What the Duck?! Episode 20 Transcript
MACROMANAGE: Managing a Large Supplier Base with Cole Perry
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.
Thank you 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 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 materials supply chain content. Today, I’m going to be joined by Cole Perry, and we’re going to discuss how to increase and manage a larger supplier base. If you work for a manufacturer and are struggling to source and manage a larger group of suppliers with minimal spend increase, then this episode is for you. Cole Perry is the strategic sourcing director at Tilson Technology Management. He’s responsible for their fleet and equipment, subcontractor sourcing, and compliance and materials sourcing. Welcome to the show, Cole.
Thank you. Glad to be here.
So if you’re wondering why my background looks a little off, we had kind of a crazy storm today in Austin. I don’t think the roads here are built too well for massive rain, torrential downpour, so we’ve got a lot of flooding, and our office lost power. So our podcast studio is out of commission today, and this is the makeshift “do it from your home” podcast interview. So, Cole, I’d like to have you describe yourself for me in one sentence.
So yeah, one sentence is always hard, but what I would say is that professionally, I really like data, and I like relationships and kind of managing relationships, and then how those two converge, managing relationships and data, right? And then like, yeah, so I’m gonna guess I’m professional. That’s how I describe myself.
What do you do for fun?
So outside of work, I like to get outdoors. I like to camp, I like to hike, a little bit of running here and there. I still play video games, which is something I did growing up, I still do. I’m 40 at this point, so, and then also, listen, I’ve got a child that’s eight years old and a couple of stepkids, so parts of that are fun, parts of that are not, but yeah, seeing them grow up and trying to kind of help them mature is pretty fun.
So, favorite video… I am not a video gamer, but I know lots and lots of people are, so favorite video game?
Sure, so probably the Assassin’s Creed series for me.
Do they do… Is that something appropriate for the kids to play alone?
Not unless they’re older kids, probably. It’s a little bit violent.
That’s what it sounded like from the name.
So when we were prepping for the interview, and you actually already just mentioned it, that you have a love for data, so why the love for numbers and spreadsheets, you actually mentioned that as well.
Yeah, so I feel like that it really is a good way to tell a story about where you’ve been. Obviously, the forecasting piece is another piece, and obviously, you can use the past to kind of help forecast where you’re going to go, but listen, numbers don’t lie. Obviously, the way that you format the data, the way that you get data from multiple systems and combine it really can kind of help you tell a story and kind of help you decide how to manage things, even into the future can really kind of kind of help you learn how to focus. We gotta even like with vendor management, for example, can really kind of help focus you on the vendors that matter really where you’re spending the money, for example, where we’re spending getting away from you.
So you started your purchasing career in the food industry, so tell me about your first procurement gig. How did it all start?
Yeah, so my first procurement gig really was actually I was what were replenishment buyer, and when I when I actually was in college for my undergrad, I took a supply chain course, and that was really the first introduction I had into supply chain management. That professor that I had back then actually, I still talk to you once in a while today, just because it made that big of an impact on my life. For whatever reason, I eventually want my career and what I want to do and everything, and so the way it came about was I was actually selling cell phones prior to that, and finally found a what I would consider a professional more of an office job whatever that means, I guess these days, and that was in food distribution, and weirdly, I worked for what they call a food redistributor, so we were actually a level up, so really all we did was we aggregated demand among a bunch of different locations and brought it into one and then combined a bunch of different bins. You’re inbounds into one outbound for us, so ultimately, we were saving freight money by adding a shipper location, which is a little bit counterintuitive, but my role was I was the guy that I managed about 60 different vendors, I would every day, I’m gonna come in and out and run my inventory report, and I wish was always about 14 or 15 pages, and I’d literally go through the ruler and a highlighter, and literally highlight the things I thought I might need to buy, and that that and then managing inbound stuff that was late things, freight issues, things like that, so that was ultimately kind of what my original goal was,
it makes me think of the days of post it notes, where I’d have post it notes all over my wall or all over my computer, when you said, highlighting spreadsheets.
You’d also have post it notes all over your monitor?
I have upgraded and I’ve automated, so I try to minimize things on my desk and put as much as I can on my computer, so after you went back to school and got your MBA, and then you moved into telecommunication construction working for a company called DICOM. What did you do for them?
