What the Duck?! Episode 21 Transcript
THINNING THE GAP: Overcoming Data & System Gaps for Parts & Materials with Katie Smith
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 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 Katie Smith, and we’re going to discuss how to overcome data and system gaps when buying parts and materials. If you work for a manufacturer and are struggling with a lack of visibility of product and part lead times and orders manually hand-keyed into the ERP, then this episode is for you. Katie is a digital advocate with 15 plus years of experience in procurement, sourcing supply chain, and operations and manufacturing, tech, industrial distribution, and retail. Katie is a Purdue grad – go Boilermakers (I think I said that correctly) – and a rescue dog mom and a mom of an upcoming engineer. So, welcome to the show, Katie.
Thank you, Sarah. Happy to be here.
So, Katie, we’ve had a little bit of a challenge getting our interview scheduled. I want to say we’re three weeks in the making between travel holidays, getting sick, and then her and I were both in the Bay Area the last couple of weeks with torrential downpour and storms and power outages, so we’ve persevered, and here we are.
Yes, we have, so…
I’d like to have you describe yourself in one sentence.
You know, that’s one of the toughest questions. I think after these last couple of years, when I run into other people, they say, “I thought you were taller for spending a couple of years on videos,” so if I reflect on what other people say to me, I thought you were taller.
What do you do for fun?
Well, we’re still kind of recent transplants to Northern California, coming out of the Midwest, so we really love exploring our new territories. It’s just beautiful – driving trips, hiking trips, wine tasting – just exploring everything that California has to offer and making that part of our free time. Fun.
So, as you know, I was born and raised in Cali and spent a lot of my time in Sonoma County, so if you have not yet checked out Sonoma County wineries, highly, highly recommend. I have to say, I think it’s the real true wine country. Go beyond Napa.
So, Katie, when you and I were prepping for the show, you let me know that you were raised in Indiana, and you mentioned something called “Kiss the Bricks,” so I’d like to have you tell me about that.
So, Indiana, probably one of the most significant landmarks I guess you’d call it that many people, not just in the United States but maybe the globe, would be familiar with is the Indianapolis Motor Speedway, which hosts the Indy 500, IndyCar racing, so it’s a big deal to us, especially during high school, taking days out there. But it was actually built in 1909 and ended in a brick, a physical brick race track, and the bricks for the finish line are still out there from the original build, so it’s a big tradition if you’re out at the speedway and you have a chance to get out on the racetrack to kiss the finish line bricks.
Very interesting. That is something that I’ve not even thought about putting on my to do list, which people would not have yet.
So let’s get personal a little bit and talk about the beginning of your journey in procurement, so you actually started your career at Sears, so talk to me a little bit about how and why Sears
So I would say it truly was the start of my career, but I was at a very small accessory manufacturer, a jewelry and accessory manufacturer, before I joined Sears. I met a vice president at Sears and we struck up a really good friendship/sponsorship relationship, and like a lot of us on our career moves, I made the move to Sears through that relationship. I was invited to come in in a junior buyer role, and they were, at the time – because I would say I was at Sears from almost some of the acquisition years through the divestiture years – really lean on the direct side and in product management for a number of our different products. After doing that for my first few years, I was introduced to indirect procurement when indirect procurement was embracing the first consortium buying and the first digital tools that came out in the market to help really digitize, streamline, or leverage spend for buys. So I was attracted to jump over the indirect side, and what I found fascinating instead of really managing a product line at a time, via accessories or jewelry, or where I started on the soft side, at Sears, was an indirect procurement. You really had a view of the infrastructure of the entire company, whether or not you were supporting it, or marketing, or construction, etc.
So, how did you get involved? One of the reasons why I wanted to have you on the show is you have experience in direct and indirect. As you know, this is a podcast focused on the direct side, and then you also have a background in manufacturing, which a lot of our listeners and guests work in the manufacturing space. So how did you get involved in manufacturing?
