What the Duck?! Episode 13 Transcript
ENSURING TOM-orrow: How To Ensure Supply In The Coming Times With Tom Oris
Welcome to What The Duck?! A podcast with real experts talking about real issues in direct spend supply chain. And now here’s your host. Sourceday’s very own supply chain maven, Sarah Scudder.
Thanks for joining me for What The Duck?!, Another Supply Chain Podcast brought to you by Sourceday. I’m your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of supply chain. I’m @SarahScudder on LinkedIn and @SScudder on Twitter. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct spend supply Chain Content. Today I’m going to be joined by Tom Oris, and we’re going to discuss how to ensure supply. If you work for a manufacturer and are struggling to secure supply for the components and materials needed to produce your products, then this episode is for you. Tom is responsible for purchasing all food ingredients, commodities, and third party manufacturing of confectionery and bakery items for 1-800-flowers.
Welcome to the show, Tom.
Thank you. Thank you for being here.
So you are born and raised a New Yorker and are suffering with what you describe as Midwest Pizza. Tell me about the bad pizza that you’ve been forced to eat these past few years.
So being born and raised in New York, any New Yorker, true New Yorker will tell you we have by far the best pizza that there is. And moving from New York into the Midwest. And I’ve lived in Saint Louis. I’ve lived in Chicago and now in Ohio. New Yorkers really wouldn’t even call this pizza. We would just call it some other type of food.
So how I survive is I really don’t eat pizza anymore until I go back to New York and then I try to gorge myself with pizza as much as I can to last me for a year or six months before I go back.
Have you tried the frozen pizza route where you transport it back from New York and put it in your freezer?
I have. It’s just not the same. So, you know, it’s probably good if I still lived in New York. I probably would be about 450 lbs. by now. So it’s probably a good thing that I’ve moved away as I get older and not eating as much pizza anymore.
You are often the most immature 50-something-year-old that people have ever met. This is how you described yourself to me when we were prepping for the show. Where did you get your silliness from?
You know, I… Poor people raised in New York, and I had a… I still have the same very close-knit group of friends, and we just always had fun and maybe had a little too much fun in high school. But we always had fun, and it’s just kind of carried over. When I became a father, you know, it was just all about making my kids laugh.
And then as I started to go forward in my career, I kind of realized that, you know, you can be very effective at work. You can do some great work, and you can have fun at the same time. So I always like to try to have fun and have a good time. You know, if we can accomplish what we want to accomplish and laugh and smile during the day, I think that’s a great day.
Favorite sports team?
You know, that’s a tough one. Being in Columbus, obviously, you have to be a Buckeye fan. I’m a season ticket holder. I love the Buckeyes, so I would say the Ohio State Buckeyes and then the St. Louis Blues hockey team right there, neck and neck, are my two favorite teams.
So are you a tailgate fanatic, since you’re a season ticket holder?
Not a fanatic, although anyone listening, if they are living in Ohio State and want to invite me to a tailgate, I would love to find a steady tailgate. I’ve been known to go from tailgate to tailgate as I meet people, but I would love to find just one serious tailgate. But I do get down there about 4 hours before the game.
So we… I used to live in the Bay Area before I moved to Austin. When I joined Sourceday last year and we have the professional football team, the 49ERs. And my friend actually runs procurement for the 49ERs. So we did our first ever 49er tailgate and I feel like that was my absolute favorite part.
I don’t even care about going to the game. So I want to become a professional Tailgater.
I don’t blame you. It’s a lot of fun really is.
So I want to begin with your personal story. Mm hmm. I always like to hear how people wind up in our crazy world of supply chain and direct spend. So how did you wind up in direct materials procurement?
You know, it’s funny. 20, almost 29 years ago, I was a single father, had a small five, six year old daughter, and I just wanted to finish my education. I’d only done two years at the time, and I was looking for something that was steady, you know, normal hours, so to speak. And I saw this position open and I didn’t know anything about purchasing, really.
And I applied for it. And I don’t want to say a big completed, but I sweet talked to a few people and maybe stretched the truth even a little bit. And I really just fell into the role out of necessity. So I go back to school and literally within two weeks I just fell in love with it and I’ve been with it for almost 29 years now.
So you’ve got a, I call it a supply chain nerd and training when people get their kids involved in the industry as well, are they, they learn about it growing up.
