What the Duck?! Episode 40 Transcript
BO-RN to PROCURE: How Client Education Mitigates Supply Chain Disruption Impacts with Bo Bradshaw
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 Bo Bradshaw, and we’re going to discuss the need for client education to avoid the worst impacts of supply chain disruption. If you work for a manufacturer where your internal stakeholders don’t understand the need for spend forecasting and evaluation of critical supplier relationships, then this episode is for you. Bo is the procurement director at Edgio, and he’s built the Edgio procurement department from the ground up. He’s passionate about negotiating unexpected wins and creating an environment where his team can thrive.
Welcome to the show, Bo. Thank you, Sarah. Happy to be here. You are quite fancy, all dressed up for the show, which makes me happy. It makes me think of one of my favorite shows, Marvelous Miss Maisel, which is a show from back in the day, and everyone is exquisitely dressed all the time. So, you remind me of a character from that show. Oh, how fun. I think that’s on Amazon Prime. You know what? I think it is on Prime. I get a few different stations, so I can’t keep them straight, but it’s one of my faves. Awesome.
So, Bo, I want to start from the beginning of your career when you were actually not in supply chain at all. You were a claims adjuster. So, why the pivot from being a claims adjuster into supply chain? It’s a funny question, actually. Claims adjusting wasn’t the beginning of my career. It was early mid-careers.
What I would say, but to answer your question, the pivot from claims adjusting to supply chain was really the confluence of a couple of things that came together. So, one of my good friends from engineering school worked at Dow Chemical. Ever since she was an intern before we even graduated, to the time where I ended up joining Dow in the purchasing function. She had been trying to recruit me over for years, and I was resistant. I told her I was happy where I was, but you know, then I started to kind of open my mind a little bit, listen to her more, and decided it was a great opportunity. So, that’s when I went ahead and moved into purchasing at Dow. And you know, really kind of started at a junior level just to get my feet on the ground, to understand what it was all about.
The funny thing is, there are a lot of unexpected similarities between claims adjusting and supply chain negotiation, purchasing negotiation. You’re both interpreting contracts, you’re both negotiating with clients, with insurance, you’re negotiating with customers, with supply chain and purchasing. You’re negotiating internally as well with vendors. So, there are a lot of similarities. It’s kind of an interesting transition.
So, how did you land your first gig in supply chain at Dow? Was it through this connection, your friend that you had from college?
It was. Dow had an opening for a sourcing specialist in the Houston purchasing department in the indirect space. I looked at it, I talked to her about it, thought, “Hey, I’ll try that out. That looks really interesting.” So, she recommended me. I went ahead and applied and went through the process, and was successful. That’s when I made the transition. That was mid-2014.
So, one of the things I noticed about your background is you moved up the ranks pretty quickly at Dow, and you were there for several years. So, why did you decide to stay in supply chain? You landed this gig in the indirect side as a sourcing specialist, but why did you decide to stay?
It’s because I was enjoying it. I was having a really good time. You know, Dow’s a great company. I was very happy there the entire time that I was there, and I learned a lot. And I really loved to negotiate as well, and this was a new type of negotiation. Like I said, it’s similar to claims adjusting, but it’s a new style of negotiation. And this one, you dig in a little bit more deeper when you’re in supply chain and procurement. You really have to understand what’s going on with the market, with your internal clients, and with the suppliers. So, there are so many variables that you have to take into account. It really challenges you to think, and there’s just so much opportunity to grow and continue to learn. That’s what kept me motivated. And because I was so motivated and enjoyed it so much, that’s where the success came from.
