Manufacturing Supply Chain Woes
Kris Harrington, Sneha Kumari, Curtis Strzinek and Johnathan Townsley
Welcome to our first Manufacturing Woes show. This is a show I’ll be hosting the second Tuesday of each month to bring people together in our industry to talk about what really happens in the world of manufacturing, and it ain’t all pretty. Believe me, our show aims to bring experts together to share their manufacturing nightmares, train wrecks, and meltdowns, and also reveal the wisdom gained from their mistakes and how they have learned to refine their skills and add more value at their company. I’m Sarah Scudder, CMO at SourceDay and today’s show host. Our platform integrates with ERP systems for manufacturing and distribution companies. So my team and I have lived through the good, the bad, and the ugly.
The founders of SourceDay, they spent years in manufacturing before deciding to build our platform to help manufacturers automate PO changes. Today I’m joined by Jonathan and potentially his son. We may have a special visitor with us, a mini supply chain star in the making, Sneha, Kris and Curtis. They have extensive manufacturing experience and I’ve asked them to share their wisdom and stories today.
To kick off our conversation, please put in the comments where in the world you are joining us from and a word or phrase that describes your craziest manufacturing experience. Think of the absolute wildest thing you’ve lived through in manufacturing and try to describe it in a word or phrase for us. Don’t be shy. Throughout the show, please engage with us in the comments and post questions anytime.
So with that, Jonathan, I think we’ll kick off the panel discussion today with you. So I’d like to start by having you talk to us a little bit about your background and how you got into manufacturing, everybody. It’s really been an interesting story for me as it relates to my career in manufacturing. Actually, as it stands now, I’m not in manufacturing anymore, but I never forget where I came from. And I started out more than 20 years ago in a very large industrial firm, Ingersoll Rand, and they had many different brands that you might recognize along their span. They had Trane air conditioner, Schlage locks, Club Car golf cars, all those brands that are pretty much household names. But I started out in the company as an export manager and working on the logistics and getting our ocean freight, getting our air freight, and really working on doing the buying, the nuts and bolts of procurement and supply chain for our plants that were offshore in China, Brazil, and in Mexico. And it was really interesting for that first year or so. So that was fun.
But really, I think the overall lesson that I learned in my first year and being in manufacturing is that you’ve got to be flexible and you’ve got to be ready for anything that can happen and they can come across your desk. So overall, it was a good experience. And I still reflect on that in a positive way. Jonathan, a fun fact about yourself that most people don’t know.
Something fun is actually, I got married to the same woman twice in one year. So my wife is Russian, and we got married in St. Louis. That was in April of 2010. And then we followed up a few months later in September and got married in her hometown in Moscow. And actually, I can thank my manufacturing background in getting connected with her and that we had an Ingersoll Rand manufacturing plant in Russia. So I asked some of my colleagues how I would go about asking permission of my then-fiance’s father for marriage. They walked me through the whole process, gave me all the language training, so it was great. So again, I have that bit of fun fact, but I owe it all to my manufacturing relationships and background. And we’re looking forward to your son, hopefully joining us on the panel, our supply chain star in the making may make a guest appearance. Indeed. Jonathan, thank you so much for being here today. It’ll be fun. Thank you.
Kris, you’re up next. We’d like to have you start by introducing yourself. Tell us a little bit about your background on how you got into manufacturing, what you’re doing today, and make sure to also share a fun, personal fact about yourself that most people don’t know. And then I’ll throw out your first question. Sure. So yes, I’m Kris Harrington. I am the President and COO of Gen Alpha Technologies, and we actually have built a digital commerce solution for manufacturers. It is designed to help them sell their parts, both their aftermarket new equipment and used equipment online.
What’s really unique about us as a business is that as founders, we all came from manufacturing, and we had a responsibility to grow the aftermarket business and support our equipment and operation. And in our time with a large manufacturer in mining, which I’m going to draw my stories from today, we saw our business grow in the aftermarket from $250,000,000 to $1.2 billion when we were sold to Caterpillar. So it was tremendous growth.
But one of the things that we began to understand is how the world of servicing equipment was changing and how you could utilize digital to support that change. So that’s a bit about what I’m doing today.
I actually started in manufacturing myself after I left the Navy. And I always like to say that manufacturing chose me because when I was in high school, there was a local manufacturing company that gave an award away for the student athletes of the year.
So it happened that they gave an award to females and males in each school in our district. And then they had this really wonderful evening that they did in there. They rented a space and they brought in a great speaker. The speaker for the night that I attended was Coach K. So your parents got to attend. And here was the coach of Duke, and I was a basketball player. So this was just really awesome and cool for me.
