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 supply chain and manufacturing. I’m @SarahScudder on LinkedIn and @Sscudder on Twitter. I’ve decided to change things up a bit and incorporate past interviews I’ve conducted from our LinkedIn live events because I feel the content is good and relevant to our podcast audience. So, today, here’s an interview from a LinkedIn live show I hosted earlier this year.
So, I’m going to have Lindsay kick us off today. So, Lindsay, would like to have you start by introducing yourself.
Thank you, Sarah. Good morning, Lindsay Smith. I’ve been in the medium-sized U.S. manufacturer supply chain management role for 20-30 years, mainly in the technology space. So, a lot of printed circuit board and small box build manufacturing. I’ve held roles as site general manager, especially for contract manufacturer. That’s a legitimate low-margin kind of hard job and all the way to global supply chain president, senior vice president for a couple of public companies.
Thanks, Sarah, for allowing me to join the call today. Looking forward to collaborating with everyone today. Similar to Lindsay, I came from actually manufacturing for contract manufacturing: printed circuit boards, cable harnesses, box builds. As Lindsay said, you know, thin margins in those worlds, right? So we had to do everything we could to lean processes out, you know, operational excellence, lean processes on the floor, whether that’s in supply chain, wherever we were, squeezing margins out.
But my name, again, is Mike Romeyn. Been with SourceDay about four years now, but prior to that, spent 20 plus years in electronic manufacturing, so I’ve been in plants around the world. Actually, don’t come from a software background, ironically enough, but I love it here, working with supply chain folks again, just in a totally different capacity.
Hi, thanks for having me. Well, I got into this industry because of my dad. He owned a machine shop, and, you know, I just kind of grew up in the business. So, I’m your typical shop brat, I guess you could say. You know, there are a lot of us out there. We just kind of were born into it, right? And no matter how hard I tried to push myself away from it and do something else, you know, it just, here I came. I came back to it, you know, every time.
Good morning, everyone. My name is Tim Wise. I’m in lovely Colorado, where spring is trying to force its way in, but I think I saw a lot of snow on trucks today coming out of Wyoming. So, it’s not quite here yet. I have spent 25 years within the high-tech space, primarily everything from laserjet printers to supply chain toner cartridges, inkjet cartridges for Hewlett-Packard, all the way to storage goods for Seagate, running international supply chains, redesigning and configuring networks, lots of outsourcing, so Mike and Lindsay, lots of outsourcing in your field, a lot of good experiences, and a lot of not so good experiences.
Lindsay, on-time delivery is a key KPI, often the number one KPI in the manufacturing sector.
The inbound supplier on-time delivery is one of the key KPIs that supply chain organizations are largely measured by. Tell me about a time when a supplier surprised you with the root cause of their missed or late delivery.
Yeah, okay, great question, Sarah. When the supplier surprises us, they… I think it’s a blessing in the supply chain world to listen, all right? God gave us two ears and one mouth, and there’s a reason for that, yeah. And suppliers will tell you things if you create space for them, especially where supply chain management doesn’t know something’s happening or doesn’t get told about. So, we… you know, in our genius era, we started to move towards the digital migration path, you know, moving towards the kind of fully integrated goal that SourceDay offers, and the first thing we had to do was scrub data and normalize data. We set up a little SQL that said, ‘Hey, tell us about late POs. Tell us about late PELs.’ And couple it to the email alert feature that’s standard, and I think most ERP systems, certainly the Sage MAS 500s and Apricor, you allow you to use an email alert. So, we loaded up the supplier email contact information for every supplier, and we started sending out emails every Monday morning to suppliers saying, ‘Hey, on-time delivery, important part of our values and our, as Rox said, our ISO 9000 compliance. So, here’s the POs we show in our system that are late.’ And what was remarkable, Sarah, was that on-time delivery immediately improved. Went from about 85 to 97%, and the reason for that is, you know, people were being held accountable, which was great. One of the surprises was that suppliers came back and said, ‘Okay, you’re sending me this report and you’re blaming me.’ I said, ‘No, no, we’re not blaming, we’re just saying this is what the system shows.’ And they said, ‘Well, all right, I received your PO and I sent an email and told the buyer we couldn’t honor that delivery.’ And two weeks later, I sent another email and didn’t reply, and… etc. What was interesting, Sarah, was as we got our act together with 97 on-time delivery just by monitoring late delivery, you start to get more and more clarity about what the root cause was. And you know, just a small purchasing team, maybe five or six buyers, and one of the buyers was recognized for being the top performer. She was just… in fact, we called… they called her the machine because she placed so many PO lines. Hand-in-hand with that, she had the most issues with suppliers coming back and saying, ‘Hey, yeah, I emailed you and said can’t do that price, can’t do that delivery, or asked for clarification on the order because there was an English second language issue, and didn’t get a response.’ So, the… the supplier surprise was the learnings was that all buyers are not equal. All… there was nuances as much as we were under that ISO or AS9000 umbrella of procedures, and we had a flowchart that the quality department drew up that said, ‘This is how we do our job.’ But each buyer had nuances of different ways of doing their job day-to-day. So, the… the fix was, you know, certainly… you know, uncovering the hidden issue was great employee coaching, team or retraining around, especially around purchase order confirmation, treating that as a separate process step, and then having direct conversations offline with supplier management and saying, ‘Hey, great that you have this partnership with our buyers. You have a second relationship and obligation to supply chain management, and you have to come to us and be open and tell us when things aren’t going the way you want them to.’