So, how did you move up the ranks quickly? It’s a tie-on to the last question, right? For me, it’s not about being the hero. It’s about helping my client to succeed, my internal client. You know, businesses and the functions that are spending the money that we are trying to source to get the best deal, right? And so, for me, it’s about being client-focused and aligning how I’m working with my client with what their pain points are, as well as what both the immediate tactical and the long-term strategic needs are for the company. And, like I said, if you enjoy what you do, it’s really easy to be successful at it without really looking towards the ambition part of the equation, right? And so, enjoying what I do, plus having that focus on allowing my client, making my client, the hero through what we’re sourcing and purchasing, that’s really how I got the visibility to move up so quickly at Dow. And it’s also about being flexible and realizing that in our profession, things are always going to change. The market has thrown us several curveballs over the last few years. And with that, being able to be flexible, pivot, and bring your client along on the journey, those things really will propel your career. And also, if you want to go into the leadership track, my recommendation is to really be mindful about what you want to be as a leader, who you want to be as a leader, right? What your philosophy is, not just on getting it done, which we all have to do, but also how you’re going to get it done, right? How are you going to build your team and enable your team to be motivated and want to succeed, not because you’re pushing them, but because they want to, mm-hmm.
So, one of the things you did at Dow was you led your team through the Tariff war with China.
Tell me about this. That was one of those interesting unexpected market events that we all had to pivot for, right? So, a lot of that was along the lines of, “Okay, well, this is what the price may be for this piece of engineered equipment that we need in the plant today. What’s it going to look like tomorrow? What’s it going to look like in a month when we cut the PO, once we finish the negotiation process? What’s it going to look like in three or four months when we need to order additional equipment for whatever project that we’re working on, things of that nature?”
And when you’re looking at it and you know what the plan is for what you need to buy for projects internally in the indirect space to support manufacturing, the question is always going to be, or should be in your mind, “What’s going to happen? What does the geopolitical landscape look like?” And also, taking your client along the journey, right? Letting them know what you know as far as what’s going to happen in the market. Because the reality is that the trade war was so dynamic when it was going on with the tariffs back and forth that it was really impossible to predict, right?
And so, letting the client know that, yeah, the tariff could disappear tomorrow or it could double or triple, we just don’t know. That’s in the hands of the political administrations, and we just have to comply with whatever the law is at the time, right? And so, the best advice is letting them know what the best estimate is that you’re seeing in the market and on the news for what’s going to happen, and then making a recommendation, a risk-based recommendation. Should we buy now or should we wait a few weeks, right? And letting them understand, well, if we buy now, we think we’re going to avoid another tariff increase, but the tariff could disappear completely unexpectedly. So, how much risk tolerance do you have in your budget? And also, advising them that it might be wise to put a line in their budget for tariff uncertainty as well, right? And then just being hand in hand, in glove with your clients so that you can go ahead and execute those and communicate to leadership why you’re doing what you’re doing to try to mitigate the risk.
So, you had this tariff challenge that you worked through with your team. What were the main things that you were buying when you were at Dow?
So, at the time of the tariff war, I was the Business Capital Purchasing Leader, and so a lot of it was physical equipment that actually goes into the plants, right? So, a lot of it was, we may be buying a lot of engineered equipment out of China, for example, a lot of equipment that has to be designed for a specific use case and manufactured in China and then shipped, usually on a boat.
So, is it fair to say that these were pretty big-ticket purchases?
Yes, yes, they were. They were very large-ticket purchases. Obviously, I can’t go into the direct specifics on what we were buying and how much they cost, but I will say that there was nothing that was not in the six-figure or above range that we were dealing with when the tariff war was going on.
Got it. Anything on the direct side that stands out that you and your team purchased and kind of struggled with when you were at Dow?
So, in the capital space, it’s still largely focused on the indirect side. And so, for me, there wasn’t a whole lot in the tariff war that we were purchasing on the direct side. But what I can tell you is that for direct purchasing with Dow, they were going through the same thing, right? What are we buying from China, and how do we need to hedge? Because on the direct purchasing side, what you have to look at is your inventory risk balance cost equation, right? Do we want to go ahead and hedge and buy more and then accept the additional carrying costs of that? Do we have the capacity to even store that inventory before it actually goes into the manufacturing process? And you know, what are the tax implications as well, right? And so, that’s the balance that the supply chain people in the direct space have to strike. And again, it’s about working with your clients, it’s about working with the plant cost centers that actually have to spend the money on that inventory to make their product, and how does that affect their gross margin for the product, right? Taking all of those cost factors into account.
