Transcript
Colin Uthe:
Welcome to Chamberlain Group's very first podcast series, Connected. I'm Colin Uthe, and I'm setting out to better understand what makes up our global presence by sitting down every month and speaking with people from different areas of the company, both organizationally and geographically. We're going to share stories that bridge different parts of the business in ways that may not be obvious but are valuable, sometimes critical to our company strategy. So join me as I dive headfirst into the complex network of operations that make up Chamberlain Group. Let's get connected.
Supply chain is a term that the average consumer might not have even heard before the pandemic. In the last two years, you've most likely heard someone complaining about the supply chain when their order got delayed or while gazing upon empty department store shelves. You've probably even said it yourself. When we talk about the supply chain in this way, it's implied that we're referring to the vast and complicated global system that, in the simplest terms, gets things where they need to go.
When we buy something on a website, that item is loaded onto a truck and delivered to our door. Before that, it's sorted from a different truck and stored in a warehouse. Before that, it sits on a colossal freighter ship crossing the ocean for sometimes an entire month. Before that, it's constructed in a factory. And before that, the plastics and metals that make up that item have to be processed and refined when they're extracted from the earth. All of these steps, what gets us our stuff is categorized into what we know as the global supply chain. From a business perspective, supply chain is sometimes referred to as the backbone of the service economy. But much like a backbone, it's fragile. And if it takes a direct hit, it can cause severe damage throughout the rest of the structure.
I sat down with Kim Thornton and Noe Sanchez to discuss their firsthand involvement and perspective in Chamberlain Group's own supply chain. Kim started with Chamberlain Group back in 2019. She started as the director of integrated business planning. Before that, she worked for several other household names in supply chain-related positions. After three years in her original role, Kim took a new title called the supply chain center of excellence director, or COE as some call it. Kim's job is to align different resources within her department towards a common strategy.
Kim Thornton:
Yeah, I think if you look at ... And this is industry standard. A lot of organizations have a center of excellence that looks at overall strategy. Underneath strategy, you got the analytics side of it, you got project management, you got whether it's productivity, cost avoidance, and then as well as our systems. So within our supply chain systems, you've got our IBP platform, which are several different platforms within that, our transportation, and then our warehouse management system, and then as well as our overall processes. So as you think about work constructions and lean counsel and black belts, like someone that helps house that, but it's also taking current talent within Chamberlain that has some of the knowledge, and then hiring some existent talent that we haven't had. So my team's a pretty blended team, which I think is pretty exciting, but it also will help to create some talent as we build out the pipeline.
Colin Uthe:
Would it be accurate for me to say that you are the supply chain's people person?
Kim Thornton:
I think so. I try to hold the group together. I try to sit in the middle and make sure we're all connected because it's hard when you're kind of zoned and you own. Whether it's logistics, transportation planning, or the BU business operations manager, I try to make sure that we're all holding hands and moving together. We're doing what's right from enterprise, not just each individual department.
Colin Uthe:
Noe's journey with Chamberlain has a couple of chapters to it. He started his career back in 2000 as a materials manager in Nogales. He left for a few years to pursue other opportunities, but a few persistent phone calls eventually brought him back as a liaison between the plant and the corporate headquarters. After that, he eventually transitioned into the director of supply planning and network flow.
Noe Sanchez:
I mean, everybody's shouting at me with, "We don't have inventory." That's really what it is. Whenever people is looking for some inventory and we don't find anything, that's me. So yes, I'm in charge of making sure we support our demand and making sure that the finished good is flowing through our network to support our customer needs. I learned a lot, and I was able to understand the full supply chain through living it in Chamberlain.
Colin Uthe:
Kim and Noe were both working at Chamberlain in March of 2020 when the global supply chain stopped dead in its tracks. We talked about their first reactions, their responses, the ongoing recovery, and plans for resilience to prevent anything like this from happening in the future.
Kim Thornton:
It was that Friday, March 20th, if I'm right. It was, "Guys, pick up your stuff. Take what you need to, and we're going to figure it out from here." But I mean-
Colin Uthe:
Stay home.
Kim Thornton:
Yes. The whole news was going on. We're all watching it. So everybody took what they needed to get through their jobs, and then they worked really well from an HR and leadership team to communicate. But I remember packing up my desk and taking what I needed to, to make sure I could do my job. And that's what we all did in. We were up on the fourth floor and grabbed our stuff.
Colin Uthe:
See you back in two weeks. Something like that.
Noe Sanchez:
Something like that.
Colin Uthe:
For six weeks, the Chamberlain manufacturing plant, along with all other non-essential businesses in Nogales were shut down completely. I've been told that supply chain did anticipate, simulate a couple of different disasters that could have been impacted manufacturing, but the pandemic was not one of those things that was anticipated.
