Leaving Supply Chain Management to the Experts
Discussion Videos: Panel 1
Photos from the Event
Supply Chain Transformation
Discussion Videos: Panel 2

What the future holds

The supply chain industry faces many of the same issues as other industries as advancement in technologies forges a new and uncertain path for brands and providers. At the 2015 Council of Supply Chain Management Professionals conference in San Diego, Calif., executives at Target, Dr Pepper Snapple Group and Ryder sat down to discuss what this seismic shift means for their business, as they peered into their crystal balls for what the future holds.

Panel Speakers

Darin Cooprider

Vice President and General Manager, Consumer Packaged Goods Ryder System, Inc.

Fernando Cortes

Senior Vice President, Supply Chain, Dr Pepper Snapple Group

Dave Belter

Vice President & General Manager of Global Transportation, Ryder System, Inc.

Ryan Hanson

Senior Director, Domestic Transportation, Target

Q & A

What are some big opportunities and challenges coming up in 2016?

Hanson: At Target, we’re in the process of transforming our supply chain, and the work we’ve done with Ryder is the first step. The new system may not be less expensive, but it will be more reliable with an ability to customize our approach depending on the type of product.

In the past, we might agree on our metrics and other parts of the organization could agree on their metrics, but we’d be out of stock. We want to make sure we’re all measured on the same thing.

Belter: We’re all very interested to understand what 2016 will offer in terms of weather and capacity constraints that may be out of our control. We’re working to improve the efficiency of how we work with our carriers.

Cooprider: We’re talking 3-4 percent unemployment in some markets we serve, and that’s affecting the availability of warehouse workers and drivers. The wages we have to pay those workers are escalated.

If we don’t have an eye toward a period of inflation and its impact to our cost structure, we’re probably a bit myopic.

How do the next five years look for the supply chain industry?

Cooprider: In looking at the speed we’re moving now, it’s slow compared to the next step. The ubiquitous nature of mobile devices will change how we do business: How information is generated, how we deliver information to our customers, how often information is consumed. The next 5 years will probably bring more change than the last 25 years due to the ubiquitous nature of data.

Belter: Technology does help us to have a seamless flow of information that precedes the material. But at the end of the day, you have to physically move it. In major cities, the whole concept of delivering on time starts to fall apart due to the congestion and infrastructure challenges we have. The flows are already constrained at bridges, tunnels and ports and everywhere else. We’re looking at a constrained infrastructure that the country is going to have to invest in.

Hanson: We keep telling our team that change will never be slow again. There are some absolutely amazing concepts that we never would have thought of a few years ago, like shopping at a store without products.

Cortes: We’re going to see a faster evolution in analytics and making that data meaningful and useful will be the key for success. For us, it’s all about how we continue to streamline processes and become a more responsive supply chain.

When you’re shopping at Target or other retailers, we want to be closer to that consumption signal so we can rapidly replenish what consumers buy. We want to know when that Dr Pepper gets consumed so we can replenish another Dr Pepper. The more instantaneous and reliable that information is, the more we can synchronize and streamline our entire value chain.

Leaving Supply Chain Management to the Experts

Definitions matter when it comes to outsourcing supply chain roles. Fuzzy concepts need to be outlined in concrete terms that everyone understands: How will problems be resolved? What are the priorities? And when can you say you’re succeeding?

Take it from a pair of top officials with Dr Pepper Snapple Group and Ryder System, Inc. As they explained at the 2015 annual conference of the Council of Supply Chain Management Professionals, outsourcing requires an intense ongoing conversation about challenges, expectations and more. It’s never a matter of ‘set-it-and-forget-it.’

“It takes active business management and executive engagement to make sure the teams stay aligned to what their North Star is: The priorities set by the organizations and the commitment to doing the right thing even when the right thing is hard,” said Fernando Cortes, senior vice president, supply chain, with Dr Pepper Snapple Group.