So one of the things that I think is really interesting about your background is you have really kind of found a niche or maybe purposely focused on food. So why food manufacturing?
You know, I actually started doing more on the consumer packaging side and also did a little bit on the ingredients and different ingredients and chemicals, things like that. And about 15 years ago, I really started to.. I was really thrown in my lab to take on more food. And I found it fascinating with the commodity markets. And believe it or not, the regulation and all the requirements that you had to have in places.
And I found it very, very challenging. So it’s something that I just decided to start focusing on and have been building upon and I’ve had the opportunity to work with some great organizations that have trusted in me and given me the ability to learn, to make a few mistakes along the way and learn from those mistakes. And just continue to grow and develop.
So it’s something I really enjoy.
So you mentioned you’ve purchased a lot of different commodities especially being in food and buying ingredients. There’s a lot that’s involved there. What are some of the main commodities that you’ve purchased throughout your career?
Well, if you look at the agricultural commodities, corn and wheat, different types of soybean based products. I’ve worked with items like sugar and cocoa and then also some.. I wouldn’t usually call them straight commodities but a lot of different food ingredients that are influenced by commodities, you know, so corn syrups, corn oils, things like that. So those are the main items.
And then over the last few years, I’ve done more work with natural gas, which has been very challenging unto itself and electricity. So taking on that energy side of it as well.
What are the most difficult commodities that you’ve purchased?
Depending on the year? Depending on the time of year, they’re all difficult. And in this year they all seem to be difficult at the same time. So, you know, I would say if I look over the spectrum, one of the most challenging has been actually natural gas because it’s been fluctuating, you know, from 2008 to now, you know, four or five, 600%.
I mean, the swings are just, you know, crazy and how the country itself has changed their energy policy, how fracking has impacted natural gas. So natural gas has definitely been very, very challenging. And then year to year, the agricultural commodities like can be challenging because they truly are global now. And everyone’s talked about over the last 20, 30 years, the global economy.
Well, it’s never been more impactful than it is today when you have markets, you know, in South America. If their corn crops are bad, how it impacts the U.S., even the U.S. may have a great crop. So whether the dynamics of whether the supply and demand now, with the political issues going on you know wars. They all come into play with agricultural commodities.
You mentioned also one of the challenges with buying food type ingredients and commodities is all the regulations involved. From the government, from cities, from states, there’s many different parties that like to have a say in saying what you can and cannot do. How have you been able to navigate and stay current and up to date with all of that?
I know that’s something that a lot of buyers struggle with.
You know, I think one and we’ll talk about this I think later, too, is the relationships. It’s, you know, the with all the regulations, it’s very important to have those relationships internally, you know, with your peers, whether they’ll be in quality product development and regulatory so that you’re working in unison to make sure that you’re sourcing ingredients properly, that you’re working with suppliers that meet certain food safety standards and just making sure that the products are aligned, that we’ve got all of our ducks in a row, all of our documentation has to be in place. So all of those audits that have to be done, all of those factors really need to be done as a team effort. Anyone in purchasing that tries to take all of that on by themselves, I don’t want to say is destined for failure, but they really, really put up a large obstacle for themselves.
And I feel like the world in supply chain is really pivoted from “I” to “we”. And we involve not only your stakeholders but your suppliers as well. And I would argue suppliers are probably your most important stakeholder in 2022.
Oh absolutely. And they will be going for it.
So about four and a half years ago you decided to join the 1-800-Flowers team. I’m a customer. I’ve placed many many online orders for sending friends or flowers to friends throughout the US, so definitely a fan. Why did you decide to join their team?
You know if you look at 1-800-Flowers and everyone thinks flowers. It’s actually a multitude of different organizations and there are a lot of food organizations that are owned by 1-800-Flowers. So for me to have the opportunity to come in and work with different brands, different marketing individuals, different salespeople, different merchants, a wide variety of different food ingredients and packaging elements. And then I don’t know if it was fate but even though I’m in Columbus, Ohio, and I love Columbus, 1-800-Flowers is actually headquartered on Long Island, which is where I’m from.
So I kind of felt like I was destined to be here.
You can go back once a year and get your pizza fill.
So, 1-800-Flowers which I didn’t really know much about till we were prepping for the interview. So lots of different brands, lots of different companies that you guys own that the average person who’s just placing a flower order may not know about but you guys do manufacture and buy a lot of different food products. What is the structure like on your procurement and supply chain team given you have so many different entities and so many different teams?
