year blueprint. But how can folks connect with you and learn more about Blue Ridge? Get through LinkedIn.
[00:44:54] It’s probably the best way, but if you want to learn about Blueprint, Blue Ridge, WW Dot, Blue Ridge Global dot com is our Web site. Lots of good information on that Web site. Encourage folks got kind of take a look at it.
[00:45:10] Tree up at a lot of research and data and in thought leadership pretty regularly. We certainly do. Yeah. Yeah. I follow you on Twitter, Flourish. All right. So. So, Greg, let’s see here. What a great. I want to bolt on like one more hour to Mike. Clearly beyond having been there and done it. But what he all the stops he makes and what he observes. This is this is compelling, I think.
[00:45:41] Well, he sees what’s happening out there in real life. I mean, it’s a little bit stunning, this description you gave of this huge spreadsheet, even though we just talked about how people’s understanding is much more simple. Yeah, we think it is. It’s still a little bit stunning when you hear stories like that, people forgetting about a promotion and these giant spreadsheets. And these are companies that are, you know, trying to compete in, you know, the day of digital transformation. Yeah. Look, it’s an m it’s an imperative. It’s not an alternative these days. You have to Dan Solla like you said earlier, or you have to be able to compete. And I’m I’m truly worried for companies that don’t get that. The stakes are too great. They are, Sarah. They aren’t now. I mean, there will be a place for those companies. Not all of them will get. But crushed. Someone will get acquired. Yes.
[00:46:36] Let’s not it’s such a it is such a. We’re to look back. OK. Let’s to go there now. Well, no, it’s just real quick. It’s it’s going to be a it’s going to be a a business case. This studied not just from a kind of planning and execution and a day to day leadership standpoint, but also this the story that Wall Street Journal report and other outlets of what’s taking place in the boardroom at Sears and what was allowed to take place. You know, I think we’re setting that that case study for years and years to come.
[00:47:07] I will only say this real briefly.
[00:47:09] This is a company that used to be able to ship you a house by mail order. They should have seen this. I mean, what is so what is electronic commerce but a catalog online or on your mobile device? How did they not see it coming with you?
[00:47:25] It’s because they were they were too invested in their current infrastructure. And this is what companies have to do to survive, not succeed to survive. They have to look at themselves. Like of everyone else looks at the tradeoffs they have to. I mean, at Blue Ridge, we had to make the decision in 2011 to go to a cloud declaration. And it was, I guess, internal and external battle challenge. But but you know it. That is what broke loose this company and its ability to get to be able to process so much data to do these transactions. And it’s similar with any other company you have to look at yourself from without as well as within move at the speed of your customer. I have to. Yes. Got to take more companies to do that.
[00:48:10] Ok. So we’ve been talking with Mike Mills, director business consultant with Blue Ridge. Fascinating conversation. Mike, want to give you back, get you back on and bring the rest of your world. Travis, I really enjoyed it. And when you’re not making music with you or with your band traveling the world, you have to spend time out here in our studio. I think I’m a better dancer, Sarah. I’ve been said if you’re a to watch or you want to. We made you know, I don’t know. But but really great to finally meet you in and hear a lot more about your supply chain perspective. Okay. To our listeners, you can learn more about Blue Ridge at Blue Ridge Global dot com. We’ll include that link in our show notes Greg. The hits keep coming. I really enjoyed this episode. Really enjoyed. We had a couple episodes yesterday. Yeah. That we’re looking forward to releasing as well. One in particular on mentoring best practices, which really is a universal. Yeah. So to our listeners, stay tuned for that.
[00:49:07] Can’t wait one quick time. We talked to Mike Griswald about S&P sales and operations planning and sales and operations execution. That’s something you want to listen to. And I think maybe we can certainly we can put that in the show notes those, too, so they can reference this one and that one so they can reference one another, because I think they’re both really, really valuable.