Well, early in my career on the direct side, we were very active in flying to our suppliers to collaborate with them and work with them on their plant floors to see their CAD CAM and their design and walk the floors hand in hand with them. So it wasn’t owning the direct manufacturing at that time, but working very, very closely with them through the entire design, production supply, and then of course, on the other side, manage inventory management. So really running the end-to-end supply chain, but with very strong partners in manufacturing. And then after I moved from retail to indirect distribution with WW Granger, which was very similar to a retail environment, some bricks and mortar, some service-based deliveries, and then high tech, I then pivoted and really thoughtfully chose my next experience and to challenge myself with being in the manufacturing space directly. And boy, manufacturing is tough. There’s a lot of piece parts moving. It’s one thing to collaborate with a manufacturer; it’s another thing to become part of the manufacturing environment.”
So you pivoted to actually work for a manufacturer on the procurement team. What was that journey like for you, and maybe highlight a couple of the most important takeaways?
Yeah, the first one was, I knew it’d be a challenge because I had traversed a few sectors. I’d really moved sectors in my career and always tried to become a really active learner so that you have a lot of agility in your career. I knew it would be a lot to learn, and that I embedded myself in the same way that I did with every promotion or every new organization that I joined was I really found functional leaders to just really sit with and say, ‘Tell me what’s important to you. Tell me how you build this. What’s your design process? What’s the end-to-end project process here?’ And then sit with everything from engineering to legal to business ops and finance and really learn the environment. And then spend time out in the plant, spend time out a direction site, spend time out in the field, actually seeing all the parts come together. For the manufacturer, I think that’s one of the most important things to do is really learn your environment, and then in learning the environment, figuring out what the business processes are currently and why. Because you may come from a different sector or a different company, and it’s not like you want to walk in and say, ‘Gosh, why are we doing this?’ Instead, it’s ‘What’s the underlying reason that we produce this this way, or that things are forecast in the following manner,’ which is what it was when I joined the company.
That’s what we had, and I joined the company, really, in meeting the management team to build out a strategic procurement department, which in the past preceding was an order desk. And so, as we all know, an order desk is reactive orders. When I stepped back and we talked about Strategic Procurement, it’s like taking forecasting into estimating materially, segmenting it category managing, and then doing dedicated go-to-market strategies with your suppliers on how you take the buys to market. So, it really started working on that very complex and manufacturing, especially in something like construction manufacturing, any manufacturing that has thousands and thousands of parts that are all needed to make an assembly or to make a product. One of the things that I recognized right away, as you and I have talked about and you opened with, is what are the gaps? How are we not excelling at this? Out of those thousands of parts, would not arrive in time for the casting for the production and things of that nature. So, you mentioned that I’m a digital advocate because I believe that these things really can’t be controlled by humans through spreadsheets. It’s only through really aiming for the best in digital systems. We sometimes it’s hard to get there, but it’s good to aim for the best in digital systems. Can we correct some of those gaps, overcome, and I call it death by spreadsheet or death by email? The cringe when the one person who has the information on their computer or their email is out for a week? Yes, right? You’ve got the emergency that happens, and no one has access to the data information.
Yes, that’s what I always said. The probably the biggest, riskiest knowledge management is knowledge that’s sitting in someone’s head, instead of a process or a processed, digitized outcome.
Certainly. Well, most recently, when I actually saw you a few months ago last year, at a conference as well, you were running procurement for a company called Clark Pacific, and one of the things that I know that you were really focused on in that role was process documentation. So, I would like to have you walk me through why that was such a focus and priority for you.