I hear a lot of communication in there, Lindsay.
Well, it’s always going to be one, yeah. Good, good, good pick up there because communication is always going to be one of the weak points in a process.
So, Mike, you spent the first part of your career, most of your career working for manufacturers.
Tell me about one of the biggest disruptions you had to your supply chain and what the impact was to your company.
Yeah, great question. I mean, we’ve seen a lot of disruptions over the… how many, x amount of years. Again, I’ve been in the manufacturing sector almost… you know, like with Lindsay and Tim, 20 plus years. We’ve seen a lot. We’ve seen the tsunamis, we’ve seen… you know, obviously the 2009 global downturn that we had, those… you know, scenarios like that, and obviously we have COVID that’s… you know, still lingering around. But in my days of manufacturing, I always… always really think about two big ones. That was 2009 when we had the global downturn, it was a banking downturn, obviously. It was a huge one for globally for everyone that actually had a ripple effect, because we had all our eggs in one basket, and that one basket was oil and gas.
So, what happened was, when you’re building electronics for oil and gas, when you start having disruptions like this and downturns in the economy, you know, I consider that a disruption, right? To our manufacturer, and that is a disruption when you have a global downturn, right? So, we obviously were sitting on millions and millions of dollars of inventory that the customer asked us to go buy. Thank God that we had a contract in place, but you can only imagine if we didn’t have a specific contract in place. A PO is a contract, but, you know, things like that can really hurt a small… Again, Lindsay knows, it’s a smaller contract manufacturing company like us, we’re 35-40 employees, and we have all this inventory tied up. We couldn’t build product; the orders were getting pushed out almost a year. So, we obviously had to pivot, right? We had to react to that. The other one was, again, the tsunami. I think about that because we had to… again, we were an ISO 9001 company, I think we’re 2008 at the time. And what happened was, during that time of the tsunami, and then we had electronic parts coming out of different regions, they were starting to see a lot of counterfeit parts. We were getting a lot of counterfeit electronic parts. Again, this is a disruption to me because when you have things that happen that disrupt the electronic industry, you’re all of a sudden gonna have start seeing things like counterfeit parts. Now we had to build a whole incoming inspection team and put a lot of our parts under our microscope to make sure that the markings on the resistors, capacitors, and every other electronics were there, they weren’t counterfeit, right? So, that added a different layer and a cost to our entire manufacturing process that we weren’t ready, and we weren’t passing that along to our customers, they weren’t going to accept it, right? So, those are two that really stand out to me. I joke about the UPS truck, I don’t know if you want to call that a supply chain disruption, but to us, when you have a truck coming in and the catch is on fire, and all of a sudden you’re like, going, ‘Uh-oh, we have a lot of material on that truck.’ But, you know, there’s… there’s other aspects of it. We’ve seen it throughout. I mean, there’s things that happen, you know, just recently in Canada, for instance. I mean, that, again… I’m not manufacturing anymore, but I talk to clients all day long, and these… this is what I’m hearing. Even things like blocking the border and, you know, Canada, right? That’s impacting manufacturing. So, I can go on and on, I can think about it over 20 years. I mean, there’s been a lot, but those really stand out to me as two big ones that really impacted our business, and it actually impacted me personally, you know, as an employee of the company. In the 2009, because I was, you know, a leader in the company, and I actually took a huge, huge pay cut to keep all of our employees working. So, those are the type of things that happen in the world of manufacturing that people don’t always think about, right? And… but it is dynamic, for sure, and it’s really dynamic right now, but that’s one of my examples, Sarah. Thanks, Mike.