[00:49:28] Greene. We’ll be releasing that. I think our third installment in a recent series with Mike. Mike Griswald of Gartner. So more to come on that and to our audience. Check out our events and webinar tabs at Supply Chain Now Radio dot com variety of in-person and virtual events coming up, including our our global interactive forum that is entitled Stand Up and Soundoff. Right. Yeah. We haven’t formed an acronym for that yet. Graystone. Oh, that’s not the only one. We’ve got events with E.M.T. Rorters Events, the Automotive Industry Action Group, the Georgia Logistics Summit, Resilience 360 Mode X, which is just largest supply chain trade show in all of the Western Hemisphere. And Erlend Supply chain words coming out of which Blue Ridge was nominated. Congratulations. Well, richly deserved. But if you can’t find some something on our Web site at Supply Chain Now Radio dot com, shoot us a note r CMO her email us at mandar at Supply Chain Now Radio. RT.com. Her inbox is overloaded and folks are doing exactly that. You suggest something. Don’t be surprised people are gonna do it right now. Maybe we’ve made it too hard to back it up or hit us up on Twitter or Twitter. There’s a lot of fascinating say all the conversations that meaningful conversations that that take place in 140 characters or less. So anything we miss before we we wrap up here. Greg, give us. Come on. Go down the gantlet challenge once more that companies have got to they’ve got to look.
[00:50:59] I mean, digital transformation. And what Mike is talking about is an absolute imperative for companies. They have to do it. If they don’t, somebody somebody will do it. Yeah. And somebody is. I mean, the truth is, somebody is and you know, I am just a year or so ago, I was at a conference heating and air conditioner. ATDC Hardy. Trident. Yeah. Yeah. And I heard a guy say, I can’t envision a world where Amazon can do what y I’m inserting my 50 million dollar HGC distributorship can do. I can’t envision a world where that where that could happen. And I had to go on stage after that. And I felt compelled. And I did say the entire problem is that you can’t envision a world where Amazon can do that. Because Amazon can literally do anything. And people have to think about. That’s right. There is not there is no defense against it. Forget Amazon against the momentum in this marketplace now driven. Thanks, thanks to Amazon opening our eyes, but now driven by consumers. There is no defense against the march towards digital transformation. We’ll put it on that note.
[00:52:15] Big thanks to Mike Mills with Flourish today. What a great idolization look for to have you back to our audience. Be sure to check out upcoming events. Replays were interviews, you name it, Supply Chain Now Radio RT.com. Find us and subscribe where we get your podcast from, including YouTube on behalf of Greg White. The entire team here. Scott Luton here wishing you a wonderful week ahead and we will see you next time on supply chain EFT thinks about.
Mike Mills is a subject matter expert with 20+ years of supply chain experience, Mike adds value to Blue Ridge by providing expertise throughout the sales process. Mike treats each sale as an opportunity to challenge the status quo and show retailers and distributors how to use Blue Ridge solutions to make a demonstrable impact to the bottom line of their organizations.
Greg White serves as Principle & Host at Supply Chain Now Radio. Greg is a founder, CEO, board director and advisor in B2B technology with multiple successful exits. He recently joined Trefoil Advisory as a Partner to further their vision of stronger companies by delivering practical solutions to the highest-stakes challenges. Prior to Trefoil, Greg served as CEO at Curo, a field service management solution most notably used by Amazon to direct their fulfillment center deployment workforce. Greg is most known for founding Blue Ridge Solutions and served as President & CEO for the Gartner Magic Quadrant Leader of cloud-native supply chain applications that balance inventory with customer demand. Greg has also held leadership roles with Servigistics, and E3 Corporation, where he pioneered their cloud supply chain offering in 1998. In addition to his work at Supply Chain Now Radio and Trefoil, rapidly-growing companies leverage Greg as an independent board director and advisor for his experience building disruptive B2B technology and supply chain companies widely recognized as industry leaders. He’s an insightful visionary who helps companies rapidly align vision, team, market, messaging, product, and intellectual property to accelerate value creation. Greg guides founders, investors and leadership teams to create breakthroughs that gain market exposure and momentum, and increase company esteem and valuation. Learn more about Trefoil Advisory: www.trefoiladvisory.com
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