So when I got out of the Navy and I was looking for my first career and what to do next, I thought, Well, why don’t I go apply at this manufacturer who had seen something in me in high school? And I share that story because when we think about STEM and we think about all the ways that we’re trying to encourage young people and specifically young women to enter into manufacturing, this was one way that I went in, is that a manufacturer in the local area was recognizing, in this case, student athletes. But I think as manufacturers start to recognize different younger people and share with them what’s happening in manufacturing and what their career plans can be, it might be something that they would then get interested in. So that’s a little bit about me and a fun, personal fact. Well, you shared it in the LinkedIn message, but I’m from Wisconsin, so a very typical Friday night would look like a fish fry and a whiskey old fashioned. So not everybody is a whiskey old fashioned fan here. I think we’re the largest drinkers of Wisconsin is of another bourbon. But I’m a whiskey drinker. And a whiskey old fashioned is my drink of choice. We were at dinner a couple of weeks ago. I think you actually had a watermelon drink. Yes. It was called Watermelon Sugar from the Harry Styles song. Since I liked the song, I had to check out the drink. Yes.
So, Kris, my question for you is back in your machine operating days tell me about the impact your operation when raw materials did not arrive on time? Sure. So in the earliest days of my career in manufacturing, I worked as a sliding machine operator in a clean room, and I can recall a story when we were having a shortage of materials. It was late December, end of the quarter, and our fiscal year was ending. We were very busy trying to get as much product out the door as possible. I was part of a company that offered profit sharing. And as workers on the shop floor, we were all motivated to do everything we could to achieve our numbers in order to have the highest bonus possible. Well, that particular year, our supplier shortages were impacting our machine schedule.
As an operator, you were responsible for picking your materials in the warehouse, changing blades, setting your machine tolerances, running the machine, and then loading your end product on a pallet before it was packaged to be shipped. And I can’t recall what the exact problem was, but I know the disruption was creating challenges in defining the production schedule. And on this particular day, I changed the machine three times before I ever produced any final product. Now, what that meant for me in a clean room is that I had to take off all the clean room garments, cover all shoe covers, head cover, hop on the forklift to get the raw materials from the warehouse, prepare them for entry into the clean room, and then put all my clean room clothing back on in order to then set the tolerances on the machine. And I just remember that schedule changed three times. I thought management had lost their mind. And oftentimes when you’re on the shop floor, you don’t get an explanation as to why things keep changing. You just have to make the change. And I’m sure the sales team was calling customers and the purchasing team was calling various suppliers. But on the floor I felt like my shift was wasted and we lost valuable production time to help us achieve our numbers.
So as my time in manufacturing has evolved into various different roles, I always remember how material shortages can impact production, and mostly the people performing the task. I look for clear ways to communicate the supply challenges up and down the organization. And I look for small ways to thank people for their hard work, even if it doesn’t feel like on any given day that they’re having the impact that they would hope to. Awesome. And we’ve seen that accelerated in the last couple of years, with so many challenges with companies getting products and parts and entire production lines being shut down for days or weeks. Yup. We’re seeing it everywhere. Well, Kris, thank you so much for being with us today.
Sneha, you are up next. Joining us from Beautiful, So. Cal, some decent weather today here in Austin, too. It looks a little overcast, but it’s supposed to be in the 70s today. So I would love to have you introduce yourself. Tell us who you are. Talk to us a little bit about how you got into manufacturing. And then we would also like to have you share a fun, personal fact that most people don’t know about you, for sure. First of all, thank you so much for having me today. I’m super pumped, excited to share my experiences along with some great industry leaders, the panelists today, and of course, all the viewers. Thank you so much for joining us today.
I actually did not, like Kris was saying, that manufacturing chose her. I think I chose manufacturing, and this is a start where when I did my bachelor’s, I decided to do it in electronics and instrumentation, unlike a lot of my friends who took computer science. So I always knew that I had to do this and not something related to computer science. But then I actually joined the likes of the home automation industries. So joined them, did some QA. So I actually started in QA. My career was in QA and then moved on to do more of supply chain. So doing a lot of R&D, launching new products, which is super exciting. And that’s how my journey started. And when it comes to supply chain, I’ve done pretty much end-to-end, like starting with procurement to demand planning, strategic site, and the tactical side and the logistics piece and bringing it back and then finally manufacturing it.