Well, I saw and recognized within my first 30 days at Clark Pacific that there was an absence of process documentation. Coming into an existing team and needing to build out a team and build out even new processes, I like to understand the current processes. And when I asked, ‘So, do we have these in a handbook online?’ No. Now, that didn’t surprise me. That happened at a number of companies before. But I’m a big advocate of process mapping, and if possible, if more than one of the team does, like, does this just some like process, I actually like to get the team together in front of a whiteboard and process map. Because what you find is like most knowledge that’s held just in our brains, there are a lot of assumptions. We may make one, two or three-step leaps over actual actions that need to happen for it to be complete. And other teammates who participate either in the inputs or outputs can help each other poke holes in it. In an environment of trust, drawing that process map for the first time, the process map also allows us to have a lot more insights into what could or should be digitized. Because, by the way, I think any of us who are digital advocates know we’ve never digitized 100% of our work, right? I know that that could be, you know, there’s a lot of great chat going on AI, and how much things can be digitized. But I’ve always found that there’s a balance of, you know, the manual with the digital. So, a process map allows you to see who’s doing what, have a discussion about why, find out that there are gaps that the even team members can point out to each other, and then it brings it to a level of having much more depth of what actually happens for that process to be completed. What is also allowed is allows us to investigate the process and have a conversation again in it when you’re trying to process map together in an arena of trust saying, ‘But why do we do it? Is it necessary? Is it good? Can we streamline or eliminate before we start to digitize?’ That’s why.
I know a lot of HR teams will try to hire people with very specific industry experience, but I’m also an advocate of bringing people in from different industries because I think they can look at processes and systems and bring in a different perspective that may not have ever been considered if you only have people who have worked in a certain industry or space. So, that’s the ‘why’ right. Why were you focused on process documentation in your last role? The big question now is how. How should a buyer document her processes if she has never done this before?
Yeah, and this is something that people actually find really difficult because if I said, “My perfect environment is if you can get even a small team, whether it’s three or four people or anything over seven or ten, sometimes maybe a little bit too much for this process,” but if you say to somebody, “Can you document what you do and bring it back to me?” sending that poor person off with a blank piece of paper is really intimidating. It’s going to be riddled with absences, right? So some gaps. So, I like to show people, like, do a demonstration of “Tell me what you do,” and I’ll actually map it on a whiteboard with them, and then we’ll get a little bit of experience with it together. I’ll put markers in people’s hands so they can start collaborating.
Now, once you get that experience done on a whiteboard, and you’ve taken it to a degree that it’s fairly thorough, it’s well below like a level one process. You got level two, level three steps, etc. Then I always like to find somebody. I have the experience, but I like to find or train somebody on my team to then emulate it in a process map. Whether that’s in Visio, PowerPoint, or Miro, I don’t really care what the tool is, as long as you get a physical digital map that you can not only show the processes but also put in swimlanes of who’s doing what and the process handoffs so that it’s an order of the process. So the physical to the digital and then testing.
So to recap, what you said was you will train somebody on the team and then have them go create a process map, and you can see how well they learned and how well you explained to them based on what they’ve actually put on paper.
Exactly. Exactly. It builds up the understanding of the acumen of the team of why are we digging into process? Why are we looking at it so strongly? And one of the reasons is that a strong believer that you have to test your processes, and maybe even changed some of the process. You don’t have to overhaul all the processes because you don’t want to take an assumption of a process or even a process that could or should be streamlined into a digital tool into a solution. Because then you’re just taking the assumption that what we have is great. Now we just need to digitize.
I always someone who throughout my career is like to volunteer to train other people, because I feel like I’ve learned so much from actually sitting down and teaching and training someone. Because you may know something in your head, but doesn’t mean you have it clearly organized or mapped out, so I think that’s an important process part of the process as well.
Yeah, so when we were prepping for our interview a few times, you mentioned the phrase progress over perfection. Why?
I think I really learned this early in my career, and it was just really, really honed home is that no matter how many smart thoughts you have, if you can’t execute, you haven’t delivered, right? And I think I’ve caught in that trap of analysis paralysis in past lives, and I’ve seen certain team members, peers, and friends in my companies who also, if I could just do these slides one more time, if I could just have one more week with this analysis, and like, it’s okay to present it as is, just say what the assumptions are. So that’s one thing I learned too, is don’t put it out there as the truth. Put it out there as a hypothesis with, you know, here are the assumptions that we had to make because data and the stuff that we scrubbed as imperfect, right, and we recognize that. But if we put it together and at least put a hypothesis of this is what we see.