So, you made a pretty big career move a little less than a year ago. I remember when you messaged me and made the announcement.
So, you joined the Edgio team, I want to say about 11 months ago now. So, what do you do for them?
So, I’m the Procurement Director at Edgio. And so, over the last almost year at this point, 10-11 months, I’ve been on the journey with the company to build a best-in-class procurement department. And so, with that, it’s been about a lot of client education, a lot of stakeholder education internally, a lot of discussion with external suppliers and vendors regarding really the way that we want to transform our business interaction with those suppliers and vendors. As well as, you know, staffing up the organization, putting the people, tools, processes, and procedures in place so that we do procurement from a strategic discipline perspective, while again, we’re able to handle those tactical items that come up that might have, you know, a short timeline for whatever reason. And so, it’s been a lot about education, building, and doing all at the same time.
So, when you say you are building out a procurement function, you mean there was no procurement department before you?
What I mean by building a procurement department is that, you know, Edgio is the combination of a couple of acquisitions led by Limelight Networks over the past roughly two years. It’s a combination of Limelight acquiring Layer0, an applications-based company, and then acquiring EduCast from Yahoo Incorporated, which happened in mid-June of last year. And so, I wouldn’t say that the companies didn’t have a procurement department. They certainly did have a procurement department, especially in the areas that are critical to the company. We reached the point in the indirect space where it was time to go ahead and make sure that we were purchasing things the right way to benefit the company and provide the best value. And so, that’s what it means when I say I’m building the procurement department. Now, where we’re at on the journey is that I’m thrilled that I’ve filled my staffing model just a couple of weeks ago, so we do have a full staff, a full procurement department. We’ve got the processes and the procedures in place. There’s been a lot of client education. There’s been direct employee chats with me on, you know, come ask me what we’re doing, you know, group chat settings to really kind of understand what procurement’s about for those that don’t understand, and all they know is that it’s going to be a change and what does that mean for them on how they actually are able to get the tools that they need. So, a lot of it has really been about that growth curve. And the nice thing is, is that when you bring the client along for the journey, especially if they may be a little bit change averse, when you’re able to deliver that unexpected win for them and they look like the hero, that’s when you’re able to really go ahead and build the momentum so that you go from a push to a pull model. To say, “Hey, we need to go to procurement for this because I’ve seen it. They can get us a better deal than what I’ve seen before.” So, that’s the journey that we’ve been on, and I’ve been really pleased with the success that we’ve had.
So, to kind of summarize, you’ve been brought in to make the procurement function more strategic, moving from more tactical to more strategy high-level, kind of looking at values and metrics and ROI, correct?
Exactly, and that’s the change, is that really helping our internal clients to understand, you know, what is the ROI that we’re buying? Do we need this, or is there a better solution? Or can we get the cost down to increase your ROI for your product line? Things along those lines. And executing that strategic vision model while, again, making sure that if they have a, “Oh, we didn’t consider this, we need this tool,” and it’s something tactical with a short timeline, that we’re still able to support that as well, right? That way, we’re not disrupting business operations while we’re also accelerating the value that they add for the company.
So, what are the main things that your team is sourcing this year? I think it would be helpful to our listeners just to get a kind of high-level overview about what your company is buying.
Sure, absolutely, happy to. So, as a technology company, my team is primarily composed of two major categories, which are the software and SaaS space. Since we’re a technology company, we have a lot of software and SaaS tools that we use internally to run our business, to make sure that we provide our customers the products that they expect. And so, that kind of runs the gamut all the way from our customer-facing applications to our internal applications, you know, really all the way down to our internal messaging tools, our internal business suite. You know, anything software-related. The other side of it is much more related to the manufacturing space, I would say. And that’s the direct capital hardware and equipment buy. Because as a global CDN provider (Content Delivery Network), we have a lot of hardware as far as electronics are concerned. We’ve got a lot of servers and the equipment to make sure that those servers are running at the performance level that our clients demand, right? And so, that’s what’s mostly related to the manufacturing space, and that we are working with manufacturers to get that equipment into our facilities to meet those needs and to meet our customers’ needs.