So my original role for them, I was really looking kind of that next step up, I got my MBA, you know where I was, didn’t quite have that next step that I was looking for, so I took a job as a Material Manager is what they call it, but ultimately, what their responsibility was I worked for one of their subsidiaries, who was based in North Carolina, and I was the corporate guy that managed basically all of our materials purchasing, as well as all of our warehouse management, so that was the guy that set up all the items and maintain our database of items. I was the guy that dealt with all of the vendors. I was the person that trained and hired all the warehouse people, as well as kind of handled the invoices once we received stuff, things like that, and so that was kind of my initial role there. It evolved over the years.
What did what were your direct inputs? How did you define direct working in telecom?
Yeah, so there it was in telecom. Even with what I do today, it’s very much what we consider direct materials, or what we consider essentially what the US raw materials are, what for most people are finished goods, right? So, like you interviewed on one of your podcasts, someone from Corning, on the fiber optic side, that’s a big input for us is the fiber optic cable. There are other different types of boxes and enclosures, and all sorts of different parts and pieces that go into nuts and bolts, literally in some cases. The other thing where I was working was very driven by an end customer who really defined a lot of what we had to buy at the time. So, it really depended on who the customer was and what we had to buy, you know, what we had to maintain. They did a lot of maintenance type work, so you had to keep a lot of things in stock in case a cable got cut, or in case service went out to somebody’s home because it’s very driven around telephone and internet and this kind of thing. So, when people call and say, “Hey, my internet’s not working, my phone’s not working,” we were the people that they would call, but you’d call the phone company, the phone company would call us, and we were expected to respond and fix it.
Yeah, and you can’t say, “Oh, get people talking.” You can’t say, “Oh, well, we’ll get the part in in two months.” No, that doesn’t really work very well. I think you’ve at least got to have something to be able to temporary at a minimum. So, yeah, you want to get people back in service, so you’ve got to have those materials on hand. So really, part of the struggle there is always a struggle a little bit between the people doing the ordering, and the people trying to maintain inventory levels and the people who are trying to do the work, your operations piece of it, and so they are. It’s really about what do you really need to keep on hand in case of an emergency, and what is it like, “I used one of those things 10 years ago, and I think I might need one again,” so that was the struggle there. It was always trying to kind of keep enough inventory but not keep too much. It was not that different in that way from food distribution, right? So same kind of thing.
So when inventory turns are looking a lot different, but…
Yeah, and directly, just-in-time has kind of gone away, and I’m not sure if it’ll ever come back to life again. Right, so one of the things that I thought was really interesting that you did when you were at DICOM is you did something called outbound customer pricing. What is this?
And I think, yeah, so I’ll get that. So the way I would describe it is essentially, I was actually doing the bidding like in the estimating type functions, and you know, compiling a bunch of pricing and comparing it, that kind of thing. One thing that really kind of defined my career the last 10 or so years and, in general, is that I don’t say no to a lot of things, which is both good and bad, and so like, I wound up doing things like working on customer pricing, even though I was the Material Manager, right? And like I ended up working on, I was the guy that was there when you started up new projects and new contracts and that kind of thing, and so that’s one thing is a little, “Why are you doing that? If you’re the Material Manager?”It’s like, well, that’s a good question, but listen, it’s just kind of how you can work a spreadsheet, you can do numbers, it’s just inputs, its outputs, whatever, so like, I ended up being the guy that did a lot of those kinds of things, and ultimately, it’s not really what I wanted to do longer term, and it’s not what I’m doing today, but it is something that it taught me a lot. I learned a lot about the business of the telecom construction and engineering and projects, but at the same time, was it wasn’t ultimately what I wanted to do and what not what I’ve chosen to do more recently.
So now you’re in a director role, and what’s been your greatest challenge this year, meaning in 2022 at Tilson?
Yeah, so at Tilson, it’s a few different things, and I’ll hit your biggest thing here in a second, but in general, is it Tilson as a company that’s trying to grow a lot? We’re trying to maintain 30 and 50% per year revenue growth rates, and actually looking at even more in 2023 than that, so it’s a challenge. Tilson not that many years ago was a very small company, and so it’s trying, the biggest kind of high level challenge, I would say, is trying to both bring the things in and forecast and kinda order things that we need and get them in when we need them, along with trying to put the controls and processes in place to make it sustainable, and kind of help the company grow in a sustainable way. Because obviously if you just continue to do things in the same way, you’ve always done them in many cases that will get away from you, and obviously, so we’re trying to do both of those things at the same time, and one of those things alone right now can be a challenge, so that’s probably the biggest overall challenge.