I’m gonna give you a couple of examples from my latest company, Clark Pacific. When I said, “What do we spend it on?” You know, you can walk out in the plant in the yard and you can see it all in action. But again, where’s the demand management? What do we spend most on? What do we spend least on? And when we went to pull it out of our ERP, we couldn’t see it. It said parts in the description. It wasn’t classified, right? So even if you have data, that doesn’t mean you can do anything with it. I know, I know, so classified. You know what you have to work with. This is just an example. Classifying data is an imperfect science as well.
I always someone who, throughout my career, is like to volunteer to train other people because I feel like I’ve learned so much from actually sitting down and teaching and training someone. Because you may know something in your head, but it doesn’t mean you have it clearly organized or mapped out, so I think that’s an important process part of the process as well. Yeah, so when we were prepping for our interview a few times, you mentioned the phrase ‘progress over perfection.’ Why?
I think I really learned this early in my career, and it was just really, really honed home is that no matter how many smart thoughts you have, if you can’t execute, you haven’t delivered, right? And I think I’ve caught in that trap of analysis paralysis and past lives, and I’ve seen, you know, certain team members and peers and friends in my companies who also, if I could just do these slides one more time, if I could just have one more week with this analysis, and like, it’s okay to present it as is, just say what the assumptions are, so that’s one thing I learned too, is don’t put it out there as the truth. Put it out there as a hypothesis with, you know, here are the assumptions that we had to make because data and the stuff that we scrubbed is imperfect, right, and we recognize that, but if we put it together and at least put a hypothesis of this is what we see. I’m gonna give you a couple of examples that my latest company, Clark Pacific, when I said, ‘What do we spend? What do we spend it on?’ You can walk out in the plant in the yard and you can see it all in action. But again, where’s the demand management? What do we spend most on? What do we spend least on? And when we went to pull it out of our ERP, we couldn’t see it. It said parts in the description. It wasn’t classified, right? So even if you have data that doesn’t mean you can do anything with it. I know, I know, so classified. You know what you have to work with. This is just an example. Classifying it, classified data is an imperfect science as well.
You know, we took it from maybe 30% visibility to over 90% visibility in six months, just doing the hard work of classifying what we bought, and in doing that, we couldn’t wait to become 100%. I kept showing the management team when we went from 30 to 60, from 60 to 70, from 70 to 90 because there are so many people in a company, even a smaller company like Clark Pacific, compared to my Fortune 500 companies prior, that you’ve got to bring people along with you on what it is and why it would make a difference, and did we have assumptions about what we bought, or how much or how little or the frequency or with who, and things of that nature, so progress over perfection all the time. I don’t know if it was originally a Microsoft focus, but I remember that from hearing Microsoft releases like ‘Do not wait for perfection, you want to be early in market rather than late,’ and I have spent a good amount of time in OPS as well, and ops operations is all about execution.
So when we were chatting, prepping for the interview, you broke out a couple of challenges that were really big pain points for you last year, so I want to split those into the first half of last year and then the second half of last year. So what was the biggest direct spend challenge that you had to overcome in the first part of 2022?
I would go hand in hand with that, though, and then say, but then we had to bring that knowledge to and publish it to the company: who were our suppliers, what did they categorically supply? What is their lead time? What is their price volatility? That really tracking almost on an index basis, so that there was much more transparent information for planning, because a lot of the ordering or the, you know, early was still just in time ordering, which, while no, just in time went a little bit by the wayside in COVID.
So building out your supply base to try to ensure consistent steady supply, that was kind of the first part of the year. The second part of last year, you mentioned you had some big data challenges, so what were the data gaps that you had? And why was this such a big problem?