So making it so that actually gives me a very good perspective of how a product actually is, how we bring in components. We actually put it together, make it, sell it, bring it back and all that so amazing journey so far, being very thankful to all the industry that I’ve worked with, and while I do not work in manufacturing right now, as Jonathan was mentioning, I still will always remember where all my experiences still as passionate about manufacturing as I’ve always been.
There’s so many pain points that I do want to share. But amidst all of that, I just have to mention that the learning that has come through the journey through the years that I’ve been in, this is just an unimaginably incredible. And I would always encourage everyone who thinks that manufacturing is kind of a legacy industry, is behind. Let’s just get out there, be there, see things happen because trust me, all the products that you use today somewhere is being manufactured somewhere, so this industry can really open doors, your eyes on how things happen and move around the world. You definitely want to give that shout there and one fun fact that I guess you did add it on LinkedIn. And I guess most of my friends know that too. I was visiting China for one of my supplier visits, and when I visited some of my peers, it was my first visit to China, and living in China was one different experience, trust me, I was a vegetarian back then. I’m not anymore. So when I introduced my name to them, they were like, very amazed. And they were like, wow, you know, Chinese. And I said, no, I don’t know Chinese. I’m not sure what you’re talking about. And they said, Well, you just said Nihao. I was like, no, I just said Sneha. That’s my name. Then that’s how I got to know that Nihao means Hello. And maybe I was using the best accent there for them to understand that was my name rather than speaking their language. But that’s a fun fact about me. And you might see a guest appearance from my two boys, two little boys who are also very interested in supply chain. Whenever I’m speaking, sometimes they actually repeat the verse that I say, which I’m like, wow. So I’m happy about that. You might see some guest appearances there as well.
I’m happy to have supply chain stars on our show anytime. So all the kiddos are welcome. My first question for you is tell me about a time when you had to deal with the craziness of meeting a customer demand. Yeah, for sure. I do want to mention something specific that happened during these crazy times that we are living in, and I believe that all could easily and they’ll relate to. So there are so many stories that I could. But I’ll take this one. And especially around Covid. There were many market segments that actually saw a slump in their demand. But there were certain markets that were actually going up, for example, the medical field specifically because there was a huge demand for all the medical equipment.
So one of the potential customers was serving this market, and the demand suddenly saw an increase of two to three four, which was a great problem to have, of course. But then how do you meet them? How do you make sure that you grab onto this opportunity and make it happen?
Of course, the burden always lies on supply chain and operations to step up the game and get it done.
While all of this is happening, the demand is coming up. You also got to know that you all must be aware that our offshore suppliers were also running in the same boat as the rest of us were around the world where there was a demand shortage. It was hard to manufacture stuff. So this was actually creating reports both downstream and upstream supply chain. And the dependency on our offshore suppliers wasn’t something that was a possibility. It could have helped us at that point in time. And there was a fixed stringent timeline that we had to get things done, bring this together. And so, of course, I started working with our procurement and some of our commodity managers who actually made their relationship magic happen. And we were able to get some of our secondary suppliers locally to get things done for us, and then moving on to the Ops piece. And that was challenging again, because we were in Covid times. And then you cannot really run your capacity, like at full capacity. You have to manage physical distancing. You have to break down in shifts. Not everyone likes being in shifts. You have to take care of your people while doing all of this. I’ll come to that later. But anyway, we did that. We had to run more than two shifts to make it happen. And the best part was actually seeing our people, our associates, actually come together the moment you explain to them the needs of the market, what exactly are we serving?
You just see that loyalty. You just see that passion coming through them, too. And they’ve already given the times. Given the scare, we didn’t know what’s going on, what could happen. Hi there. What could happen. And they still stood up. We divided shifts. They were ready to show up every day to make it happen for our customers. And I cannot tell you the gratitude I have for everyone that’s standing on the shop floor and actually making things for us. I guess they are our real heroes. They make things happen for our customers. And so always, like Kris, as you were mentioning, always find those small moments to appreciate them as much as we can. The more we do, the less it is.
