Welcome to What the Duck?! A podcast with real experts talking about direct spend challenges and experiences. And now, here’s your host, SourceDay’s very own manufacturing Maven, Sarah Scudder. Thanks for joining me for What the Duck?! Another Supply Chain Podcast brought to you by SourceDay. I am your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of the 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 Ryan Burns, and we’re going to discuss the importance of understanding your customers to effectively source product and develop a direct material strategy. If you work for a manufacturer and are struggling to develop a strategy for your direct material spend, then this is the episode for you. Ryan has managed every part of the direct spend cycle: buyer, strategic sourcing, say procurement lead, global category manager, creating and leading category management team, and leading procurement on two continents for direct categories. Most of his experience is in castings, machine components, fabrication, plastic injection molding, seals, and gaskets. Ryan started his own consulting business about 11 months ago. Very exciting! Being an entrepreneur is not easy and can be a hard change going from being a practitioner to a business owner, and he helps manufacturers make their supply chains more resilient. Welcome to the show, Ryan. Thank you, it’s great to be here.

So, Ryan, you and I share a similar passion for hiking. It’s something that I developed during COVID when all of the gyms in California shut down for, I want to say, two years. And so, I decided that I wanted to continue to get exercise, and I took up hiking and bought my, went to REI and bought my hiking clothes and hiking boots. Why do you love to hike?

So I live in Denver, Colorado, and the mountains are absolutely gorgeous, but that’s not reason enough to want to go hiking. I think the thing I like the most is that it just makes me shut down and disconnect for a bit. Sometimes, literally, there is no signal on the cell phone, and I honestly think that’s one of the best experiences. But the fact that you just have to pay attention to make sure you don’t accidentally fall off the side of the mountain is, it’s just nice to focus on what’s in front of you and take that time.

I agree. I think the technology disconnect is my favorite part. Sometimes, I’ll purposely go to places that I know don’t have cell or Internet service.

Right. What’s your favorite place to hike? So I just told you that I love hiking in Colorado, which is very true, but my favorite one that I’ve done so far is actually earlier this year. I hiked the last 120 kilometers of the Camino de Santiago in Spain and just had a wonderful experience. That was over five days. Some days, I was getting rained on, other days I wasn’t, and I, you know, had no control over the length because I had to get to my next lodging experience. But it was just a really, really good experience. It’s the longest hike I’ve ever done. I typically am a day hiker, so I go somewhere and I hike for a long time, and then I come back. It was just a

wonderful experience.

Now, was this a backpacking trip? I am not going to take that much credit, so there are services that will provide transport from hotel to hotel for your suitcase. So what would happen is I would leave to go hiking each morning with my day pack on my back, enough water, you know, snacks, things like that, and I would get to my hotel whenever I finished my hike for the day, and my suitcase would be there. You know, maybe a nice cocktail was waiting, so it wasn’t exactly like I was roughing it, but I did enjoy the hiking.

Awesome. So I’d like to begin with your personal story. So one of the things that I think is a little unique about your background is you were intentional with some of your degrees and actually focused on Supply Chain versus just kind of happened chance falling into it.

You got an MBA with a focus on finance and Supply Chain management. So why the degree? Well, I should say advanced degree in Supply Chain, right? So I was not a business undergrad. You know, I had worked for a bit. I was a science major, and I went back to get my MBA for the education because I wanted to be in the business world, but it was also for the career pivot. Right? So part of the reason I chose finance was to give myself that credibility. I wanted to make sure that people knew that even though I had only two years of business education, that I knew what I was doing, and then Supply Chain really was where the passion was, and that’s what I knew I wanted to do.

So, what was your first job in supply chain? My first supply chain job, right after getting my MBA, was as a strategic buyer working at a large spare parts distribution center. It was, at the time, the largest spare parts for elevators Distribution Center in the world. I used to joke that it was every young boy’s dream, and I got to live it, but honestly, as a supply chain person, it was just the perfect opportunity for me. In that role, I managed projects to drive cost savings and value in sourcing, and I got the opportunity to do a short stint as a tactical buyer while another employee was out on extended leave. Honestly, that experience, being a buyer directly, really helped to shape my focus and my belief system in supply chain, and really the understanding of what it means to do the work.