Roz, you mentioned that you’re in a very niche market of machining. What’s the biggest nightmare that you’ve had to deal with in your career as it relates to supply chain?
You know what Lindsay said earlier? I’m gonna go with that customer service. It’s a nightmare when you don’t have a team that is advocating for the customer, and you know, in every business that I’ve been in, in this industry, again, I’ve been in a niche market, which tends to make you think, ‘Well, you’re in a cornered market, you can kind of do whatever you want, right?’ And there are companies who I’ve… I… there are places I’ve worked, and you know, there were niche markets, and they did take liberties with, you know, doing whatever they want, increasing their prices. In fact, one specifically, a company they were the only only company you could go to for a very specific service that they did. And all the primes listed this one organization, that’s the only place you could go, and three generations deep into the business, the company was, you know, accustomed to charging really high prices. And then they got very… you know, they got used to having life, you know, so sweet, right? No competition, there’s competition out there, but customers, vendors were not allowed to go to those different, you know, organizations that offered the same service for a much lower price, etc. Anyways, so this company got very used to being spoiled, I guess you could say. And they lost sight of their customer-advocating, you know, personality. They lost their humble, and which is what it takes to start a business. You know, when you start a business, you first get into the industry, any industry for that matter, you’ve got to have humble, or you’re not going to go very far, you’re not going to get started. So, anyways, this company, they lost their humble, and the customers all pounded their fist on the desks, and they complained and complained, and they went to the primes and said, ‘Look at how we’re being treated.’ And you know, it takes a lot to get a company like, say, for example, Boeing, to change a blueprint or frozen planning, right? That’s like a miracle. Long story short, the miracle happened, and the primes went ahead and opened up the floodgates and let the customers know, ‘You know what? You can start going to other places. I’m not gonna… We’re not gonna lock you into this one supplier.’ So, long story short, that’s kind of where… when I met the company, because they were actually bringing me on board, as… I had done… I ended up getting the nickname the ‘Go Get Them Back’ girl, because I then had to go get these customers who were… were the very customers that had pounded their fists and, you know, got something changed. I had to then go get those customers back and promise them that we were going to be good and humble and treat them right and care about our quality and care about the OTD and give them realistic pricing. Anyway, so we did that. We did manage to fix it, but about to… to speak to your question, teaching a ro… teaching a team unaware of, you know, the need to be humble, the need to be have gratitude, you know, especially in a niche market, you need to maintain a very customer-advocating team. You’ve got to teach that across the board to be successful, yeah.
Tim, what are the risks with suppliers making manufacturing changes or product changes without notifying customers?
Yeah, it’s a… it’s a… well, it’s almost like they don’t know what they don’t know. We had a situation where a power supply supplier thought they were making an innocent little resistor cap change on a board and assembly. You know, it took about three months to propagate, right? Because by the time they made the change and we flushed inventory out to our customers, and it went through from Asia, you know, finally landed in an installation, and these power supplies were supporting big storage network storage units, right? Like 2U48, so it had like 48 disk drives in it, 2U height. And we started having some failures, right? Some power supply failures, and they were intermittent enough that it was very hard to get to the root cause of what was happening.
But the bottom line was, eventually, we ended up with an epidemic failure in the field with these power supplies that we trace back to basically a resistor change, okay?
And, you know, when you’re dealing with that, and it was still intermittent enough that we didn’t really know all the scenarios or the install scenarios of that of those storage and those disk drives, such that we could easily say, ‘Well, you’re not at risk, you’re at risk, you’re at risk.’
And so, one, we had to deploy good power supplies out to the field right as soon as possible because they were easily replaceable and swappable, thank God.
But it was incredibly, incredibly disruptive for customers, for our customers, trying to get back to the original design. You know, took some time as well to get resourced and get the boards remade, and you know, it was an 18-month to 24-month purge and replace cycle.