That’s what I feel like having them making them part of our changes and process is so important. Communicate, communicate, communicate. I cannot stress enough for that. Whichever role you are in, you have to make sure you’re being transparent and communicating as much as possible, of course, professionally and good stuff. Anyway, we took care of the drink, of course, to the quality aspect as well, because it was going to a market that is very susceptible to any kind of failures. It was very important that the customers were trust that we were following. So we actually worked with Gamba. Not sure if you guys have ordered, but pretty much installing cameras, making sure that customers could watch the process, could get the copies of the reports, the test reports, and all of that. So that was kind of an innovation that was happening on the shop floor for us for our customers.So that was amazing as well. And finally, the logistics piece, which I don’t want to miss that, because that was crazy. Like one of the problems was the last-minute rush that you always run into where there’s some problem the truck hasn’t left. It’s not arriving on time. We might miss the deadline. And I’m like, literally that time we had to use our own fleet, meaning our own truck. And I would have been ready to actually drive a car to our supplies facility to load boxes. But literally, during this process, what I learned was actually moving up hallelujah. So literally, like going to the warehouse and bringing the boxes back in production, like working with our associates. It was fun. I learned new things. We innovated, and we made it happen. In the end, when we were able to meet that demand, it was all worth it. And as I always say, like supply chain and operations make things happen. And so we did it. And I just feel that there was no possibility that this could have happened if my associates were not with us on the same page, running at the same pace that we wanted them to.So I thank them all the time that I’m on the shop floor working with them and try to make sure that I understand their issues as much as they understand mine and the business issues as well.
Awesome. Thank you for that story. Very interesting. And we’ll have to see you in action, Sneha, sometime. Driving forklifts and pallets around forklifts are good. I don’t have the license with the Palette. Yes, I do. Alright. Well, thank you for being here today. Curtis. Excited to have you on the show. You’re actually joining us from a real office. We can see all the work behind you. We’d love to have you introduce yourself and tell us how you got into manufacturing and then also share a fun, interesting, personal fact that a lot of people don’t know about you. Okay.
How I got into manufacturing, I really don’t know if you would call it getting into it. It’s getting out of College and looking for an opportunity. I worked in the oil field, out in the field on rigs and different locations for a couple of years and then found out that’s really hard work, especially with a College degree, to have that opportunity. But at the same time, I learned a lot of mechanical and chemical things that you wouldn’t normally learn from an office or watching a video or having interaction with a supplier or a client. So that being said, I went into distribution and industrial distribution. So then again, making sales calls and working in the actual warehouse on the floor. It was a smaller distributor. So we all kind of did everything. So at the same time, you learn procurement, sales, manager operations. You learn a little bit of logistics, a little bit of everything. And then the opportunity to come into manufacturing was through that procurement experience, which is here at lined up. Not sure if I’m going to stick with purchasing.
I’ve been doing it for about 30 years now, so I’m still trying to decide, but I’ve been here almost 20 years, and that’s kind of how I got into manufacturing is the opportunity to do something different and new and still kind of be able to look back at my previous experiences and how everything fell in line. And here I am. And then a fact about yourself that most people don’t know. Most people don’t know that I am involved in a prison ministry. And so I visit a maximum security prison on a weekly basis and disciple and Minister to several inmates on a regular basis and correspond. You do a lot to give back. So thank you, Curtis, for all your efforts.
So my first question for you is around this whole notion of urgency and manufacturing. So what does urgent really mean to you? Well, that becomes a daily weekly conversation with what we call our site clients as our coworkers that are out in the field. Someone will make a request for something needed. And I’m being very vague and doing this from a 50,000 foot view, but it’s always here. This is what we need. We need this widget this part or these certain parts or whatever the case may be. And we have a steady flow of items, obviously in procurement, so many things go automated. But when somebody reaches out to you and they say, we need this and they say, okay, well, how quick do you need it? Oh, no rush. Just as long as we can get it on Monday, and it’s Friday afternoon. No rush. And then you have to re-explain sometimes to the same people. That okay. That is a rush. As in, people will be working through the weekend, and we will be renting the space shuttle to get it from their dock to our dock by Monday morning, when you say you don’t need it in a hurry.
So basically the communication of urgency means different things to different people and different aspects of the different functions that people have in the plant. Some people just don’t get it until you explain it to them. Okay, I get what you’re saying, but here’s what’s going to have to happen to get the results you’re looking for. And it’s going to involve 15 emails, seven phone calls to get to the right people who can make it happen. I think you get a lot of 4:45 on a Friday afternoon. Hey, by the way, we’ve been working on this, you find out we’ve been working on this project for the last two and a half days. We realized that we need to make sure these parts are here on-site so we can because there’s going to be crews working on this first thing Monday morning, and you’re like, yeah, not going to happen or how much are you ready to spend to make that happen? I could talk on that for days. So you know that, Sarah. So anyway, that’s all I have on that. Awesome. Thank you for being with us today, Curtis. Oh, it’s a pleasure and a privilege.
