Time for a Supply Chain Reserve Corps

As I am sure every supply chain professional and logistician is doing now, I am spending quite a bit of time thinking about the overall supply chain in the United States and wondering if it is truly set up to service the Country in a time of national emergency.  We heard the Governor of NY today in his press conference say that the states are basically bidding against each other to get needed (and scarce) health care supplies.  Rather than going where they are most needed they appear to be going to the highest bidder.

We have also heard the President tell the states this is substantially a state problem and the feds are there to help and backstop.  Finally, we are hearing about the shear lack of ventilators and hospital beds when (just a few weeks ago it was "should") a pandemic hit the United States.  All of this makes me wonder if this is truly the best way to deal with a national emergency.


By now many of you have also seen the incredible Ted talk Bill Gates gave back in 2015 where he essentially predicted this COVID-19 outbreak.  While not predicting this one in particular, Mr. Gates did say something like this would happen.  I highly encourage you to watch this:

Here are some key points from the talk (March of 2015):

1. The next big crisis will be from "microbes" not "missiles".
    
2. We have insulated ourselves from huge war catastrophes (i.e. a nuclear war or another world war) because we have spent a trillion dollars plus on national defense and the infrastructure required to defend the United States.
3. We have a military which can scale up dramatically in a short time to fight or deter a war.
4. We should model our fight against microbes after the structure of the military.  You have a permanent "active" force and you have a large "reserve" force which can be called up and which actively practices, trains. and stays functional. 

When I saw him say this I was absolutely floored.  When I was in the Army in Germany we used to practice going to our "General Defensive Position (GDP)" and we would periodically go visit the warehouses set up all over Europe with stockpiles of tanks, trucks etc.  We would start them up, move them, practice deploying them etc. and we would do that in conjunction with our reserve forces.  We called it "REFORGER" which stood for "Return of Forces to Germany".  It was all a preparation for scaling up the military in Germany to over 1 million soldiers if the war started.  Similiar exercises were done in Korea and other places.

So, the question I am thinking about now is if it is time to have a "Reserve Supply Chain Force"?  This would be something you would sign up for just like the military reserves.  You would have a role / rank, you would go and practice once a month on the weekend, you would do a 2 week summer training and you would be available to be called up if the government activated the reserves.  We would have needs for coordination with civilian industry, you would run a huge reserve of trucks, trailers and drivers and you would work for a leader of this organization.

If your civilian job was in an "Essential industry or company" you may get activated but stay embedded in that company to coordinate all the work.

There are a lot of details to work out but perhaps we need this force that can work in the complex civilian world of supply chain and tie it to the needs of a pandemic so we can scale up the supply chain and distribution / logistics network very quickly.  What would this accomplish:

1. It would allow us to scale up almost instantaneously.  Get the expertise in place, get the trucks / trailers along with drivers and immediately establish the infrastructure for leadership.
2. It would prioritize the loading of the nation's supply chain after huge "air in the pipe" is created (Think the run on TP).  This could be done in conjunction with FEMA.
3. It would allow us to train so we are ready right away.  By being trained we don't take months to just figure out "how things work".
4. Finally, it would establish a professional "corps" which is qualified, ready and willing to get called up as needed. 

In the end, we have the model on how to build an infrastructure to fight a huge event which comes up on us like a black swan.  The model is the military and the reserves.  We should follow it.  Perhaps CSCMP can help with this and build out the model.  

Extreme Ownership in Supply Chain Management

I think it is well known that the supply chain area becomes somewhat of a hub for the corporation.  Just about every activity either flows into or flows out of the supply chain area.  Great ideas turn into products through the supply chain; Great sales of products cause great products to flow out of the supply chain and into the customer's hands.  Through the S&OP (Sales and operations planning) process, just about all planning activities move through the supply chain. 

This is why Extreme Ownership is so critical for the supply chain manager.  There is a saying in the safety world:  "You see it, you own it" and that is true for the supply chain manager.  You see the issue, you own the issue and since you are going to see just about all the issues you have to take ownership to get those issues solved.  Product defects?  You will see it in inflated returns - You see it, you own it!  Inventory problems (Too little, not enough) the distribution center manager will see that in his/her distribution center - You see it, you own it!

These ideas are built from a fantastic book called: "Extreme Ownership: How US Navy Seals LEAD and WIN by Jocko Willink and Leif Babin.  This book is written for all leaders but especially for the supply chain leader.  We see it all and therefore we have to own it.

While there are many types of leaders I think one large macro category could be that there are two types:  Victim and Owner.  The victim is the one who lists off all the things that have happened to him or her and therefore that is whey they cannot get their job done.  If only forecasts were better!!  If only we made products which cubed better... If only.... .Well, you get the picture.  This person sits back and plays the "if only" game as a complainer, not a participant.

