What the Duck?! Episode 50 Transcript
QUACKING THE CODE: Win-Win Supplier Scorecards for Buyers and Suppliers with
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 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 today I’m going to be joined by Justin Sayre, and we are going to discuss how to set up a supplier scorecard program that benefits your buyers and suppliers. The key there is the double win for the suppliers as well. If you work for a manufacturer and are looking to set up a supplier scorecard program for the very first time or looking to improve an existing supplier scorecard program, then this episode is for you. Justin has been working in supply chain for six years, he went to grad school for supply chain and is certified in production and inventory management through an association called APICS. Welcome to the show, Justin.
Thank you for having me, so I have to make two call-outs if you are watching the video portion of our show. Justin is rocking green today, so shout out for the SourceDay Green and congrats to Justin who is engaged and has a wedding coming up very soon. So appreciate you squeezing me into your schedule. I know how many last-minute meetings and things you can get pulled into. So Justin, let’s go back in time and I’d like to have you share your story about how you got your start in supply chain. How I got my start in supply chain?
Well, I went to MSU, which is Michigan State University in East Lansing for undergrad and I knew I always wanted to be in business. I just didn’t know exactly what, and you know the prerequisites for the business college are all pretty much the same and then you can diverge into where you want to go. So I did accounting, I did finance and economics and all of them really weren’t for me, and I’m also a very competitive person as it is. I want to be the best at things that I do and the supply chain program at Michigan State is one of the top ones ranked in the country, you know according to certain publications here there, it’s you know normally in the top five. So that attracted me to it. I always I’m a hands-on person so I always like to dive into problems, you know with my hands in things. So I go out to the problem rather than you know try to fix it far away. So manufacturing kind of appealed to me and I took the supply chain route. So you chose to get a master’s in supply chain without actually having worked in supply chain. I worked in supply chain for about four years before I went back and got my masters. So I always wanted to get my masters or an MBA and I looked at the MBA route and I just wanted to be more specialized in the supply chain field and like I said I’m competitive so I want to be the best. I was like well might as well get more specialized in it where I can. If I were to go back though for all the viewers out there I would not go to the same master’s program that you went for undergrad. I would go to a different school. So that would be my suggestion and I have to ask why.
There was just like a lot of slides that I remembered from my undergrad years, which was like four years before that, so there’s a lot of things that piggyback off of. So I just feel like you’d probably get different exposure and different points of view from different professors coming from, you know, different areas of the country, yeah, you know, different programs. So my youngest sister went to law school at UCLA, and she applied to, she did her undergrad at UCLA, she applied to law school there and got in, but that was her reasoning as well. She didn’t want to get her law degree from the same undergrad school. So she specifically went to a different program because she was worried about the same thing, it just being too much overlap and not enough change in diversity, yeah. And I mean, I learned a lot in my Master’s Degree, obviously, but that would just be my only recommendation.
So you started as a production analyst, what was the most important thing you learned in this role? How important you know analytics are to making every decision that you can, you know if you, you know a lot of people want to go off gut feeling, but you know data normally doesn’t lie unless you have bad data going in, you know you’ve heard the term “Garbage in, garbage out”, so you just want to, you know, make sure that you have the best data you can possibly have to make an informed decision that will be good for you and overall the company. So I learned how important data was for pretty much all aspects of the business. So one of the challenges that most of us face working in supply chain is bad data, especially ERP data, right? There’s a, there’s it can be very challenging to trust the data in your MRP and or your ERP, what advice do you have for people that are looking to put a better process in place to clean up and keep their data clean?
It takes a lot of hard work and it really, you need to, you know, top-down influence that data is actually very important to, you know, the decisions that you’re going to make in an organization, you know one person can make a change in an organization but it really takes a good team and a culture that really will get you where you need to go. So you really want to make sure that you have people that think that having good data is important and they are willing to invest the resources to make sure that the data you’re getting is actually accurate. So, you know, you want to be in a company that has a pretty good, you know, culture and they want to make sure that the data they’re getting is correct, and you know forecasting is always wrong, it’s just by how much, you know it actually is wrong. You want to make sure that, you know, your forecaster is as accurate as they can possibly be or just data in general. So you were promoted after you were a production analyst to a position called a production planner, how did you get promoted so quickly?
Well, my boss that I had at the time, he was leaving the company for a different position in Boston and the production planner that he hired when he came in there was also leaving. So the role came open and that same individual, she was out on I believe maternity leave, I can’t remember specifically what the reasoning was but she was out for a specific period of time, so I filled in that production planner role. I already knew how to do it while doing my current role, so the new bosses that came in, they just combined both of those roles together and I already learned all the production analyst’s role, was pretty good at it, could take both of those roles on at the same time, so it kind of all, you know, kind of just fell into place that, you know, this became open, it was something I was interested in, it was something I already learned, I was already in the same offices as the other production planners, so it was a good fit.