In the meantime, we had our fingers crossed that, you know, some of the intermittent problems weren’t coming up. But I remember having a full-time person that’s all they did was have to go track these power supplies and figure out who was at risk, what was an install base, how do we pull those out, right? All you know supplier didn’t have good documentation about live tracking and where they, you know, how they were tracking their units in their factory as well. So, you know, having that tight interlock with your suppliers on change management, right, eco management, especially is something as sensitive as a power supply or any other type of electronic components, is really critical when especially, especially when they’re making changes that aren’t that don’t appear to be like a big deal, right? So that that was really ugly there for about two years actually.
While the show is focused on train wrecks and nightmares, it’s not all doom and gloom. Tell me about a time when a supplier did something unexpected but it actually turned out okay.
So I think one of the themes, and Tim’s thing about the value of having a supplier change notification process in place. One that comes to mind was we had a supplier who was a great, great supplier, a Chinese supplier in beautiful Guangdong, in Southern China. And they provided low-cost fast-turn small form factor injection molded parts, and they could do tooling very quickly, very inexpensively. We learned to spec the tooling so that, you know, that in terms of what the duty cycle was going to be or how many parts we were going to run, and we planned on either supply chain manager or supplier engineer being on-site every at least every quarter. So part of our managed expense about a Chinese outsource was, you know, rule of thumb, you know, man outsourced from China for a million bucks and plan plan a hundred thousand a year for having engineers and business managers go out every quarter.
So I went, I took my turn, and I went out and met with a supplier outside of Shenzhen. And we had a really direct relationship with the CEO, so he gave me the tour and outside it’s interesting, a couple of thousand employees, big campus. And we got through all the discussion points and we had a couple of dozen parts we were sourcing, and I had a note from engineering that they were planning also to source silicone soft silicone molded parts, and soft silicon, you know, has a red flag against it. You know, there’s been… it gets everywhere, literally. So to the extent that some injection molders have erroneously introduced silicon to their facility and had to pretty much demolish the facility because once it gets in the facility, you can’t get rid of it. So I asked the CEO, so you’re going to make these parts, and he said, ‘Oh, yeah.’ I said, ‘Here?’ He said, ‘Yes.’ So I got two yeses. So I was still a little confused because I hadn’t seen the silicon molding equipment, so I said, ‘Well, in this building?’ And he said, ‘Oh, no, down the street.’ Okay. And is that part of your company? He said, ‘Well, it’s a friend, it’s a partner.’ So, okay, so you don’t own the facility? No, no, no. All right. But you think they’ll be able to make good parts? So, yeah, yeah. I said, ‘All right, put it back in the process.’ All right, we have to have our supplier management team come out and approve the facility. And he nodded and said, ‘Yeah, there’s no way they’ll approve it.’ What he said, ‘Well, what?’ I said, ‘Don’t they have, did they have a quality system, they have a quality manager, they had… They have a quality manual?’ They said, ‘No, no, no, nothing like that.
So, you know, the unlike Tim’s adventure, we were ahead of the curve, at least you know, we the red flags went off before we started receiving the parts. So I asked, ask them, Jerry, why would you do this? Why would you agree to supply a part you’re already having an established relationship? We’re paying you lots of money for lots of parts. Why would you go off and and sign up to do something completely different from a guy down the street who doesn’t have a quality system?’ And he said, ‘Well, I wanted to be helpful. They asked me if I could do it, so I said yes.’ So I think the be very careful. I think you know us buyers can be intimidating or suppliers can can get the wrong message that they want us to say yes all the time. And being able to catch it up front and saying, ‘Okay, this is this is silly, let’s put a stop on it, let’s roll this back through supply chain, tell engineering now they’re not going to get qualified, no way, no how, and let’s go off and do a commodity search for for silicone injection molders.
Interesting story you’ve had a lot of global experience.
A lot of pain. Going back to you, lots of money and lots of stress. Mike, what was it like during your weekly production meetings when you knew you were going to miss a customer commitment?