So, SIMs are audiences primarily direct and primarily manufacturing focused. What would you say is the biggest challenge you’re having on the direct manufacturing side of the business in regards to sourcing this year?
So, I think the biggest challenge continues to remain the disruption in the Silicon wafer microchip space that is continuing to cause pain points really across anybody that uses microelectronics, which is essentially every company out there, right? And I actually just got back from Procurement Forge’s technology sourcing event, and what we’re all seeing in the space, what our peers are seeing in the space is the same thing that I’m seeing, that lead times for chips are extremely long. Last year, they might have been 13 to 26 weeks, now they’re 36 to 52 weeks. And it really requires a disciplined approach to forecasting what your needs are going to be and then getting those budget approvals and those orders completed in a timely manner, or that way you go ahead and get the orders out there. Because with a lead time of 52 weeks or maybe even more in some cases, you can’t afford to make an “Oh, we missed it” kind of mistake. And so, that’s the client education piece on what does your forecast say you need and what do we need to talk about as far as inventory from a risk mitigation perspective, right? Because there are always going to be opportunities for unexpected additional growth. I mean, we, like a lot of companies out there, I mean, our customers love our products, and so we want to make sure that we can be there if we do have some unexpected demand as well.
Yeah, I feel like the inventory juggling act is going to be here forever. It’s like we need to have enough to make sure we can meet customer demand, but we don’t want to have too much where we’re tying up cash flow and we have product that becomes obsolete. So, it’s a very, very fine line because looking at data on analytics can only go so far if there are unexpected things that happen in the market, unexpected things that happen with your customers. So, I feel like that’s kind of a common theme on all of our shows, is the challenges with inventory.
So, Bo, when you and I were prepping for the show, you talked a lot about a key learning that you’ve had in your career: the need for client education and how important this is for every single procurement department to understand and implement. So, I’d like to have you start off by explaining, what do you mean by client education?
When I’m talking about client education, I’m talking about internal clients, the businesses and functions that are actually spending the money out of their cost centers. Those are who I view as the clients of procurement and supply chain, right? And so, working with them to understand those pain points and saying, “How can I help in the initial conversation to really kind of educate them?” And a lot of it initially in those interactions is based on, “Give me a little bit of trust and let me kind of show you what we can do and how we can help,” right?
One thing that I’ve found that’s very helpful with people that are not necessarily procurement professionals that may have been doing those negotiations on their own is to let them know before you have a call with the supplier, invite them to the call with your supplier or vendor and let them know what your general strategy is beforehand. Because obviously, there are certain things you don’t want your internal client saying to an external vendor when you’re trying to negotiate, right? And saying, “Why do we partner on this to make sure that I’m on the page and meeting your needs and you’re getting the right bill of material fulfilled by the supplier in these negotiations?” And you can kind of sit in and hear how I negotiate with them, right? And so, you’re bringing them along on the journey because you’re asking them to trust you in the beginning. And what that does is that I’ve had reactions after the fact, after I’ve done those meetings with vendors and internal clients, as, “Wow, I had no idea,” right? You see the light bulb turn on, on, “I really thought I got them to the lowest price. I’m thankful.” And so, there’s a lot of that.
But for mature organizations, you’re always going to have the dynamics of market change to deal with, just like you are in growing organizations. As well as, you know, there are always going to be people changes, right? People advance their careers, so you might have a new client representative that you’re working with internally, you might get a new sales rep at your vendor, right? And so, it’s also about continuing education with the client, right? Helping them to understand the market dynamics and helping them to understand why your negotiation strategy today might not be the same as it was last month, six months, a year ago, right? And so, pulling them along, partnering with them on that journey, is really key to continue to deliver those successes for the client.
So, for somebody who’s listening to our show, who works for a smaller mid-size manufacturer and is on the direct side, and they want to put some process or program in place for better managing their internal stakeholders, where do you recommend that somebody starts? Like, what are the first one or two things that you should do to lay the groundwork for doing something like this?