So this show is really focused on folks working for small and mid-sized manufacturers in direct materials procurement. So what did you learn about direct materials procurement as a production planner that has helped you as you’ve advanced your career?
It’s really important to make sure that you know your raw materials are coming in on time to make sure that your manufacturing is going to continue to go and make sure that you guys have material to make the product. You know, in the production planning role, we didn’t really buy the product, but we were working hand in hand with the procurement team to make sure that we had that product here and it was the right time. And if we had to deviate, we had to make sure we had ECRs in place. We did a lot of testing, a lot of vetting. So, you know, if you don’t have the raw material, it’s pretty hard to make the product. So you just want to make sure that all your cross-functional groups are coordinating together and make sure that they’re all on the same page and, you know, keeping the business going. So yeah, yeah.
So you left your production planner job and you transitioned to a company called InProtech Industrial Technologies, where you became a buyer and you did a lot of interesting things at this company. I’m going to highlight a couple of them that I think are relevant and interesting to our audience. So one of the things you did was focused on driving down total cost without jeopardizing on-time delivery or quality. How were you able to be successful at doing this?
Well, the company that I went to, InProtech, was very, how do I want to put this, like they were beginning to get into supply chain and make supply chain a very important aspect of their business. So, you know, they had a homegrown team of, you know, past buyers and, you know, a management team that was very used to doing the same thing over and over again. And it just takes a lot of time and a lot of vetting and, you know, open conversations with your suppliers and, you know, meeting with new suppliers and prospective suppliers and making sure that, you know, you’re helping out the business while not jeopardizing, you know, your on-time delivery and quality. You’ve got to make sure that, you know, if you are gonna go for something that is cheaper or some kind of, you know, alternative material, that it’s going to work and actually make sure it’s not going to fail out in the field. You know, you’ve got to get those TDS and SDS and all that stuff to make sure that what you’re doing is actually not going to hurt us longer in the, you know, the long run, rather than, you know, save a quick buck. So it takes a lot of communication. You know, sometimes there’s a little risk involved, but you just got to make sure you mitigate that risk and just, you know, never be content with, you know, what is, you know, the status quo. Make sure that you’re always trying to learn and improve and try to beat out your competition because, you know, you can’t do the same thing over and over again and expect the same results. You just got to always push those boundaries and try to continuously help the company and overall get a better product and beat your competition.
So, one of the things that you were also tasked with in your buyer role was maintaining and establishing new relationships with suppliers. Now, this is very near and dear to my heart, given that I work in the world of buyers and suppliers collaborating better and automating a lot of manual processes. How were you successful at building and maintaining these relationships with your suppliers?
Well, I mean, you know, a lot of businesses don’t have, you know, you don’t have the time to establish a relationship with every single one of your suppliers unless you have a very, you know, you know, small supply base and there’s not that many components. But, you know, I have over 200 suppliers here, so you just want to make sure that you’re, you know, establishing a relationship with the ones that are critical to your firm. Not that, you know, every component isn’t critical, because, you know, low spend items can still hurt your supply chain if you don’t have them here or have options to make sure that you have them. But, you know, I always make time for my suppliers. I want to, you know, get to know them, establish that relationship, because when things hit the fan or you need a favor, you know, just a strictly transactional relationship isn’t going to get you that far. Maybe it will with suppliers that you spend a lot of money with, but at the end of the day, you want to help people that you have a relationship with, and, you know, it makes your job more fun when you have a relationship with people. You can get those favors and you can, you know, help the company out in times of need, and you can trust your supply base to help you when you need help, and they can also trust you that you’re going to give them the fair opportunity to win business in the future. So, it’s, you know, it’s a pretty good thing to have a, you know, good relationship with your suppliers and establishing new ones and, you know, giving people the time of day, because you never know what’s going to come through your door. You get cold calls all the time and you don’t want to, you know, answer every one of them, but you’ll be surprised that what you might find.
I there, go ahead. No, go ahead. I mean, I just one call here at Crest. I had a guy during COVID, you know, no one really wanted to switch their supply base during COVID. You just wanted to make sure that you had the materials, make sure the stuff was here. You didn’t want to, you know, take those risks because you were already dealing with 5 million headaches as it was, trying to keep the production line going. And I had the sales guy always coming in saying, “Hey, you know, just let me have a chance.” And I would meet with them every single time and turned out he was able to save us a significant amount of money while getting a better quality product. So it’s just, you know, giving those people those chances and making sure that you hear them out because you never know what you’ll stumble across. And, you know, every buck you save goes directly to the bottom line. You can sell more boats or you can sell more product. You can sell more anything, but there’s always a margin to that product. And when you save a dollar, it goes directly to, you know, that bottom line.