Noe Sanchez:
So we were not prepared for what happened. We created some scenarios on not being able to provide products to manufacture product for a few weeks. We did some scenarios if some of our suppliers were having issues, but never to the magnitude we went through.
Kim Thornton:
I think that's fair, though. Peers in supply chain, they had tornadoes, the border shut down, and fires. But, we weren't the only ones. Everybody else was not thinking of a pandemic like we were going through.
Colin Uthe:
For sure.
Kim Thornton:
So I thought that was interesting as you're speaking to peers, you're hearing from what other supply chains are dealing with. It's interesting because nobody had that in their playbook.
Colin Uthe:
Between Chamberlain and several other businesses in the area, Nogales is primarily a manufacturing town. People who were able to work from home were told to do so. But for the majority of employees working the assembly line or maintaining the building, they were told to stay home and wait.
Noe Sanchez:
So the people down there in the plant is really grateful to what the plant did while in the shutdown. The people was granted their salary intact even though they weren't working. That wasn't something done by any company down there in the region. That was a strategy that really helped us bring back the people once we restarted the operation. Something else, the people from a Char down there in Nogales, they were preparing food for people and providing and delivering to their houses. That action really created a lot of gratitude out of the people down there in the plant.
Colin Uthe:
It wasn't until after a lengthy trailblazing legal victory that the plant was allowed to reopen, but reopening the plant was not as simple as turning the lights on either. COVID-19 was still just as present in our daily lives, and we needed to plan out and execute serious precautions to guarantee the safety of our workers.
Noe Sanchez:
The protocols implemented by the plant were outstanding. The people felt safe on going to work compared to other plants down in the area, and that permitted us to reopen and ramp up back faster than other companies.
Colin Uthe:
Yeah, you mentioned before we started rolling that we weren't the quickest when it came to ramping up production as opposed to some other companies around the area, but we remained open. We avoided those shutdowns because of the safety protocols that we put in place.
Noe Sanchez:
Even some of our suppliers, they had to shut down several times because they were having spikes in their facilities. That wasn't the case for Nogales. We stayed open consistently. The HR team down there in the plant did a great job maintaining the labor needed for us to ramp up and build up. So we built record months of production down there in the plant, and that really permitted us to support the big demand we were having back then in 2020.
Colin Uthe:
When Chamberlain and the rest of the world started to resume their production, this is when things started to get out of sync, because not everyone opened up at the same time. Some of Chamberlain's own suppliers had to shut back down and wait to reopen until it was safe to do so, causing shortages and bottlenecks for materials.
Noe Sanchez:
So the same way we work with the commercial teams about having the right inventory, and talking to customers, the same synergy happens within the OSC team. We had so many challenges, and the team was really fighting to resolve them between the team in sourcing, purchasing, up to transportation team, obviously the planning team, and the manufacturing team, all working with the challenges of not having parts and building the right stuff. You mentioned that offline, right? It's like playing Tetris and connecting, putting one piece at a time. So the OSC team did a great job of understanding the problems and solve one thing at a time.
Kim Thornton:
Yeah. I think as you think about the bearer of bad news, I remember Fitzgerald always say, "Inflation, here you go." As he's looking at costs, right? We're trying to figure out what the BUs if they want to approve air freight. And so first, everybody was trying to get their items right to the ports, and then the port's congested, and then it became capacity with the air freighting, and then the price-
Colin Uthe:
Because everybody's trying to do this at the same time, right?
Kim Thornton:
Yeah. We were all going to the same port, and then there was a labor ... So then we switched the ports. I remember Alex moving it over, so did everybody else. So it was trying to look at the lead times and the items we need, the right mix, and make sure we're not doing any more costs that are needed from an air freighting. But it was crazy because it's literally there's eight parts we need and we might only have six. And then, by the way, I got to figure out when the rest of them are coming in. You're constrained on trucks.
Colin Uthe:
Did you have to fight anybody for some materials at certain times?
Noe Sanchez:
Yeah, sourcing the ... Several negotiations with tough negotiation with suppliers to increase our share or deviate a little bit from other companies.
Colin Uthe:
Yeah, it's cutthroat out there with the material bidding, right? Everybody
Noe Sanchez:
Everybody was fighting. Right.
Kim Thornton:
I think that Jeff's gotten into several different conversations. Stuart, had a lot of them right, right? And then as well as Meredith would help support that. I'm getting on the phone. But yeah, they had a lot of those conversations.