So, I think the starting point is to really understand what your client is doing today, right? Understand their existing process and methodology and what their pain points are. Having that open conversation about, “Hey, how are you doing this? I’d like to understand so I can help.” And then really understanding that process, because when you’re dealing in the direct space for manufacturing companies, one of the major pieces that you have to be cognizant of is the qualification process for direct suppliers that are going to go into your manufactured products. Their products go into yours. And so, digging into that qualification process is a critical component and understanding what the current change methodology is if you were to change suppliers and how long does that qualification process typically take on average, right?
That’s one thing that, in the direct space, when you’re looking at enabling a procurement department or even if you’re mature and looking to maybe change who your feedstock supplier is, you’re really going to need to understand that qualification process as well as all of the stakeholders that need to be involved, right? It might not just be the business that’s making the product and their representatives and engineers. You may need to pull in somebody from Finance, for example, to update the cost model and update the profit model for the product that you’re talking about. You, for manufacturers, you may need to pull in your environmental health and safety representative as well when you’re talking about changing feedstock, especially if it’s chemicals.
So, there are a lot of pieces that you need to understand about the baseline process and requirements as you’re talking to your client. And then, once you’ve got a handle or a vision on what that process is going to be, then it’s about saying, “Hey, this is what my thought process is on how we can update this to facilitate getting your costs down, getting you better on-time delivery, getting you better consistent quality supply response, whatever your combination of goals are.”
Continuing to partner with your internal clients and stakeholders and not just creating a policy or procedure and then just stamping it out there and saying, “Everyone must comply with XYZ policies and procedures,” but saying, “This is the vision. What do you think? Will this create pain points? What do we need to look at and modify?”
And along the journey, just because you have a process or procedure doesn’t mean it should always stay that way, right? You’ve also got to be flexible about realizing that business is constantly changing. That’s the environment that we live in. And do the processes, policies, procedures, or even the tools that we use need to change to meet our current market situation, right? And I think those are some of the key components that you’ve got to keep in mind.
So, let’s say I decide I’m going to implement a program to better communicate and collaborate with my internal stakeholders, and I’m starting along that journey. How do I know if it’s working? What are some of the success metrics that I should be tracking and looking at?
Some of the success metrics that you should track and look at are, first, what is the nature of the client relationship and how has it changed over time? Did it go from what I call a push model to a pull model? That is, I think, the absolute most telling metric at the end of the day. That’s your bottom-line metric. If you were working from the tone of resistance with your internal clients and stakeholders and it’s gone from that to, “Hey, please help us with this. We need you,” I think that’s the key metric.
That is the bottom line, whether or not you’re successful metric, right? Along the way, there are others, right? Is what you’re doing working? Are you meeting the client’s needs from whatever it is, cost, quality, on-time delivery, flexibility, whatever those things are? Because if you’re not meeting the client needs, then they’re probably not happy about what’s going on, whether or not they may tell you directly.
And so, I think the other key metric is, am I fixing their pain points and making their lives easier and helping them to accomplish their goals? Because procurement and supply chain is a supporting function. A lot of people that don’t understand what we do may say, “Hey, why are we paying money for a procurement department or a supply chain department? What good do they add?” So, we’ve got to be mindful that our clients are the ones that are paying the bill for having our department in there. And so, we’ve got to bring them more value than we cost their business.
And so, with that, if the communication is working, it’s based on the results that you’re achieving. It’s based on two things: the results that you’re achieving and the tone of the relationship and how that tone changes over time as you continue to work with them.
Thank you for discussing the need for client education to avoid the worst impacts of supply chain disruption with me today, Bo. Where would you like to send people to find you?
So, the easiest and best way to find me is on LinkedIn at Bo Bradshaw. So, feel free to connect, message, reach out. I’m always happy to talk about ideas and, you know, what our views on industry best practices are because, like I said, the market’s always changing, our client needs are always changing. So, we’ve got to be agile enough to meet those needs in real time.
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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 am your host, Sarah Scudder, and we’ll be back next week. Thank you.