The Owner (in the way of Extreme Ownership) sees the issues and regardless of origin takes ownership.  Rather than play the "if only" game as a spectator the Extreme Owner takes action to solve the issue(s).  If only forecasts were better! - Action: I am going to meet with the head of planning to discuss how I can give an early warning indicator to things which are not selling (Planning is in supply chain but the early warning indicator may come from outside the planning department).  If only products cubed better! - Action: I am going to participate further upstream in product development to educate others on the costs of not cubing properly and how we may be able to meet all the customer needs and ensure a cost efficient way to cube transportation conveyances (Design for Logistics).

My advice here is to take ownership and move out of of your "sphere of influence" and into your "sphere of concern" (Covey).  Take action, own the issue and work with your other partners across the company to bring to a resolution. 

After reading this book and contemplating for over 1 year (Read it last year), I really have concluded this separates out the great from the good.  The great take extreme ownership, the others observe and say "If only...".

What do FOMO and Linkedin Have to Do with Supply Chain Management

Has anyone noticed recently that your linkedin feed is just full of a bunch of technology looking for a reason to exist and all sorts of conventions and other events people are attending?  When I first got into Linkedin (Yes, I am an earlier adopter) it was a community of practitioners who would exchange ideas and thoughts on real issues, mega-trends and other more practical items of supply chain.  Then the "Facebook" world invaded.  And FOMO began.

First, if you do not know what FOMO is it is the "Fear of Missing Out" and I think it has become the most dangerous marketing tool technology and others have used in a long time.  People are not even sure sometimes why they need or want something but what they do know (Thanks to "social media") is everyone else is doing it so I better jump on board before I miss out.  Harvard MBA Peter McGinnis coined this phrase and also warned us about the problems it will create for business.  In an INC article, it is defined as:

"He used FOMO to describe managers who execute on too many initiatives or follow too many potential paths, out of fear of missing some positive trend or opportunity"

The weapon the purveyors of FOMO use in business is LinkedIn.  It is here everyone posts about some fancy technology or some convention that you just "must be at" or "must have".  Mind you, most of these posts are not practitioners rather they are just advertising.  Rather than buying advertising they just create an environment where you feel like if you do not engage you will "miss out".  

There is a corollary to this phenomena and it is called FOBO - Fear of a Better Option.  This is the other side of the coin which is when managers are inundated with so much information they are behave like a deer in headlights.  They freeze.  They are waiting and assuming there must be something better out there and so they stop awaiting a "better option".

According the article cited above, FOBO can be a direct result of our "big data" world.  We have so much data and so many ways to display it, slide and dice it, and analyze it that we continue to do that figuring if I "slice it one more way maybe the answer will come out".  In other words, we keep looking at the data hoping a "better option" will come out.  

Both of these are problems.  If you are infected with FOMO you will go down every path known and you will end up with too many disjointed initiatives with no clear direction.  If you are infected with FOBO you will stop everything. You will not innovate.  You will be like your father at Christmas who says "Don't buy that T.V., next year there will be something better".  Of course, this is true every year and it leads to inaction and lack of innovation.

My advice is to be careful on your LinkedIn feed and be very careful who you accept invites from.  It is full of "advertisers".  Stay focused by reading about topics in depth and stick more to the academic world for studies and thoughts about the future.  Don't get sucked into these diseases. 

If you want to learn more about it, Peter has a Podcast called FOMO Sapiens and you can listen to it on your favorite podcast player. 

Another Tough Report from A Carrier - Schneider Has Tough Q32019

The freight recession is real and the carriers are feeling the pain.  We know the smaller carriers are truly suffering however today Schneider (SNDR) reported and it does not appear to be pretty.  First, relative to expectations it was a tough quarter.  From Seeking Alpha:

1. EPS missed by .02 on Non GAAP and by .11 on a GAAP basis
2. Revenue was down 7.7% YoY and missed expectations by $40mm

A couple of key points from their press release:

1. Volumes and price were "compressed" and while they stated there was a "moderate" uplift in the seasonal volume the tone of the message was it was virtually meaningless.  We have learned this from other carriers:  There has been no meaningful "surge" period.
    
2. We knew there were shutdown costs due to the closing of the First to Final Mile business (Which opened to a lot of fanfare about 2 years ago) but I found it surprising they had to impair the value of trucks they are selling.  This tells me they are shrinking the fleet and are actually taking losses on the equipment to dispose of them.
   
3. While their truckload numbers are tough to decipher due to impacts of the FTFM closure and the impairment of tractors, both intermodal and logistics (think brokerage) suffered as well.  Intermodal was down 2% due to volumes and Logistics was down 13% (Blamed on a major customer insourcing). 
   
4. They lowered their guidance from what was $1.30 per share to $1.38 and it is now $1.24 to $1.30.  Again, this appears to be due to the tractor impairment charge.  Interestingly they lowered their CAPEX for the year which again, indicates to me they are shrinking the asset base.  

My opinion is the freight recession is even tougher than originally stated for all carriers.  While I do think there is some "kitchen sink" activity going on here (So many losses due to shutting down the FTFM that they are adding in other stuff to clean up) I think the recession is real.