First, though, it’s vital to determine if outsourcing is the right choice. “People outsource for cost, for capability, for geographic reach, for technology,” said Darin Cooprider, vice president and general manager of consumer packaged goods with Ryder. “It’s a value-driven question: ‘What’s in it for the shareholders?’” His company provides supply chain management to Dr Pepper Snapple Group, and the companies have been partners for 18 years.

Once a company starts to consider outsourcing its supply chain management, definitions come into play and both sides need to agree on them. “What does success look like? What are you trying to achieve? It’s not a one-size-fits-all with Ryder or any other company,” Cooprider said.

It’s also crucial to define how the business relationship works, Cooprider noted, and that comes at the very beginning. “I look for how we are going to settle things we don’t know about when we first sign the contract. How will we have a process in place to deal with the unexpected? How will we work to solve that problem?”

Dr Pepper Snapple Group’s Cortes is a fan of quarterly reviews. “We really respectfully push each other’s positions, generate ideas and challenge each other to find better solutions,” he said.

Cooprider said the meetings are frank and open – a “full-contact sport” – and necessary to sustain a level of engagement by creating an “operating rhythm.” But unlike sports, it’s not a good idea to set one team against another.

“When we get to those meetings, we’re not thinking about Dr Pepper or Ryder,” he said. “We’re talking about transportation. That’s the best way to preserve engagement on the executive level.”

Ultimately, Cooprider said, “the whole thrust of this process is to know the knowable and eliminate as much of the unknowable as you can from the operating equation.”

Supply chain transformation

Thanks to a helping hand from Ryder System, Inc., the Target store chain is finally nearing the bull’s eye when it comes to inbound scheduling in the supply chain.

The problem: Clunky inbound scheduling that lacked data and flexibility and actually relied on fax machines for communication. The solution, according to executives who spoke at the 2015 annual conference of the Council of Supply Chain Management Professionals: Useful analytics, more flexible scheduling and solutions that evolve as situations change.

“We’re one year into the journey, and things are going well,” said Ryan Hanson, senior director of domestic transportation with Target. “Already I can’t imagine running a supply chain without this level of analytics.”

Target’s efforts were inspired in part by a growing awareness about the clunkiness of the current system, Hanson said. “The old way of doing business was getting the job done without consistency and visibility about what was really happening.”

After extensive discussions, Target turned to Ryder for help to improve the system. Moving to a new way of doing things was much more than simply flipping a switch: “It’s a whole new way of doing things for every vendor, every carrier, every merchant, distribution centers,” Hanson said.

Now, Ryder’s system allows Target to be much more nimble and use information to its advantage about the timing of shipments. “Our carriers go in and schedule freight and load balances, and we see that,” Hanson said.

In some cases, the numbers have come with helpful revelations. For example, he said, reception centers “moved appointments around in a way would be good for the staff inside the four walls in the receiving center but not necessarily for Target guests.”

The new scheduling process has also produced accountability in other ways. Now, there’s more transparency about carriers who try to reschedule. “Not all carriers like that we have that visibility,” Hanson said, “but they know it’s fair.”

Dave Belter, vice president and general manager of global transportation with Ryder, said the data provide other benefits. “The team members at the reception centers are able to make decisions rapidly whether they’re deploying labor or taking advantage of a down period of time. The data helps them make these tactical decisions.”

In the big picture, “supply chains are getting more complex,” Hanson said. “There a lot of headwinds, and demands are increased.” The good news: “We’ve broken down some barriers, and we’re making more leaps.”

As for Ryder, it plans to evolve as circumstances change. “It’s all about service and adding value,” Belter said. “Focus on that, developing good, strong working relationships with honest, trusting and open lines of communications.”

In essence, he said, “We’re all looking for perfect execution and continuous improvement. Every customer wants that.”

Top officials with Dr Pepper Snapple Group and Ryder System explained how outsourcing requires an intense ongoing conversation about challenges, expectations and more.