Sure. You know, my team, we focus on food. So within the brands, like many organizations, you know, I have staff at various plant locations and, you know, we all kind of work together to try to collaborate. And obviously like a lot of other companies, we want to try to maximize our spend, maximize our leverage and we look at what all the brands are doing and try to find, like ingredients and so on and try to take advantage of those opportunities.
So your team buys across several brands. You’re not assigned just to one brand. And then do you also have an indirect team or what is the kind of the whole structure look like?
Yeah, so my team is focused strictly, as you mentioned, on food. And the great answer was what we call packaged food. There are other purchasing folks that focus on different aspects of the business, whether it be packaging or indirect spend. But I really just kind of focus in on the food side and let the other teams do their responsibilities as well.
Got it. So this year has been tough for everyone in the supply chain. But I would say in particular, those of us who are in the direct materials, direct spend part of the business, we’ve just.. it’s been brutal. I would say the last three years but this year in particular. What has been the hardest part of your job this year?
You know, it’s funny you mentioned it really has been a three year odyssey. You know, toe to toe came and told me it hit. You know, everyone’s like, oh, this is going to be very difficult. Then toe 21 came and, you know, we thought, how could we get worse? And it did. And now 20, 22 is even worse than the previous two.
So it really has been a struggle. One of the challenges, I think over the last two and a half years has been supply because of COVID. You know, people weren’t working, people were staying home, but yet there was such demand for food. I think the food industry as a whole saw such a surge in demand because nobody was going into restaurants.
Everyone was staying home. But the ability to get the materials that we needed were hampered by the fact that a lot of people were sick. A lot of people are staying home. There were COVID safety protocols put in place that impacted capacity. So we’ve had struggles on and really on for the last two and a half years. Of just getting enough supply to meet demand.
How have you changed your strategy this year because of having so many supply shortages?
You know, I think a lot of companies and I’ve seen it talking to suppliers is that, you know, before 20, 20 you know, there was obviously a balance between supply and cost savings and you know, trying to keep our costs low. And since COVID hit, I don’t want to say cost savings has taken a backseat because it hasn’t.
But if you can’t get the supply, it doesn’t matter what your cost is. So, you know, when you have demand that’s high and less supply and obviously you see costs are going up one of the most critical components is just having the supply to meet your demand or to meet your sales plan. So in my vision, there has been a shift to ensuring that you have supply and then trying a factor where you can minimize your costs, do some risk management and try to find ways, creative ways to reduce your costs.
Maybe you’re going from 50-pound bags to super sacks to try to offset the cost you’re looking at your supply chain thinking, you know, can I reduce the distance between my supplier and myself so that, you know, the supply piece to me I believe talking to my peers and so on and other companies has definitely been the biggest challenge.
And it sounds like securing supply across almost everything you purchase has been a challenge. But what would you say really stood out as being the biggest supply issue items or commodities this year?
You know, one of the ones from a baking standpoint that’s been very challenging and hasn’t gotten the attention that it deserves. This has been eggs or liquid eggs. You know, in the spring we had avian bird flu hit. And I can’t, I don’t know, off the top of my head how many millions of egg-laying chicken that were taken out of the supply chain.
But it really impacted the cost of the product that literally quadrupled in the span of a month. Or at least tripled in the span of a month. And we got through that. We got into the summer, things started to settle down. And now this fall, we’re seeing the baby in person come back again. Which is a little bit of a surprise to a lot of people.
So if you’ve been at the supermarket in the last two weeks, you might be seeing four or five, $6 for a dozen eggs. Now, so that has been a real challenge. It’s not something you can forecast. It happens. And there is really no mechanism to try to offset that cost. You just kind of have to ride it through manager inventories, perhaps a little tighter during those peak periods.
But the situation I hope is starting to get better, but it’s still going to be an elevated issue through the balance of the year.
So eggs has been a struggle that maybe hasn’t been talked about as much as you mentioned. Is there anything that you were surprised that wasn’t impact it with significant supply issues, kind of another surprise where you thought there would be a big issue and there maybe wasn’t?