So, you started as a strategic buyer and progressed, and I would say moved up pretty quickly in your career, ending as a head of supply chain or a VP of supply chain. So, I’d like to have you walk me through your professional career progression and highlight and focus on some of the key learnings.

Sure, when I was at that Distribution Center, my next role after the Strategic buyer was my first leadership role, managing procurement and planning for the Distribution Center. It was my first time managing people, and the thing I loved the most about it was just getting to work to improve people and processes. I then moved into manufacturing, following a leader that I had met at the distribution center, and I thought to myself, you know, procurement is procurement. I couldn’t have been more wrong. So, it was a baptism by fire. The site that I moved to was going through astronomical growth at the time. This was in 2010, so a lot of people were still coming off the recession, but this industry was just going gangbusters. So, it truly was a learning experience every single day, and I figured out how many layers to the onion there can be in manufacturing, but it was a great learning, and it was fun to be part of that organization. That’s where I got my first introduction to international sourcing. Previously, at my work in the Distribution Center, most of our suppliers were either domestic, or if they had international supply coming in, it was through distribution. So, I really enjoyed that. One of the things I did there was really grow the relationship we had with China at that time, but also developed a strong relationship with India.

I grew that procurement role to eventually include everything that was both strategic and tactical procurement, production planning, warehousing, and logistics. And then my next step after that, I stayed with the organization but I moved to corporate, and that was my first corporate role. And I had really enjoyed the sourcing portion, so to explore that more, I took a category management role. I worked with castings, machining, and some fabrication on a global scale. You know, it was so much fun, I had a much bigger sandbox to play in. And then I just had so many opportunities while I was there. You know, I think it’s just that classic say-yes mentality, right? You know, so I had opportunities presented and I took them, and some of the best were working with integrations, that I actually got to work with companies as we were acquiring them and bringing them on and integrating them into our processes, but also looking to see how we can improve the processes they have. And I actually got to spend a year on-site in Italy for one, and that was my only time working outside the US a hundred percent, right, as an expat. And that was its own learning experience.

And then after that, I took that role with IMI, which was my last corporate role, and I came on as a sole contributor with the intent of developing their strategic procurement for the Americas region, which included their sites in North and South America. It was the first time I ever got to design and build my own team, so that was an amazing experience. And then through after that was done, I was able to take on more responsibility, so I was able to backfill that role that I had in leading that strategic procurement function and take on great logistics, trade compliance, and sales and operations planning for that region.

One of the common themes I think throughout your career has been your focus on, or maybe it was not intentional, but staying in manufacturing. Why did you choose to stay working at manufacturing companies?

I developed this passion for manufacturing once I was in it. So, you know, my generation grew up, I’m not gonna, I won’t tell my exact age, but I think people can guess, we grew up in a time where we didn’t expect manufacturing to exist in the United States.

Right. I remember in fifth and sixth grade, if somebody had said they were going to work in manufacturing, I think the response would have been, “Well, that’s all going to be in Japan by then.” Obviously, things changed a lot in the world since then, but it just reiterated the need for manufacturing in the United States. I’ve talked a lot about international sourcing, and I really think that there needs to be a nice hearty mix to support our supply chains through international trade but also making sure that we’re developing the internal resources here. And I’m just a visual person. I grew up on a farm and I love to understand what I’m doing. So that’s probably why you’re never going to see me working for a financial institution. I really loved the aspect too that I get to see the products. To this day, about more than half the times that I go to fill up my car at the gas station, I get to smile because I know that I had a part in sourcing the breakaway that’s on the pump. So I just really love all aspects about it.