Colin Uthe:
Wow. Surprisingly, the biggest uncertainty during this period was not supply. It was demand.
Noe Sanchez:
So everybody was fighting as we were stating. Fighting for the parts, making sure we could support that unexpected demand because everybody was thinking that everything was going to be slowing down. And it happened the opposite. The people just was clicking at their computer, expecting the same.
Kim Thornton:
Ordering everything.
Noe Sanchez:
Ordered everything. And instead of going to the gym, to the theater to have dinner, they started spending stuff in gyms and fixing-
Colin Uthe:
People renovating their houses.
Noe Sanchez:
Fixing their houses. And that really created this-
Kim Thornton:
[inaudible 00:13:45].
Noe Sanchez:
... some of the problems that happened.
Colin Uthe:
It's important to note that this started happening before production even started to ramp back up. People weren't getting their stuff, and they were getting angry about it. In everyday conversations, supply chain quickly became the buzzword that people could point the blame to. And they weren't totally wrong. A delicate system rattled by global crisis and an unpredictable scenario, millions of people staying home with nothing to do except buy.
Kim Thornton:
We didn't know how customers were going to behave. I mean, nobody did. And so that was the one thing of trying to figure out what we need to think about from a future and start putting that in demand plan to help flow through materials, and then as well as Noe's production planning. So that was a big conversation at first because we did think we're going tank like we were only going to bring it down. We'd solve complete opposites. We had to get back in a room. We worked with marketing. We worked with sales. We got our order entry team.
Colin Uthe:
And that's all coming up while the plant was shut down?
Kim Thornton:
Uh-huh.
Colin Uthe:
Wow.
Kim Thornton:
Yeah, as we're going through and looking at daily communication where we're at from inventory. We're focusing our A&B SKUs and seeing what our inventory levels were slowly coming down to, and then also getting back in the room to figure out what we need to start prioritizing from an order perspective. I don't think we've ever talked to, whether it be the order entry team or sales or marketing as much as we did this past two years. Normally, it's going through and coming up with our demand plan, our consensus, and then during our S&OP meetings and trying to figure out where we're going to land from our risk and opportunity. But I felt like we literally have spent more time together in the last two years than I ever have.
Colin Uthe:
It sounds like you guys moved the mark quite a few times just anticipating for everything to open back up whenever it could happen. I'm sure you had to restrategize a handful of times before we even got to that next step.
Noe Sanchez:
That was a daily work, basically. We were doing scenario planning on a daily basis, tracking. As Kim was stating, tracking inventory position, trying to understand the behavior of the market, and trying to be prepared to, once we were ready to open, we were doing it the most efficient way, supporting as much as we could our customer.
Colin Uthe:
With customer habits acting is a bit of a wildcard at this point, Noe's team doubled down on their focus to supply, while Kim's team tried to make sense of how customers were behaving when locked up in their houses. It was obvious at this point to the whole world that supply chain priorities needed to adjust.
Noe Sanchez:
The industry is not looking for the best cost any more, but the right cost, making sure they have resiliency into their supply. It's very customer-centric. The customer is used to get what they are thinking they need. And the supply chain, they need to be agile in order to react to what that customer is going to be asking. So yeah, definitely many industries and companies are rethinking their supply chain and reviewing their priorities.
Colin Uthe:
I understand that with the acquisition from Blackstone, we were able to get a bunch of extra help with that selective sourcing. Is that correct?
Noe Sanchez:
That is correct, and that's a total full podcast for you. I think Jenny is doing a great job on understanding the resources from Blackstone. Yeah. She's rethinking their full sourcing.
Kim Thornton:
At David coming in.
Noe Sanchez:
With David coming in.
Colin Uthe:
Yeah, we got some new talent, right?
Kim Thornton:
Oh, yeah. And his knowledge and what he's done with the Blackstone portfolios, he's going to be a great addition for the team. I think it was week two, and we were out at a conference, and Jenny's like, "Oh, no. Is he helping with the outside storage or helping for locations?" He's got a whole strategy that he's putting into place and getting his team on board. He's going to do some great things for us that we probably haven't had set up in the past because we hadn't needed to.
Colin Uthe:
How are we expecting this sourcing to strengthen our supply chain?
Kim Thornton:
You can't just look at cost, right? But you got to look at lead time. I know a lot of times we do stuff overseas, but then you're paying for air freight when you have it a little closer, maybe shorter lead time, and not have to pay all the extra expedited. But also, looking to get somebody that could be dual-sourced or have materials quicker. I know that's a few things, but he's got a really big roadmap of stuff that he's working on I think to make us be more flexible and agile for materials.
Noe Sanchez:
And making sure that that goes and evolves with our products.