You know, that’s a great question. I don’t believe there’s actually been anything that shocked me by not being a challenge. You know, again, labor continues to be a problem for manufacturers. So while there might be ample manufacturing capacity, getting the labor to take advantage of that capacity has been a challenge. For many, many manufacturers, not just in food, but across the spectrum.
So I can’t say I’ve been pleasantly surprised by anything this year. I think part of the reason maybe is we were very aggressive in ensuring supply by, by working on 20, 23 earlier this year to make sure that we did not have those supply disruptions. So in that regard, you know, I think that that’s a benefit. But I can’t say there’s an industry that I’m shocked has got more available supply than we anticipated.
So one of the challenges in your space is that some of the things you’re buying are very time sensitive. So it’s not like you’re buying screws which aren’t necessarily going to go bad or, you know, items that have a long shelf life. So how have you managed inventory levels this year when you’ve had these big supply challenges and major price increases?
Yeah, it is. It’s very delicate for many companies. Again, you’ve got food ingredients that have shelf life, sometimes as lot as little as a month or two weeks, sometimes six months to a year. And then you have all the inflationary issues with prices going up. So we all want to try to manage our inventories, I believe, a little tighter, little leaner with the thought that you know, these inflationary pressures are going to at some point kind of relax themselves.
And we don’t want to be stuck with higher inventory at higher dollars. So I think a lot of people have to weigh that. And a lot depends on obviously having an accurate inventory, good business planning that allows us to plan and order based on that plan.
One of the things that you and I talked about prepping for this interview was around data and analytics, and you just mentioned the importance of having good business planning as we’re going into 2023 and trying to figure out what the purchasing strategy is going to be for your organization. You said with more analytics, we’ve seen a shift away from relationship building.
What do you mean by this?
So, you know, it’s funny early in my career, I was actually doing the same thing in the nineties, but you’re looking at dollars and cents. I’m on a spreadsheet and you’re trying to make business decisions. You know, I want to see the company, you know, X amount of dollars by going in this direction with this supplier. But what happens is you know, and maybe it’s a generational thing.
Maybe it’s because people are working from home more and it’s more teams. It’s less, you know, in-person meetings but what happens is we start to I won’t say desensitize ourselves, but the business relationships, the personal relationships take a back seat and while, you know, there’s obviously benefit in analytics, I think that the loss of the business relationship, knowing, you know, who the not just who your sales rep is, but who the the quality managers, the production managers, you know, obviously people aren’t going to travel as much.
So you’re not going to another factory locations and visiting with folks and developing relationships and doing, you know, some supplier relationship building. I think all those kind of hurt in the long run because, you know, we start all becoming just numbers and we start becoming, you know, oh, you know, this company and that company, you know, I remember back shoes almost 20 years ago, I went to visit a supplier that had done some great work to help me in a jam.
And I brought with me about 120 donuts, ten, ten boxes of a dozen donuts. And I brought him into the building and I went into the conference room and the manager was like, Oh, you brought us donuts. And actually said, No, I actually bought them for the folks on your floor because I wanted to thank them for helping me out.
And we brought them to the cafeteria and the people came in and they were really appreciative. I don’t think they were appreciative of getting a donut. I think they were appreciative of being recognized for the efforts that they put forth. And, you know, several months later, I had a supply issue and I needed their help again. And what I was told was people in the plant said, Hey, Tom needs us to do this for him.
Let’s make it happen. And I was no longer with the company. It was Tom and I think that relationship is important. And people and what they did, they lost focus. I think part of it’s just the times with Colgate and teams. But I do think it’s a very important element, is to have those business relationships that suppliers are such a great source of information when it comes to markets, when it comes to three and five years down the road, new technologies.
So I think the relationships bring a lot of value.
I would also say that suppliers drive so much innovation, and if you are not a customer of choice, you’re not going to know about or be able to take advantage of that innovation. But your competitors are exactly.
And sometimes if you’re a big enough customer, you can even influence their plans as far as where they’re going.
Yeah, absolutely. So what has been your supplier relationship management strategy this year, given that in person has been a challenge and you can’t just necessarily go and bring donuts now to the team on the floor because of COVID and some of the other challenges.
You know, I think one of the things, regardless of the time, the times that we’re dealing with, you know, you just treat people the way you want to be treated you know, every supplier, I don’t care how good they are, they’re going to make a mistake. They’re going to send products out of spec. They’re going to be late, they’re going to have carrier issues, you’re going to see damage and transit.