The other common theme that I see throughout your different roles in manufacturing is that you were really focused on the direct materials side. So buying parts, buying materials, buying things that directly go into the end product that your companies were selling, versus the indirect side, which I know is more of an enterprise term, but that’s buying things like facilities and HR and marketing, which I actually spent the first part of my career on the indirect side before pivoting into the direct material side. But why the attraction to direct materials? You know, every company that I’ve worked for, if you look at my history, is relatively large. You know, I think the smallest one was about a little over $2 billion when I was working for them, and publicly traded, whether that’s in the U.S or elsewhere. But in spite of that, the corporate culture was very focused on local P&L ownership. So it felt like I was working for these small to mid-cap or middle-market organizations most of the time. And that’s the kind of mentality I always had. So working at the site level, which is where I started in manufacturing, direct materials is really just where the money is. Because for indirects, typically while there’s a lot of value there, it’s more impactful the larger the organization is. So it really just was the fact that I didn’t have the spin to play with. I have managed some indirects, like in my role in my last role I did officially manage indirects, but I didn’t really get into services or IT primarily. It was the freight logistics and then some plant-related services like uniforms and things like that.

So the topic of our show and really the focus of our conversation today is around why it’s important to understand your customers to effectively source products. So I’d like to have you break that down and start with what does this actually mean?

Yeah, I think a lot of people, when they think about supply chain, you know, they may think about whatever area that they associate with supply chain, right? I always use the phrase that supply chain means a lot of different things to a lot of different people, but when it comes to direct materials, it’s pretty clear. And I don’t think there are many people that listen to this podcast that don’t know what direct materials are. But direct materials are the things you buy that are actually going into the product. You may shape or improve them or put them together in some way, but that’s what makes it a direct material versus indirect. But at the end of the day, I feel like so many, especially on the corporate side, we think about, you know, for supply chain and procurement, we focus on the parts, we focus on the suppliers, we talk about pricing, we talk about availability, and all of that’s important. But supply chains are meant to support the organization’s ability to serve your customer. And I would say better serve your customer. And if you don’t understand the customer and their needs, you’re likely going to be focused on the wrong things.

One of the things that when you and I were prepping for the show, you talked a lot about is why it’s important to develop a direct materials strategy. And you said several times to me, “There is no one-size-fits-all.” So what does this mean and why do you think it’s so important to have a strategy for direct materials?

You know, the biggest thing for me, and that I’ve seen through my work, is that if this is really true for everything, but let’s talk specifically to direct materials, if you don’t have a defined strategy and understand it, your strategy will be shaped over time by things that happen. And typically, it’s going to be bad things that happen. The same way that a river cuts through a mountain over time and forms, it’s probably not going to create a strategy that’s effective for you as a manufacturer or that’s going to serve your customer base very well.

How does one, so let’s say somebody’s newer to direct materials procurement, so maybe they’re in a manager role, new to the industry or somebody who’s maybe advancing in their career a bit, how do you go about developing a direct material strategy? Can you kind of start from the beginning and walk me through the steps on how to do this?

Yeah, so I would say you really need to work from both ends. So number one, you need to understand what the strategy is for your business, right? What is the target for your company? Because the strategy is going to be very, very different on every level. If you’re trying to be the low-cost provider in your market versus a company that’s with a strategy to say, “We are the technical leader in our market,” very different for a company that might have a lot of internal capabilities. So I’ve worked in a lot of organizations where pretty much all of my facilities have had some type of ability to machine metal in-house, but also the need to buy it outside. So when you have those internal versus external capabilities, you don’t just have to think about what am I buying, where should I buy it from, how do I mitigate my risk, but you also need to have a good strategy as to what do I do in-house, how am I going to grow that strategy? Am I going to purchase more machines when I need to do this type of work or am I going to look to outside? So it really has so many different factors that that’s why I say there can’t be a one-size-fits-all. You know, I say save the multi-step programs for the self-help books because really, in especially manufacturing, you really have to look at the needs of the organization.

So you mentioned when you were walking us through your procure career progression, you ran supply chain for IMI Precision Engineering. I think that was a role you served in for a little over three years, correct? And one of the key things you did there was develop and build out a direct material strategy. So can you walk me through what your strategy was there and what you learned through the process of building out that strategy?