Jonathan, I’m going to throw the next question back over to you, and hopefully our supply chain star in the making will find us interesting enough to come back. I see that we short-lived 3 seconds and we were too boring for him. So, Jonathan, what is the longest trip taken to solve a problem with a supplier?
Well, I can think of one going back to my history of my supply chain experience where my boss came to me one day and he said, hey, we’ve got a problem with our supplier in China, and I said, Well, okay, let me look into that. And he says, Well, you need to look into that today. And I said, okay, so I basically had to drop everything I was doing, find a flight for a meeting that would occur in the next day and a half. So this was on a Tuesday. So I was able to find a flight from actually Chicago to Shanghai and got me there on a Thursday. I had the meeting on a Friday, which is a very successful meeting. We were just going through some production challenges and wanted to make sure that the supplier understood our requirements, understood the urgency that’s something that Curtis talked about. So I had really almost 18 hours trip to have a three-hour meeting. And it turns out that we had a team planning session in Mexico that Monday following.
So I actually had to go on a plane from Shanghai back to America and then over on to Monterey, Mexico, for that Monday morning meeting. So I had a whirlwind across the world type of trip in a matter of three days. But it was all really to make sure that our suppliers understood what we needed and how urgent and how important the problem was. But it was all good. And not to mention your sleep gets a little messed up traveling internationally. Yeah, I was fortunate in that regard because the trip happened so quickly that I didn’t have time to adjust. So I felt like I really didn’t suffer much from the jet lag.
Kris, next question for you. Tell me about your experience with long lead times, something I’m hearing daily from our customers and from people in the industry who are constantly struggling with this. Yes. Okay.
I mentioned that for a large part of my manufacturing career, I worked in an organization that manufactured very large and expensive equipment for the mining industry. These machines were responsible for production in many of the surface mines that exist all throughout the world. These mines operate 24/7, 365 days a year with very limited downtime. In fact, any machine downtime is scheduled in advance. You might have to plan months in advance for all the labor needed to disassemble the machine and then all replacement parts to do the job need to be on-site and available during the outage. Any delay to this could lead to unplanned downtime. And depending on the mine and the mineral being extracted, this could cost mining companies losses of hundreds of thousands of dollars an hour. So as the manufacturer supporting our customers globally, we had to work closely with them in planning for these scheduled maintenance periods.
The challenge was that since these were large capital investments and only operated in certain conditions throughout the world, the number of manufactured units was small in any given year. So our annual production capacity was one dragline, 24 shovels, and twelve drills. And that was actually really a big year for us, which means we didn’t have large numbers of units flowing through the factory at any given time that could help support parts required in an unplanned outage. We had to plan our inventory very carefully. Many of the larger assemblies or components that could take a machine down if a premature failure occurred were anywhere from 35-week lead time to 52 weeks lead time. And trust me, there were plenty of premature failures. There is nothing worse than telling a customer whose machine is down that they have to wait 40 weeks for a new component. They want to reach through the phone and strangle you. So to try and solve for this, we set up safety stock around the world based on the number of units and types of models operating there. We set up exchange programs so that we could remanufacture used components to a like-new condition and store those four parts exchanges in a machined-down situation. But most importantly, we had to work closely with our customers similar to something that NIA had said earlier.
You have to communicate, communicate. And if you’re not working closely with your customers and you don’t understand the equipment and the hours and the operation, you really are going to miss the opportunity to plan accordingly, especially for these longer lead time items. So, Sarah, I can tell you solving for long lead times is by far one of the most difficult supply chain challenges I faced supporting customers and trying to grow an aftermarket business.
Kris, it’s interesting. I was having a conversation with somebody in the office about the whole just-in-time model, and I’m wondering if that’s completely gone because before COVID just-in-time was the thing. People didn’t want any inventory; they wanted just the bare minimum so they could fulfill what they have. And now I feel like the entire market has pivoted, and people are hoarding inventory and holding things as much as they can because you mentioned that example with the safety stock. So it’ll be really interesting to see what happens over the next couple of years.
Yeah, I think it’s certainly going to depend on the industry and the products. And I think to really make just-in-time inventory work, you have to have such a close relationship with your suppliers and that there has to be extreme trust.And depending on the types of products that you’re building or you’re manufacturing, that could mean hundreds of suppliers in your supply chain to make just-in-time work. And yes, I think it’s a big challenge. And I certainly think sitting here today, people have to rethink that just-in-time model for sure. And then you throw in holiday season; you throw in seasonality into the mix where you’re balancing super short windows, where you have consumer demand, maybe two, three, four weeks. And if you miss your mark, you’re going to lose customers forever. And there’s just a whole supply chain challenge around storing inventory versus just in time for businesses that have seasonal products. Yeah.