It happens. You know, I just try to treat everyone with respect. I expect suppliers to learn from mistakes that are made, just as I expect our company learns from our mistakes. And then we move forward. And I think in times like this, again, the relationship becomes more important because you have limited supply and strong demand and then you want to maintain and build upon those relationships again because supply becomes an issue.
And, you know, I just think it’s a very important element again and it just helps overall with the business relationship.
One of the other things I know a lot of people in our space have been doing is turning to technology to try to help with securing supply supplier relationship management. What have you done this year from a technology perspective? That you think has made a big impact.
You know, from a purchasing a technology standpoint? I think one of the things again, I mentioned it earlier, is aligning with your planning team and making sure that you two are aligned and that you’re buying 42 to turn what they’re saying. Obviously, technology helps with that as far as communicating that information, whether it’s an MRP, whether it’s in a mass or production schedule to allow us to be efficient and buy accordingly and not buy access and obviously not buy short it.
Another thing, obviously we had to rely on teams more from a technology standpoint which does have its benefits because I think it is a little bit more personal than just picking up the telephone. But again, it doesn’t also replace the you know, one on one relationship of sitting in an office or sitting at a conference room with someone.
So I think it’s ever evolving and I think with multiple locations multiple times. So it’s more of a global economy. I think technology definitely has a place and will actually continue to evolve as we go forward.
I would say I don’t think I’ve ever used Zoom more than in the last two or three years. I feel like I’ll say let’s hop on a zoom. It’s actually become part of my lingo and vocab. So I think these remote tools are definitely here to say especially when we’re talking to and communicating with suppliers now and we can’t do as much in person.
Yeah, like I’m sorry, I do a real quick while we’ve been on teams and Zoom for so long, I do hope there’s kind of a swing to more of a balance between that in person and teams as we go into 23 and 24.
So a lot of our we’re recording this in mid October, a lot of our listeners are trying to plan for next year, so they’re figuring out what is their supply strategy going to be for 2023, what is your strategy for securing supply next year and what can you recommend for people struggling with this this mid-October?
And if people aren’t already preparing and planned for 23, they’re doing themselves a great disservice again with the supply tightness that we’re seeing. You know, if you’re just starting to negotiate for 23, I think for most cases you’re at a tremendous disadvantage. So you know, in the early part of 23 I envision a lot of companies, if they’re not already, are actually starting to look at 24 and starting to do things.
They are, you know, whether it be in the futures markets or just you know, talking to suppliers about available capacity but I think the shift has been over the last couple of years to more supply and as that has become more of a priority, you see companies moving their timetables. I want to say back so that you’re giving yourself six, nine, 12 months to prepare and secure supply for the following year.
What does success look like for you as you go into 2023 from a supply perspective? I know a lot of people have changed their definition of what success means.
Yeah. Again, I still think as we go into 23, I believe we’re going to continue to see some of these and especially in the early part of 23, these inflationary pressures, I think we’re going to see some supply challenges where we’re even seeing. Lately I’ve been reading about China shutting parts of their economy down because I see COVID rise again, which will play into it to some extent.
I don’t think anybody really knows how cold it will impact the US or what level, if any. It will. I assume it will to some level, but nobody knows. And it’s that uncertainty that has people nervous, that has prices higher, that has people, you know, being more aggressive with securing supply. So, you know, as we move into 23, it’s the last three years of definitely have just thrown all the norms, all the trends out the window.
We’re really in unchartered territory you know, now there’s concerns are we headed to recession or not and how will that impact things. So there’s just a lot of uncertainty and uncertainty. Usually, you know, volatility in the markets usually means higher falls.
Thanks for discussing how to insure supply with us today, Tom. If you have anything to promote or a project you want our audience to know about, now’s the time, tell us a little bit of what keeps you busy nowadays and where can people find you?
Sure. You know, the best thing as lot of people have is on LinkedIn. I’m under Thomas Oris. And, you know, I love connecting with my peers and others out there. So I would love to hear from anyone to exchange information, talk ideas, talk supply chain. I really enjoy it. And outside of that, I just want to seek opportunities in risk.
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Supply Chain Content. I’m @SarahScudder on LinkedIn and @SScudder on Twitter. This brings us to the end of another episode of What The Duck, another Supply Chain podcast. I’m your host, Sarah Scudder, and we’ll be back next week.