So the theme of our show today is about how to expand and maintain a larger supplier base, which has been quite a challenge for many people in procurement over the last couple of years, so I want to start with why did you need to expand your supply base when your spend only went up about 17%?
So, well, the reason for that is a couple of different things. One is risk. In the kind of the bigger picture, right, it’s like I like to have, I don’t like to necessarily over-order all the things equally from all of my vendors, but at the same time, I do like to have backup options to try to avoid risk to have some other established places I can go, especially the way that supply chains are today. The other thing is my spend is only up that much, but if you look at like different categories within my vendor stand, other categories can be up quite a bit, so like for instance, my fleet spend is up like 600%. This year, my direct material spend is up about 50% this year, and like I said, my subcontractor spend, for example, is down, but we’ve still expanded our supplier base there because we’d go with smaller suppliers in that scenario, but so like it really kind of what your spend is overall doesn’t necessarily get down to what is my spend in this particular category or this particular type of item or whatever the case may be, but the biggest reason for that ultimately is around risk. I’ve tried to kind of maintain the old 80-20 rule that everybody’s always heard, you spend 80% of your time with your 20% of your vendors, for example, that still works and supply chain and vendor management, but at the same time, I’m always going to be cultivating new relationships, new potential vendors, things like that. As if nothing helps us a backup or worst case, I may find something new, I may find something that you know, well, this is the way we’ve always done it. This is the thing we’ve always bought, there might be a better mousetrap out there, so I’m always willing to look a little bit.
How do you source these new suppliers? So you mentioned a pivot this year and to some smaller suppliers, right? That’s kind of a strategy but how are you actually going out and finding these new suppliers?
Sure, so a few different things, in some cases, like on the material side and telecommunications, there are other suppliers. The other thing in telecoms material side is that you’ve got a mix of manufacturers and distributors, and a lot of times the manufacturers are going through distributors, and there’s a whole relationship on both of those levels. But the way that I often find suppliers is through connections. What I mean by that is it’s either people that have come to Tilson, for example, that may know a subcontractor, or they know a couple of people that are good, and I said, ‘don’t give us a referral.’ I’ll talk to people that I’ve known in the past, I’ll talk to people, you know, that is actually how a lot of them come in. I do get obviously hit up on LinkedIn like everybody does, it’s like, ‘hey, we’re gonna sell you this next great thing.’ Some of that spam, some of it I do find is legitimate. But yeah, the biggest way, honestly, is through connections for me.
So why have you mentioned the word ‘backup supplier’ a couple of times? And I know when we were prepping for today, you talked a fair amount about that as well. Why is having backup suppliers so important to you this year?
It’s important every year, specifically in the industry. You know, earlier I thought about like, you get that call, and then we have a cut cable somewhere, like there’s 30,000 customers out of the internet, right? People don’t stand for such things. So having those backup suppliers is one of those, if I don’t physically have it, I might need somebody that does. Especially the way things are today, everybody doesn’t have everything all the time. There’s some people that that’s their strategy, to stock things and have things on the shelf, whatever, but most of them, especially now, they try to do that, but it doesn’t always work out. So sometimes having six, seven, eight, ten material suppliers for a given item is what it takes to find it there in the timeframe that we need.
So a lot of the buyers that I talked to work in manufacturing, they’re completely overloaded working 10-12 hour days, getting hundreds of emails that they can’t keep up with, and don’t have the bandwidth to read and respond to all of them. How do you manage so many suppliers without increasing headcount on your team? What’s the secret sauce or your trick behind that?
It’s that 80-20 rule. For me, honestly, I don’t spend that much time trying to cultivate new suppliers. Some of you may think that sounds like something you must do all the time, but for me, I do it occasionally, like in a couple of hours here, 30 minutes there, or whatever. Unless it’s a case to cultivate a new supplier or contact, if I know a company or a type of company, it may be a Google search, or I may be on LinkedIn trying to make a connection. At that point, it almost feels like you’re a salesperson, even though you’re a vendor management person, because you’re trying to make the contact, you’re trying to get to that right person that can then help you and provide a quote or get you the material or whatever the case may be. So, it’s just not something I spend that much of my time doing, but it is a skill, and you get better at it the more you do, just like anything.