Well, I’ll keep it professional, first and foremost, but again, you know, it’s interesting you bring that up because you know what is it like in your production meetings, right? Because we, I lived and breed that for so long, but I was obviously the face of the customer at the manufacturing plant, and obviously, I would dive into these pre-production meetings. And it was kind of funny because it was almost like the same time every time we had a production meeting. You had your general manager in the plant, you had your production manager in the meeting, then you had your buyers come running in there with their laptops and their spreadsheets, and we all sat around and we started talking about, well, what are we going to miss this week, right? It was really, we never liked that meeting because we felt like we were always talking about the bad stuff that’s going to happen, you know, instead of what are we going to produce and are we going to meet our customer expectations? A lot of it was again, we talked about earlier, you know, the buyers in a firefighting mode, we’re reacting because we’re running into, you know, suppliers not delivering on time, and that’s not maybe because of a disruption but they obviously had capacity issues, for instance. I mean, I remember another scenario we had, it was a single-source supplier, which we don’t like a lot, but, you know, what I’m saying, you know, we have single-source suppliers. So what happened was, is, you know, somebody else came in and put an order, it was a government agency that came in, it was a defense contractor, somebody came in and took all the inventory, right? So these types of things happen in these production meetings, and it’s kind of neat, interesting you asked this, sir, because, like I said, we would sit there and really have some heated conversations about how are we going to get ahead of this. And as we all know, there’s things called safety stock, there’s things you know that we’re doing now to add more buffer to our stock, but, you know, things happen and you’re sitting on a bunch of inventory, it’s not the best thing, but bottom line is, I would sit in these meetings, the buyers would, you know, obviously run through their spreadsheets, they would have their open order reports, if you want to call them, with their suppliers, and they would just show us, okay, and they sorted it by late, and we would just go line by line, what are we doing, what are we doing, what are we going to do to get the part, what are we going to do, are we going to start expediting, throwing dollars at it, are we going to fly that material over here? I mean, that’s the kind of strategic, we’re like, oh my gosh, again, reactive mode, but we’re throwing money at the problem, right, just to get the material in-house, so we can meet customer expectations. Not only that, the general manager can tell the CEO that we met revenue targets, right? And so there were just a lot of moving parts, and every week we had a production meeting, it was a lot of just reactive, and I wouldn’t say finger-pointing as much because a lot of it just went back to, you know, Lindsay brought this up, a great example was, is we had the number one buyer on our team, they were, they were like a machine, right, they were like cutting the most purchase order lines, but what they weren’t doing really well was keeping the ERP up to date, they weren’t being responsive to the supplier in a timely manner, right? So what happens is they would just all of a sudden start crumbling, and then they would be in such a snowball effect, right, they could not get ahead of the game. So that’s when, you know, what did we do? I hate to tell you this, but we ended up throwing bodies at the problem, we had to hire another person to expedite, for instance, another body to purchase because we couldn’t keep up with the demand, that doesn’t make any SFO OR CEO happy, but how else do you keep up if you don’t have technology, you literally have to throw people at the problem, so that’s what we did, that production meeting was every week, and it was no one wanted to be in it, but, you know, it was so important to be in that meeting because I had to take that information and go back to the customers and let them know that the order might be late a week or two weeks or whatever it is. So pretty interesting calls is all I can tell you is but yeah, that’s a great example of a production meeting that at the company I was with, so I’m sure there’s similar stories with everyone else that’s been in manufacturing.
Tell me about a nightmare you had quoting complex assemblies.
Well sure, we were working on a big, a large component, the parts were like $53,000 each, so it was a lot invested, there were a lot of parts, it was the build took about a year to make this component that had a set was an assembly, and it was very close tolerance, really challenging part. And we got to the end of it, everybody was getting ready to raise the checkered flag and that helicoil, you know, the one supplier on the blueprint that that supplier no longer makes that helicoil, so two years ago when we quoted it, a year deep, when we got the PO, and we could have ordered them, could have ordered that helicoil, a little stupid little coil, we had to go through the process and getting the print the drawing change, getting it approved, getting the drawing changed, and you know, so that on-time delivery, that complex component the customer couldn’t wait to receive because it was an R&D project, which you know, led to a lot of other things, yeah, we were five months late because we had to wait for that little little helicoil but it was American manufacturing that showed up and made made it happen, and I’ve heard a lot of stories today about you know the source. I think today American manufacturing, machining in the USA is really coming back strong for some of these electronic components and helicoils and things like that so it’s really good to see that coming back.
Thanks for tuning in today. 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.’ This brings us to the end of What the Duck?! Another Supply Chain Podcast. I’m your host, Sarah Scudder, and we’ll be back next week.