And I will tell you, in the digital commerce world, we’ve always said that availability sells. Right. So you have an argument of should I lower my price? Often having stock is more valuable, and you can demand a higher price when you have product availability. But I think never more is that true than right now. Right. So availability or having stock available certainly helps you sell. And if you don’t have stock, your reputation is on the line, and you can lose customers forever. If they’re there to make a quick purchase, you don’t have it; they’ve moved on to your competitor, and they’re not coming back. That’s right. And certainly again, with digital, there’s an opportunity to quickly look, search, and find those alternative suppliers.
So yeah, it’s certainly a challenge that every manufacturer is going through right now. I don’t think that it skipped anybody. I haven’t met anybody that hasn’t been affected. Sneha, next question for you, manufacturing is picking up on automation, and we can do more of it. Your thoughts on where to look for automation in your roles?
Yeah. This question is so relevant specifically that I am actually on a platform provided by SourceDay.
Who where all they think and do is about automated and make life easier for us. I would keep it short, but I did want to make sure and take time to see if I could talk a little bit about our PA robotic process automation. In the recent past, I’ve seen manufacturing catching up to automation, so they are not. We do want to go towards digitization digitalization, whatever that you call, and especially our focus on industry 4.0 and a lot of other stuff. And while I am no expert here, I did want to talk about RPA, and I’m sure many of us would have heard about it, but this is something that many industries are embracing for different varied industries, not just manufacturing, but every other industry as well. And I would say that we should at least try and embrace this because it’s not just about in.
This actually is pretty much about automating your business processes using software or AI machine learning, all that fancy concept. But while it is, we in manufacturing, we really focus on automation on our production floors. I’ve seen and myself also been involved in actually implementing robots and cobots across the production lines. And while that’s great, and we should continue and not stop any of that, but it’s equally important to focus on making efforts on how do we make our employees more productive? And how do we automate redundant tasks that they have been doing in day-to-day life?
Whether it’s a buyer, a planner, an inventory manager, anyone in any role, repetition actually powers you through some very good automated workflows, especially now that they are able, especially if we, manufacturing, have a lot of legacy systems that we’re set on, and it’s hard to find APIs – APIs meaning platform that could connect to smarter tools. And so I just really want to encourage every manufacturer out there to go out and look for tools like this.
There are cheaper tools available, but definitely have some focus also on making your day-to-day life of your employees more productive as well. So RP was one of the examples and happy to share more if anyone is interested, talk about it. Yeah.
And I think seeing how one of the things that is important to mention when you talk about automation is the risk factor. If you’re not automating work and you have people manually doing things like email, spreadsheets, faxes, phone calls, text messages, no matter how good someone is, they’re going to make a mistake. Something is going to get missed. A formula is going to be entered incorrectly, and that can cost a manufacturer millions and millions of dollars. And I think we can’t stress the risk factor enough. Absolutely. Yes, you nailed it there. Human error is always something that we should be wary of. And that’s exactly the reason why one should actually look for automation for the tasks, especially I think about accounting a lot here.
There are so many people still using literal paper to manage their accounts and their books, and it’s crazy. People still send checks. Curtis, the next question for you is: can PODs be trusted and maybe start by explaining what that means to the audience? Okay. POD is just an industry term for proof of delivery, going back to what we talked about previously, well, and first I want to make a comment. Please apologize to Sneha for making fun of paper.
Sarah, I know that from your past, but a proof of delivery is when you are looking for that tracking information for your, as we referred to earlier or as I referred to and others, you’re trying to find now that you’ve got the stuff on order and the supplier has promised you the world.
Kris, you’ve made comments earlier, and I’m very familiar with some of the things you were discussing or trying to come up with the long lead times. You just want to reach through the phone and shake them like an Etch A Sketch and start over, the proof of delivery. You’re sitting there and you’ve gone through all the trucks, you’ve jumped through all the hoops, got your tracking numbers, everything’s great. And then you reach out to one of your favorite box truck companies that they decided to use and you ask them, okay, wait a minute. The Brown trucks, the red and white trucks, they’ve come and gone. Where’s our stuff? And you’re like, oh, so-and-so signed for it, and you look at it and you go, well, he or she hasn’t worked here in six months. So how is that possible? And you start wondering, going back to the automation and they are graded on so much of time that they don’t take the time. You know what I’m talking about? I’m not going to throw rocks at anybody more than I already have, but because everybody’s guilty of it. But they have certain key indicators that they have to check off.