Of course. So, you know, there’s always a lot to learn with any strategy that you’re developing, but I started with a focus on strategic procurement because that was something that they didn’t have a good defined plan for. So, and when I say strategic procurement, I’m segregating the sourcing, you know, deciding who are the suppliers we should most be spending our money with and partnering with, what are the regions, what should we do to affect and improve the risk, get you know, of our supply chain.

And then, once I developed that, that’s when I took the larger role that also included having every site supply chain lead dotted line into me. They hardlined into their local general managers but had a dotted line, so then I had the Tactical portion too, and really from that, it grew from how do we mesh the strategy to the actual tactical execution at the plant level. And you know, the one thing I’ve always learned is, once again, no strategy works for everyone. If you’re part of a larger organization, especially, you have to learn very quickly that there are very few things you can be 100% about. Right? For ethical behavior, financial, making sure you’re doing the right things, you have to be a hundred percent right. We know that we have to do that, but if you can get to 80%, usually that’s about as good as I think you can get, with rare exception. And what I mean there is that you can create these strategies that are going to work the best for most of your sites, but there are going to be some things that are exceptions that are special to that business. And that’s why I say there can’t be a one-size-fits-all. Even at a small to mid-sized organization, there may be exceptions to the rules.

And I took that and really took from there, like to really grow and try to start to integrate the strategy as I took my larger role, to make sure that not only are we looking at how we buy things but how we ship things, how we receive things, where we’re looking globally. So it’s just, you know, it’s a lot of fun, but I do say there is no one way to do things, and if anyone tells you there is, I would stay far away from that person.

What does success look like? So, we need to understand the customer, we need to develop a direct material strategy, but how do we know if what we’re doing is working? You know, obviously, are we supporting the customers, and for me, with especially direct material procurement, I don’t just mean the end customer or if we’re selling through distribution, you know, our Distributors. I also mean the operations team, right? Am I giving them in material what they need to succeed? And that would mean, do they have the right things at the right time and in the right quantity too? Right? You know, they’re not having to move things throughout the plant. So that’s where I see success. But at the end of the day, to me, success is delivering more value than expected. That might be in a product with a longer lifespan or a component that you purchased that is more effective. It might be a shorter lead time from your supplier. It might be margin growth that you’re driving through cost savings, or in my current world, it might be a client that got more than they expected out of engagement. But really, it’s all about value.

I recently read “The Go-Giver” by Bob Burg and David Mann. It’s a great book, a quick read, and I highly recommend it. But they present five laws of success, and the first law is the Law of Value, and it simply states, “Your true worth is determined by how much more you give in value than you take in payment.” And you may have to change a few of the words, you know, because they think that’s more on the consulting side, but the same is true for direct materials, right? The true value is in how much more value you’re getting than you’re paying for the materials.

Do you have an example that you can share from your career around how you delivered more value than expected?

So, I’m gonna take this time just to talk about the proudest moment of my career, and I will say, we certainly added value, but when I was at Mi, I was there during COVID, so I think, you know, we all learned a lot from that, to say the least, especially in supply chain. It reiterated for everyone the importance of your supply chain resiliency and really your relationships both with your suppliers and your customers. But during COVID, I learned that one of our sites manufactured a valve used in a ventilator. It was a very small part of the portfolio. 100% of the machining and assembly occurred in-house, so it never got up to my level. I didn’t really even know that we had it. And then COVID hits, obviously, and this design for the ventilator that we were supporting was actually chosen by one of the auto manufacturers that, when they shut down to change from making automobiles over to ventilators to support the system. So we went from 100% internal machining assembly and a run rate of about 2,000 a year, we needed then to find a way to get 50,000 made in the next 12 weeks. And if we had run our machines with no stopping to even change a tool, we would have had to run them for over two years to support that type of volume. And the factory that we were making it at presently for assembly certainly couldn’t support that. So within a very short time, we brought on suppliers, multiple suppliers, to support to hit the timing targets. And I just can’t tell you how it was the craziest, probably three weeks of my life, where I was just… There were days that it would be like 11 o’clock at night, and I would still have my cereal bowl in my office. You know, I was working remotely the whole team was, but I just can’t say enough for how our team stepped up, how our supply base, and even suppliers we had never met or used before, really stepped up to the plate. And it was obviously the proudest moment of my career, simply because I’ve worked in a lot of very critical industries where we talk about you’re protecting people, the environment, things like that. But this just had a very, very different feel to it. And just… It was a really good time that, you know, in all the work that went into it, to see it succeed, and to see that, you know, you’re helping the really the world in some fashion at that point. But it was just a really exciting time. And if you had told me that needed to be done and you know, COVID was not a thing we didn’t understand…