So, another thing that you focused on as a buyer was correcting supplier on-time delivery to more accurately portray supplier performance. This is not something that I think is talked about very much. Why was this such a big problem for you and how did you correct this? Well, this was at my last place of employment where we wanted to, you know, implement the supplier scorecards. My manager, you know, he had a supplier scorecard system at his previous place, and he thought that, you know, it was absurd that they didn’t have any supplier scorecard, you know, system in place. So when he was pretty new to the ERP system, as was I, but I learn pretty quickly when I get into the ERP systems, and it turns out that we weren’t accurately portraying the on-time delivery for our supply base, and we were actually giving them better scores and what actually they should have got. So, and so, so that’s interesting, the data in the ERP was falsely represented in the supplier’s favor. Yeah, it was actually in their favor. So they were going after, they were going when, you know, suppliers late and they give you a new date, you update your purchase order accordingly to the new promise date, but they were grading them on that new date rather than the original date that you know they were promised. So they were helping out the suppliers, and we wanted to correct that, and you know, there was a lot of complaints that the suppliers were never on time and it was affecting the, you know, the programs that we had promised to our customers, and they didn’t understand what was going on. So eventually, I figured out that they were going off, you know, the second promise date or the, you know, so we fixed that, we were able to, you know, get those suppliers’ scorecards out to our critical suppliers, and you know, we were able to correct a few of them and get them on board with what was going on, and some of them we had to leave in the dust and try to improve the company, so.
So speaking of supplier scorecards, this is kind of the theme of our conversation today because I think they’re really, really important, and it’s critical when you are looking at setting up a program or improving that it benefits both the buyer and the supplier and fosters a collaborative work environment. You actually helped set up and establish a supplier scorecard program, so I’d like to have you kind of walk through how you did that, what steps, what process did you follow, and then maybe some of the why behind it as well, why you did things a certain way. Yeah, so we set up a supplier scorecard program for our critical suppliers, and we didn’t want to send it out to every single supplier where you only bought one widget and you spent, you know, two thousand dollars a year in comparison to the millions that you had set up.
But you want your supplier scorecard set up in a way that represents your company and what is important to you to grade your suppliers on. So you want to make sure that you know what’s important to your product coming in, whether it’s on-time delivery or quality or innovation or, you know, whatever matches your vision and mission statement and things like that. You want your metrics to be reflective of that. So we wanted to make sure that we got those metrics and we were able to measure those metrics, and some of them are, you know, pretty subjective to, you know, not hard data but just, you know, how someone feels, which, you know, sometimes isn’t that fair, but that’s just how it is. You know, it’s kind of hard to grade innovation with specific data points, but if it’s important to your firm and important to, you know, staying competitive in the market, you’ve got to figure out some way that you can grade that on. So, you know, it takes a lot of work. You’ve got to make sure that your metrics fit what you’re trying to accomplish, and you also want to make sure that your suppliers are okay with those metrics or they understand where those metrics are coming from, and that they can easily interpret those metrics. Because if you have some crazy metric, they don’t want to understand what it means, they don’t understand how they’re able to improve that metric as well. So you’ve got to make sure that the data jives with, you know, the data that they’re giving and getting or the data they’re receiving. You know, sometimes you give them a score, they don’t, you know, most of the time they won’t agree with it, but you have to give them the data, what you’re seeing, and sometimes there’s a, you know, a mishap between the data you’re actually getting versus the data that they’re getting versus, you know, someone could have received in a PO a day later than it actually came at. So you just, you know, you’ve got to sift through all that data and make sure that everything jives, and it takes a lot of work, but it’s definitely beneficial.
It allows your suppliers to know what’s important to you, and it allows them to either make it important to them or not, and it gives you that communication back and forth. So, what does good look like when it comes to a supplier scorecard program? If I have something in place, how do I know it’s actually working and making an impact?
Just depends on how often you send out your supplier scorecards, if it’s, you know, monthly or quarterly or yearly, and you just see that improvement, you know, between each scorecard, and you know, you can have a weighted scorecard depending on what your metrics are, and you just show them, you know, you think quality is 60 percent of, you know, 100 percent.