They show up when the vehicle stops, when the vehicle leaves certain addresses, GPS, all that stuff, so they don’t necessarily provide accurate information. So then you’re backtracking, trying to find where that part is that, as several of us have mentioned, is costing hundreds of thousands of dollars an hour not to have or potentially causing lost profit opportunities as we like to refer to them. So then you get into it and you realize that, oh, wait a minute. Why did you ship it via X-Y-Z company? Oh, here’s the proof, and they send it to the proof of delivery. Look at the POD and it says, oh, no one home or no one’s home or customer closed for business. Well, the government requires us to have somebody here 24/7, 365 because we’re a chemical plant, so we’re never closed, ever. And so you go back to you have to do your heavy lifting up front and literally pound your suppliers. Sorry again, Kris, but making sure that they understand completely that yes, this is important and important. Let’s define urgent and important to the Nth degree. And then you have to convince them that urgent doesn’t mean, yeah, do it next day, flight, next day. Whatever. You have to be very specific in your communication.
Yes, we need it here tomorrow. You need to say, okay, you need to take it to this airport. You need to pay for dock to dock. Like I laughed about earlier, rent a space shuttle, whatever it takes to get it here when we need it. And then you always get the suppliers that aren’t familiar with the lost profit opportunities to say, well, that’s going to cost XYZ amount of dollars or this is going to cost, you have to explain to them. I didn’t ask you how much it costs. I said, Can you do it? I need it here at this date and time because they don’t live in our world all the time, because so much, especially nowadays. Like I think, sir, you mentioned earlier, you fail a customer and they move on to the next. You move on to the next supplier. Well, that’s not always possible in the industries, some industries and with some commodities. If you have an Angerso rampant or compressor.
Jonathan, what’s the most interesting thing you’ve seen at a supplier’s facility? And no holding back here. We’ve talked a little bit about suppliers, maybe being a little bit dense and they’re getting pounded on getting beaten up. But one of the suppliers I visited in China, they were very positive amidst all the pounding and grinding that we threw their way.
So the way they remained positive is they actually installed a karaoke club in their facility, and they wanted that karaoke club because it was a great way for all of the employees of the factory to get together, have fun, wind down, and actually get refreshed for serving our orders. So while visiting the supplier, they toured us through their whole club. They had purple couches, they had strobe lights. They had a great list of songs that I even actually sang. Some of my favorites were last Christmas. That’s perfect for this time of year.
I’ll spare everybody in the audience from seeing that now, but that was one of my go-to songs in the karaoke club in a Chinese manufacturer. That was pretty interesting, pretty crazy. But it really showed me that they were keeping things positive, keeping employees engaged, really, just to serve us. So I think it was pretty good. I wish you would have taken a video of that, that would make for some great LinkedIn content. Jonathan, I’ve got them. Maybe I should release them and maybe have an FT going out there for a few of them, especially the ones with the purple couch.
So, Kris, I am dying to hear the story about the latch-free Dipper. And I’m not even sure if I said that correctly. You said it correctly. Yes. The latch-free Dipper. This is a story about product innovation. I mentioned in the last story that in a former career, I was part of an organization where we manufactured large surface mining equipment. Well, one of those machines was an electric rope shovel. And to give you an idea of the size of an electric rope shovel, the weight alone is £2,800,000. Okay, so an electric rope shovel is designed to lift large amounts of raw material. Essentially, it digs into a blasted rock face kind of like this, and then it lifts the material in what is called a Dipper. You might think of it like a bucket, and then it dumps the material into a very large dump truck through a Dipper door.
So the Dipper door opens out of the bottom or the back, and each Dipper load is designed to lift approximately 90 tons of raw material. And the Dipper door design for many years has been open and closed with a latch. This latch gets tripped by the machine operator when they want to dump the raw material. The challenge is that the latch is the leading cause of downtime for an electric rope shovel. Depending on the operator or the operating conditions, this area of the machine is frequently repaired. So as a leader in the manufacturer of electric rope shovels. We came out with a new, innovative product design that would eliminate the latch. And we called it the latch-free Dipper.
We developed this design just before I had moved to Lima, Peru, to support negotiations for three electric rope shovels for a new mining project in the country. And as an eager sales leader, I wanted to sell the first latch-free dippers. My team and I negotiated these shovels with the new design for over nine months.
We explained how this design increased MTVF or meantime, between failure and reduced MTTR, or meantime to repair and long story short, we won the contract, and this created a very special relationship for us with this mining organization in Peru.