Well, we already touched a little bit on spend, right? And I think all of us in procurement and manufacturing, we would say, “Boy, you don’t know what you’re making as a product, but you don’t know what you’re making if you don’t know your spend at a commodity and part level,” and so we already addressed that a little bit and setting up a spend cube and the criticality of that. But the next tier was, there was an ERP that had been put in a few years prior, and certainly, when we started investigating not just the process mapping and the spend, and then you move on to digital tools.
Boy, now you’re really poking into a lot of areas and people like, “But it’s a lot better than it was a few years ago.” But I noticed in the environment that the ERP did not have an intake or a requisition as part of it, and so a requisition has, “What do you want to buy?” had been built on the side, but if it had been built as a flat file to then be emailed to then be hand keyed in, even to get a quote out to a supplier, and I’m like, “Whoa, this is not 2022.” It makes me cringe.
Again, so I will say, I got a lot of support, a lot of momentum, and support, and really started preaching automation, and not just automation for automation’s sake, automation for accuracy, automation for transparency, automation for productivity. Because when you have a Stephen, a small and mighty team can jam in hand keen and everything they do, there’s going to be human mistakes, right? So we built an intake and a requisition tool in-house company of engineers who so we could build this in-house on the backbone of SharePoint, and that we made the intake form automated. If somebody started typing their name in, it recognized who they were, it populated their email, it populated their contact, the populated location, geo GL of their overhead, all that stuff that people were calling back in, writing down, and ham keying in as best guesstimate, and we know what that does to a GL of people. Guess what the GLS, and so we had the form pre-populate, and we only allowed procurement to override the form, right? If somebody said, “I made a mistake,” or “This has been bought,” and we even had it got it sophisticated enough that you could do by on behalf of so that it would automatically grab their GL, their location, their shipment information, and that was the first-tier step so that we didn’t have both our engineers or our procurement team really hand keen and forms just to say what I want I need to buy.
The next thing that we did was very passionate because these were disconnected even the new requisition intake solution that was still desk disconnected from our ERP, so it already started as soon as we started building requirements are the backbone of the process, and the rec tool was working with it to say, okay, all these fields that we fill in are a match to a field in the PIO in the ERP, the PIO creation, so rather than the team opening up a new form in the ERP and once again, rehand keyed in what they’ve taken from intake, I know is that it would take all the data that was largely auto-populated with the relief of maybe less than 20% of the form, which required a little bit again, needs human interaction to finesse, and then as soon as it was reviewed and approved by procurement, just meaning they were doing checks and balances because there’s a new tool, they could then, after many setups and trials, and user acceptance testing, that it worked with us to integrate all that information directly into the ERP and automate a PO being stood up.
So we removed people off of six years ago, that were buying off of sticky notes to completely manually keyed in intake forms. We moved to a largely 80% automated form with much more accurate detail. By the way, we all know, but I’ll give you one analogy, one person keyed in “I need 900 pieces,” it came back, and our people caught it and wrote in 900 pieces. They came back a week and a half later and said that was supposed to be 90. My mistake. Well, it was not off the shelf, and the supplier had already started manufacturing 900. So again, when I talk about the benefits of digitization and checks and balances, if somebody has a range that they can click down through or double-check, and they’re not spending all their time manually working, we have time to double-check ourselves, we have time to do reviews and approvals, and so we also automated both operationally and financially the approvals as they were going through. Before it had been kind of an adhoc selection of individuals.
So then, the theme I’m hearing from you is automate, automate, automate, leverage technology as much as you can. So you’re putting systems in place so team members, often buyers, are not manually entering data, keying information into an ERP system, and into other tools. In my experience, working in the manufacturing space, a lot of small and mid-sized manufacturers have very, very tiny technology budgets, or they may not even really have a budget. What do you recommend for people who are listening to this show that fall in that category that say, “Katie, we aligned, and we love everything you’re saying, but we have a very, very small budget?”