You know how the waiting you know thing works out. So I would cut that because I stuttered. But yeah, you know, I mean, it just depends on how you weight the scorecard and what you think is important and, you know, how they improve, you’ll see improvement, or you’ll see, you know, no improvement, and if they’re not important or if they don’t think it’s important, then you’ll have to either make them think it’s important or find someone else that, you know, will think it is. You mentioned earlier about, you know, sending the supplier scorecards monthly or quarterly or annually. How, what have you found to be successful when communicating the information to the suppliers?
It just depends on the industry that you’re in. I know the industry that we’re in right now, they send it quarterly, and it seems to be pretty good. And the Marine industry, in my opinion, just seems to, you know, have their stuff a lot more together than the past industries I’ve had for on-time delivery and quality and things of that nature. So it just depends on what industry you’re in, but I’ve seen personally quarterly works pretty well. I know some suppliers and some manufacturers do it monthly, and even weekly seems excessive, but I think on a quarterly basis, depending on what industry that you’re in.
And then when you are setting up a supplier scorecard program, making enhancements to an existing program, what role should suppliers play in the process?
Yeah, that’s a good question. I mean, it just depends on if you want to get them involved and figure out what actually is important to your critical supply base, because, you know, some of the commodities that we buy, like, you know, sheet aluminum, doesn’t take a lot of innovation to, you know, make sheet aluminum in comparison to some of the other gadgets that we put on our boat. So you just gotta work with the supplier and make sure that, you know, whatever metric you’re grading them on is fair to them. You know, we wouldn’t want to grade our sheet metal supplier on innovation when there’s really not a lot of innovation going on, maybe there is, but that is as much as, you know, sound systems and things like that.
So, kind of following your career progression, we talked a fair amount about supplier scorecards and kind of how you helped set up and build out this at your last company. In your most current role, you’re with a company called Crest Pontoons, and you are what’s called a program manager. And one of the things that you’ve been focused on in your role is reducing inventory variances by 13 percent. So, would like to have you talk through how you’ve been able to do this and why this is so important to your business.
Well, when I first came on board at Crest, I was a buyer, so it was a lot more important, which I mean, it’s still important, but it was a lot more important to my role at that time to, you know, make sure that inventory is correct based on your what you’re gonna make for a purchase order, how much you’re going to orders, what’s out there for demand. And when I first came in, our inventory wasn’t as great as what I was used to in my past life, so it was something I brought up, you know, a lot of times. And we wanted to make sure that we got a cycle counting program implemented because it’s just, it just helps so much to find those variances before they actually hit you and, you know, you’re making purchase orders and keeping the line moving and all that. So, we were able to reduce our inventory variances from, you know, 87 to almost, you know, 99. We’re above 99 as it is right now, and it just takes a whole team to think that it’s important when you come across some sort of bomb variance or, you know, that you’re tackling it at that moment and getting it solved before it actually hits you when it’s too late, so.
Greatest direct material challenge that you’ve had to overcome at Crest in the last six months. The greatest challenge I’ve had to overcome is, you know, it’s starting to get pretty hard out there with inflation and interest rates going up. So when that happens, everyone’s, you know, disposable income starts becoming a little bit more tight, so our demand projections have, you know, decreased by, you know, a good amount, which is happening across the industry. So when that happens, you know, there’s a big focus on reducing your inventory and making sure that you have, you know, more working capital and that you’re planning accordingly, making sure your world reports are real to quantities are at where they need to be to keep the plant moving, but you also don’t want to only have two terms a year. So I would say reducing inventory at the same rate that demand has started to decline, you know, it’s become a more competitive market out there, and that’s probably the biggest challenge I’ve seen in the last six months for sure. We might feel like I feel like that brings us full circle because you opened up talking about your the data and how it’s, we never have perfect data, we’re just working with the best data we have, and in your case now as you’re trying to reduce inventory levels, again, it goes back to your data, and it’s, it’s tough to make those forecasting decisions.
Yeah, just, you know, especially when they’re, you know, ever-changing, it’s kind of tough to, you know, decrease your inventory when you know you were 20 higher in your projections two months before, and you have to place orders at that lead time, and all of a sudden they start dropping. So that’s the biggest challenge. We’ll get there, and just part of the gig. It’s just, you know, it goes up, goes down, you just gotta make the best of it.
Well, thank you for just for, you know, discussing this supplier scorecard program that benefits your buyers and suppliers with me, Justin. Where would you like to send people to find you if they want to connect with you or chat further?
Oh, yeah, they can reach out to me on LinkedIn. I think my handle is Justin J Sayre. So LinkedIn, Justin J Sayre. So 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 have optimal search results, make sure to add “Another Supply Chain Podcast” to the end of your search to ensure you don’t miss a single episode. Make sure to follow this podcast on YouTube. You can find me @SarahScudder on LinkedIn and at @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.