Kim Thornton:
Yeah.
Noe Sanchez:
Right? We cannot keep using the same components that were used 20, 30 years ago. As we get not only the best cost, but we need to make more partners. More partners that work to us, and they understand our vision of where we're going, and they support us.
Colin Uthe:
There's a strong focus here in evolution to our current systems and processes. While our sourcing gets a revamp, so do our tools. As a company, we've been steadily implementing SAP systems year after year as part of a long-term digitization project. Kim and Noe are currently involved in the launch of an SAP system called Response and Supply. This will, in short, help us track inventory and fulfill orders with much greater accuracy.
Kim Thornton:
I think it goes along with our investment in technology. So if you think about our roadmap, we've already launched Sales and Operations. Last year, we launched IBP demand, which helps with demand sensing, statistical modeling to help predict customer behaviors. And then the Response and Supply module is actually one of the hardest implement because it's more cross-functional. If you think about response, that's more or less from how we are doing customer allocation, order promising. And then the supply part of it was really going to help for Noe and his team to think about how they can actually get information quicker and faster for if you think about constrained and unconstrained, whether it's materials or labor to do what-if analysis, but also how long it takes you to do a full production plan. I think you said it was like three or four days, and this could be done in three hours.
Colin Uthe:
Wow, that's a huge time saver.
Kim Thornton:
I don't know how many times they got asked to like, "When are we going to be back in stock? When am I going to have this?" And he would like, "Yep, I'll get back to you." Because everybody was asking for all the materials and items to be back in stock. It takes a lot of time because we just didn't have as much technology, or even to be able to roll it up like we do during our exec S&OP meetings of materials that are out or constraints or production planning. So I think this is going to not only help obviously the production planning team, but also within our customer care team, which is the order entry team, and then sales to be able to help prioritize customers and orders. And then from a planning, to know when we're back in inventory or even helping balance out our network to make sure for our customers we have the right items at the right place, the right time.
Noe Sanchez:
We are seeing an opportunity to provide better information to our customers. That's what shooting for, and that's what we're expecting to get out of digitizing our supply chain.
Colin Uthe:
Response and Supply is on track to launch at the very end of this year, starting 2023 fresh with a brand-new system and the processes to go with it. As the dust continues to settle on a worldwide crisis, the supply chain department and their adjacents are tirelessly analyzing and improving their current processes and technology. At the very end of our interview, I asked both Kim and Noe what keeps them in the industry despite the unorthodox challenges of the last few years.
Kim Thornton:
I think for me, it's more or less ... Obviously, I enjoy working here, but I would say, my team. We had some long days, long nights, weekends scratching our heads. We're all going through this together, but just staying connected and still trying to figure out, have a sense of purpose working remotely, especially. How do we get on video? How do we do a happy hour? How do we have an ugly sweater party? Something, because you're not just seeing the same people you see every day at your house.
But I think, for me, it was like the pride of them and what they're doing. Not only my old team, but my new team and my new role, and knowing that we have some really great people that have a lot of knowledge. I like the facts, especially with Noe. We can't make changes without understanding current state and why we ever did something the way we did. So a lot of them have that background and knowledge, and then as well as some of our new folks that are just thinking outside the box and brainstorming of different ways of doing things and different types of reporting needed. So for me, I would say it was the people.
Colin Uthe:
What doesn't kill you makes you stronger, right?
Kim Thornton:
Oh, yeah.
Colin Uthe:
What about you, Noe? What keeps you in the industry?
Noe Sanchez:
Yeah, I kind of agree with Kim, regards to the people and the passion. I'm very passionate about it. I was really in the middle of a problem, and I wanted to solve it. That's one thing that kept me, that I said, "No, I not walking away. I'm staying until the end."
Colin Uthe:
Noe, Kim, thank you again so much.
Noe Sanchez:
Thank you for inviting us.
Kim Thornton:
Yeah, thank you.
Colin Uthe:
If someone asked me what I thought motivated the supply chain team, I would tell them its passion, responsibility, and kinship. A system that both Kim and Noe spent the majority of their careers understanding and improving began to crumble. Despite all this, they held their teams together and seized the opportunity to make a system that was stronger and smarter than ever before. At the very core of our business, you'll find them, the literal movers and shakers that get our products where they need to go.
Thank you for listening. Tune in next month to hear more stories that reveal how all of us at Chamberlain Group are connected. This episode was written, recorded, and edited by me, Colin Uthe. Our producer is Thomas Missoula. Our music was supplied by Pixabay.com. Special thanks to Bhaskar Magee, Jeff Stewart, and the Chamberlain Corporate Communications Team.