And I would say you have a small budget for procurement. You don’t necessarily have a small budget for production, for manufacturing, for SRM. So there are a couple of things that if you can tie what procurement can do for the company back to their customers, fulfilling their customers’ needs by manufacturing and producing on time, with accuracy, with less shrinkage, loss or waste. That’s one of the keys to get at. You write your business case on the goals of the functional company of the business, not a procurement tool business case. That’s number one. Write it on the goals of the business, tie the need for the solution, and the expenditures in, and how they will fulfill the goals of the company. Because you also have to show in your business case ROI, if we’re going to spend this, what’s the return on this? I cut my teeth in early on in Sears and Granger and so on, working with a lot of the top four consulting companies, and so early on, I saw from them how they would write a business case, and how it needed to address things, not only organizationally, operationally, but financially, and it was based on the goals of the company, not on one function like procurement. I found that very valuable, and I’ve tried to teach that lesson to other organizations and teams that I work with. Also, by the way, work with your suppliers. It doesn’t mean you need to take all their facts and figures, but they’re very informed. It’s part of their sales case, of what’s the ROI of bringing this product on.
And I would also say, technology does not have to be expensive. There are a lot of solutions, especially in the manufacturing space, that are built for small and mid-sized manufacturers that are priced accordingly, so it doesn’t mean you have to spend hundreds of thousands of dollars to get technology that’s going to be impactful and meaningful for you.
True. Yeah, very true. And you know, I think what you hit on Sarah’s on the manufacturing space, while larger manufacturers may have an SAP or something of that, and I’ve worked with that too, that doesn’t mean that we didn’t augment it with specialty bolt-on technology that was not terribly expensive that fixed a problem. Right, so that’s a great point that you bring out about small and mid-size manufacturers. There’s a lot of really good agile tools, there’s really good, there’s good, there’s not suites of tools, but there’s a great selection of tools out in the market that can help us with our problem.
So we addressed the systems gap piece of the topic for our interview today. I also want to have you give some advice, again, really looking at the small and mid-sized manufacturer, about what they can do to overcome data gaps.
Well, the first thing is pull your data as is into a data table and just look at it and say, “Does this make sense? Does this tell me anything?” It’s almost like process mapping. You have to data mine, so you have to pull your data. You have to have somebody who’s familiar enough with where your data lies, what does it take to extract it, are they familiar enough with the tables to grab all or the right data, and just lay out your data and take a look at it. Does it give you the information that you need, or the story that you’re trying to learn or the story that you’re trying to tell or teach others? Because otherwise, it’s going to tell you where you gap. The example I gave you when we pulled all of our transactional data, that Clark Pacific and the majority of the transaction line description said “parts,” right, so there wasn’t a category schema. So I think you know, testing your data, your existing data, then learning where you have to enhance it, and where you have to enhance it is really investing back into your technology because it’s almost like remediating your existing data, right? You have to enhance it. You have to identify what’s missing, you have to identify how you would enhance it, how to test that to make sure that it works, and then you just start like anything else progress over perfection. You start enhancing the data, testing it, pulling it, doing reporting off of it. Is this giving us what we need? Or does this need further cleansing, testing, enhancement?
Thanks for discussing how to overcome data and system gaps when buying parts and materials today, Katie. If you have anything to promote or a project you want our audience to know about, now’s the time, and maybe share a little bit about where you’d like to send people if they want to check you out or potentially connect with you.
Sure, absolutely. I love networking. You know, I mentioned that I’m a constant learner, and as you mentioned, Sarah, we’re always ready to learn from somebody else, so I’m Katie Smith on LinkedIn. That’s my primary platform. I’m pretty active on LinkedIn, and reach out to me there, reach out and connect. Just love to share knowledge and learn knowledge with other people.
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” into Google. To have optimal search results, make sure to add “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’re 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.