In fact, after negotiations were complete, I spent time with the mining operators’ family members. I attended birthdays, we shared meals, experiences and stories, and we were really cementing the relationship. And then it came time to deliver. The machines and machines of this size and capacity are not shipped fully assembled.
They come in on multiple truckloads and flatbeds, and I think it’s something like 24 different rail cars left our factory to make their way to the mine, and then they are assembled right in the mining pit, where they’re going to operate for many years ahead. And everything was ready to ship except our newly designed latch-free Dipper. As many of you listening. No innovation takes time, testing, reiteration, and further testing until it is fully ready.
Well, we weren’t fully ready with our design when it was time to build the equipment on site. So needless to say, I was disappointed. The customer was disappointed. I was really embarrassed, and we had to find a way within our organization to solve the problem. Did I mention that these shovels cost anywhere from 20 million to $25 million each?
There was a lot at stake, so we ended up sending a latch design until the latch-free was fully ready, which wasn’t the end of the world, but it did teach me to carefully set expectations on anything I sold where the product design wasn’t yet completed.
Sometimes supply chain delays can occur with the best intentions, like developing a new technology. And while the new technology in the long run is still going to outperform the older technology, sometimes there are some interesting hurdles to cross before you get there. And certainly setting customer expectations is really important. Is that product still in the market today? And is that still the name of the product? Yes, it is. People can look up the latch-free Dipper and find it as we close out.
We’ve got about five minutes left. I’d like to have you share your thoughts on efforts that can be taken to move from a linear supply chain to a circular supply chain. And in particular, how this relates to people in manufacturing. Yes, thanks so much. I know we have barely five minutes left and so I can go on and on about this, but I’ll keep it short, I promise. So right now we really function in a linear supply chain model. And I do want to share this message that going from a linear to a circular model doesn’t have to be complicated. Little changes in whichever role you are in supply chain can really collaborate to make a difference. And us being in manufacturing companies, we almost most of us really know about lean and so use those concepts. While lean is about minimizing waste, that’s what Lean talks about. Circular really is about monetizing that waste. So it’s not very different. The idea is to actually work with waste and it’s super cool.
I’ll just give you, for example, the procurement professionals year over year strategy is about reducing costs or very lately because of COVID. Also focus on risk management and I’m happy, very happy we’re doing it and keep doing that. But let’s add another one to it, which is sourcing secondary materials. It could actually be cheaper for us and add that blend that into your strategy. See how things work out for you, and you never know, it could actually work out very well. Monetarily also operations quality.
Look at your scrap, see what you can. We actually do that in some ways. When we are pressed for the need, why don’t you actually blend that into our process and look at a scrap, see what we can tear down, see what we can put back on show? Like these are little ways on how we actually minimize our impact on our environment and actually slowly also try and move to the circular model. But connect with me if you want to know anything about circular supply chains. I think supply chains are super powerful in making this concept happen. Trust me, it’s not complicated. We all can do our little best to make this happen. And if we don’t volunteer to start today, I really think we’ll be forced to do it tomorrow.
We are running out of time. Because there are manufacturers that stand out that you think have adopted this new model and are doing it well as kind of an example for people, I definitely want to. I cannot name someone right here, but I can definitely say that any industries that are actually in repair and remanufacturability are really serving that cost.
When you’re actually looking into those repairs and trying to remanufacture and looking into your preventive maintenance or small things that add up towards moving towards supply chain concept. But let’s start with Unilever. They’re doing a lot, like literally they are actually turning some shipping containers into their manufacturing line. Isn’t that cool? And that’s actually scalable? I cannot talk about scalability, but that’s something that you can actually take and move close to your customer. You reduce your lead time; you’re super close to them, your demand fluctuations go down. You’re able to predict your demand so much better.magine living in a world where you’re there. You don’t rely on your forecast. Imagine how awesome that could be for us, people in the supply chain. But there are so many industries that I can definitely share more if someone is interested. Awesome.
Well, we are at time, so I want to give a big thank you to Kris, Curtis, Nehan, and Jonathan for sharing your manufacturing wisdom with us today. I know there were a lot more stories that you guys have lived through and experienced. So encourage anyone who would like to connect with any of our panelists today to reach out to them on LinkedIn. Again, this is a monthly show that I’ll be hosting. So if you got value out of today’s session and would like to meet more manufacturing leaders, hear more train wreck stories, and get more wisdom and learn from people who have been in the industry for a long time, you can join us again on January 11 at 01:00 p.m. Eastern. With that, I’m going to wish everyone a wonderful afternoon. Bye.