So, for the suppliers that I’m really focused on in that 20%, my supplier management program includes cultivating and maintaining relationships. I keep in touch with them through regular check-ins, updating them on our needs, making sure they’re meeting our requirements and delivering quality products, and addressing any issues that may arise. Communication is key, and I find that being transparent and upfront with suppliers goes a long way in building trust and maintaining a strong working relationship.
So we try to, in some cases, we are doing periodic meetings. Sometimes in some cases, it may even be weekly, and in other cases, it’s biweekly or monthly. Some vendors are quarterly or yearly, depending on how important they are to us. As far as how big of a piece of our world they are, essentially, if they went away, it was almost one way to think about it. So we are doing regular contacts in that way with some structure around it, or kind of, ‘Hey, what’s going on?’ and kind of ‘Where’s this order?’ or things like that. And then the other thing is in some cases, like I do spend time on the phone sometimes actually talking to people, trying to kind of build relationships with people.
Good old-fashioned phones.
Yeah, I mean, like, literally, like pick up the phone. It’s an iPhone, it’s not that old-fashioned, but still, like just say, but anyway. So yeah, I mean, literally on the phone, talking to people, things like that. I’ll try to see people when I can kind of in person, not every day, not every week, things like that, I must say and people, but just to try to kind of build relationships so that if I do call them, it is urgent, I really do need something. They know me, they know. So I do try to build relationships as well, kind of overcome, it takes time, just like anything, but I do try to maintain relationships with my suppliers in the same way that a business development person tries to maintain relationships with people like me.
Are you using any software or technology to help with this process?
Right now, we’re not. Tilson, as we continue to grow, I think that’s a need that we will have eventually. It’s not risen to the top of the bottle as of yet, but yeah, today we’re not. But again, what’s certainly the future, I think it’s something we should do, but like this year, we get an ERP system, for example, this upcoming year, we’ll probably do a WMS. It’s always things that Tilson being in a growth mode, obviously, we’ve got to prioritize what we can do and when, and just that’s, again, that’s not at the top of the list. I mean, obviously, we’re doing data analysis, we’re pulling reports data, we use Power BI for that, but try to kind of understand and categorize our spend, but it’s all a fairly manual process. I’ve got an analyst on my team that does that for me at this point for the most part, but yeah, they’re not using an actual procurement system or sourcing system.
What mistakes have you made as you’ve gone out and built out a larger supplier base and then tried to build and maintain relationships? I find a lot of times I learned the most from making mistakes or hearing about other people’s train wrecks.
Yeah, so yeah, I don’t want to talk about my mistakes. But, uh, probably, yeah, this year, let’s see, ultimately when we’ve made a lot of little mistakes here and there obviously, things, you can correct a lot of mistakes kind of in flight and kind of fix some things here and there. The biggest mistake that I probably made this year, ultimately, is not asking questions as much as I should have to try to kind of better understand the need, and it’s really not with the suppliers actually, more with our internal operations. To understand, it’s like, okay, like, this is a forecast, like what is the forecast based on? Like, how good are we think the forecast is, what’s our confidence in the forecast, and then really trying to kind of work around because like in one case this year, we ended up with a lot more material than what we needed based on kind of what was forecasted, you know? So, I think ultimately it’s asking questions and asking deeper questions in many cases, and making sure that, where did this come from? Is it really, you know, that? And trying to build more flexibility and about sourcing, even if our data is not that great, and what I mean by that is working with suppliers to kind of push stuff out, make stuff count for both things like that, so that was paying a little bit more for something isn’t the end of the world if you’re buying something.
Yeah, I would say I feel like in the last couple of years, data has really been a challenge. Even if you have a good process and system in place, the numbers were so crazy with changes from the pandemic that looking at what you did last month, or last year sometimes was almost irrelevant, and you really had to go with gut or talking to people who are day to day in the business who had a pulse on what’s coming ahead in the future, versus looking at the past.
Well, the other thing that happened this year, too, was like I did multiple manufacturers, actually went to people’s manufacturing plants this year for several of my key suppliers, and you know, we literally did the multi-day tour. We talked through the whole process, talked to all the players, all the things, and a lot of manufacturers at this point have done what many of them have done, which is they ordered a whole bunch of stuff, and that there’s so when you walk in the warehouse, they’re just like piles and piles of stuff, but then you also look out in the parking lot. There’s a whole bunch of other stuff sitting there that might have you got a bunch of extra or whatnot, and all those are sold, but we’re waiting on a part, and when you got all those parts, I mean, it’s still like, it’s no guarantee, I guess, you can do your best to make your best effort, but sometimes things don’t work out when we think.