I would have told you it was going to be nearly impossible, but we made it happen, and it really restored, you know, a lot of faith. And honestly, I have suppliers that I had never used before. I didn’t have a need for after, and we still communicate. It was just like, you know, something, it was like a bonding experience there.

Yeah, your story reminds me of a common theme I hear across all of our podcast interviews and a lot of the other shows that I host, is around supplier collaboration and how important suppliers are to build a resilient supply chain and to develop a strategy. Without suppliers, you cannot operate a manufacturing plan, and I think we’re seeing more and more focus on collaboration and building long-term relationships with suppliers, and I think your story illustrates that very nicely.

So, you spent most of your career on the what I call the buy-side or the practitioner side, and just a little less than a year ago, you decided to start your own consulting business. So, tell me a little bit about why the change and what are you helping people do now?

You know, the time just seemed like it was right. So, I can’t really say that there’s a one thing that pushed me to the consulting side, but, you know, I do love getting to work with many different organizations. I love learning about new businesses, so this is the perfect way to do that, right? Because I can be working with three or four different industries at the same time.

So, what we do is we focus on helping the small-cap to middle-market manufacturers reduce the cost, risk, and environmental impact of their supply chains. So, we help organizations with strategic sourcing, developing the processes around whether it’s sourcing, procurement, inventory control, implementing strategies to improve inventory and working capital. You know, I have a lot of clients right now who are really looking to understand how they can improve their planning to reduce their inventory and still meet their service level needs. And I also provide fractional executive leadership to organizations that are looking beyond the impact a single project can bring. And I do think a lot of manufacturers in this range, you know, I don’t like to set hard targets, but typically I would say 10 million to 300 million is probably the sweetest spot. And then, but I have clients that are over 2 billion, but usually, the P&Ls that I work with are on the within that nice middle-market small-cap spectrum.

Thank you for discussing the importance of understanding your customers to effectively source products and develop a direct material strategy today, Ryan. Thank you. 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 go to find you. Yeah, so obviously I want to propose promote the services of my firm so you can find me on LinkedIn. It’s Ryan Burns, and it’s, you know, type Ryan Burns and supply chain, you’ll definitely find me. I also have my company page there, and my company’s name is RBB Management Consulting, and you can find us online at rbbmanagement.com. And in addition to just having some information about the firm and what we do, I also have a Blog there, and it’s just some of my thoughts on whatever I’m pondering at the moment in supply chain. And if anybody happens to be a fan of the Great British Baking Show and wants to wonder why life and supply chain can’t be more like it, go check out my blog because we’re on the same page. As for what I’m doing today, like I said, my focus is really with manufacturers and primarily manufacturers who have a good amount of direct material spend, obviously, and with typically manufacturers that have a differentiated set, right? So they’re buying multiple categories and have a little bit more complexity in their supply chain. And right now, I’m helping people define some hard processes around sourcing, around procurement, and inventory control. I have clients where I’m working to really define their strategy of how do I segment my inventory, right? How do I treat parts differently from a replenishment perspective to make sure that I can support it with either the team I have or the team that I know I want, right? You know, a lot of people have bandwidth concerns, you know, even with the current market right now, people have trouble finding employees. And so I’ve told a lot of people that it may not be that you need more employees, you just need a robust process that can help to be managed by fewer people. So there’s so many different ways to attack it, and it’s really been fun. If you missed anything, you can check out the show notes. You can find us by typing in “What the Duck?! Another Supply Chain Podcast” in Google to optimize the search results. Make sure to add “Another Supply Chain Podcast” to ensure you don’t miss a single episode. Make sure to follow this podcast and subscribe to us on YouTube. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct materials 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.