So, our listener base is primarily people working for a manufacturer, buyer, or a director, or somebody running a team. What advice would you have for a group that in 2023 is going to need to build out a larger supplier base, doesn’t know where to start? Like, what would you advise is kind of the steps to get the ball rolling and get this in motion?
I will suggest making connections with your peers as a start and working with people within your own company that have been in the industry, whatever that industry is, for a while, and just ask them what they’ve seen in the past at work. Ask them if they have contacts and kind of use some of the contacts that you either already have or contacts that you would make in order to find other suppliers that may do things that you don’t even know about or things that you think so. Well, again, we’ve always done it this way. Well, I mean, there might be a better way, or there might be, maybe it’s not better, but at least it’s a different way, and let’s it. I’ve always found that talking to other people, both internally within your own company and also within your industry, I’ve learned things at trade shows as well. You see a lot of different people at trade shows, and being active at those trade shows, just kind of talk to your own people, see what other options are out there, and just kind of open the mind and open the communication a little bit has been the best way to meet people for me that can help me. That, or like I said, the other way is the old LinkedIn search, just like salespeople do. I’ve done a lot of that.
Hey, LinkedIn is my friend. Don’t diss. What about from a What about for data and metrics? If I have nothing in place today, and I want to start this process, what are the most important pieces of data that I should look at because I can’t do at all, so I need to prioritize?
Yep, so what I tried to do, the first thing I did like at Tilson really didn’t have the data, at least not formatted in the way that you would expect for like a supply chain organization, so when I got to Tilson, I’ll tell you, the first thing I did was I pulled all of our vendor data and really looked at where we’re spending our money and really did a categorization that will step one. The other thing is we didn’t have a lot of clean data, and what I mean by that is like we bought from this vendor, but the question is, what did we buy from this vendor? Right, so like, for me, what I’ve always found even before Tilson is that sometimes our bitmap vendors have better data than I do about what they sold me. As counterintuitive and as weird as that is to say, look, my data sucks. Can you help me? Sometimes I found that that works better. They have more detailed information on what they sold me that I’ve gotten about what I bought, so yeah, spend $100,000 or $40 million, whatever it is, but what did I buy? Because until you get down to what about buy, obviously, I spent all that money, okay? You no big deal, other than maybe you can negotiate a rebate. Okay, but I mean, as far as ultimately, like making decisions around switching vendors or switching items or types of things, you gotta really understand what you’re buying, but that vendor, that categorization, that vendor spend is step one because it helps you focus, and then from there, it’s diving into like, what did I actually buy? Hopefully, you got inventory items, everything set up in your system with detail, right? But if not, go to your vendors.
Yeah, so I used to work in packaging and print, and one of the things that absolutely drove me crazy was how few people have their own specs and information about the items that they were actually getting produced. Like, it would have the name and that’s it. No size, no ink, no paper, and it’s really, really important. Because if you need to go out and run a competitive bid or look for other suppliers, you have to have the information to know what to even quote.
Yes, well, you do, and so that’s what you’re writing, and the other thing that I found over the years, even when I was at DICOM because .com was set up around different subsidiaries, and so like looking at different people’s inventory systems at different subsidiaries, you’d always find that everybody didn’t call everything the same name, everything, every little part and piece has a name, and then everything has a slide name or about six of them, and so really trying to kind of make sure that you’re setting your data up correctly for the future calling things the right name having the spec, to your point, it matters, and like I said, if you don’t have it again, I got no option but to go back to my vendor and ask them for or guess I could guess.
Thank you for discussing how to increase and manage a larger supply base today. If you have anything to promote or a project you want our audience to know about, now’s the time. Tell us where people can go to find you.
So professionally, the easiest place to find me is on LinkedIn. I’m just Cole Perry on LinkedIn. I think I’ve actually even got like if you do like the LinkedIn address, like with a slash at the end, I’m Cole Perry, so yeah, LinkedIn is easiest place to find me.
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” on Google. To have the optimal search results, make sure to add in “Another Supply Chain Podcast” in your search. 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.