Ep 23: Fixing the Broken Links in Your Supply Chain

Supply chain professional, Marc Rancourt, joins me in this episode to share key lessons learned from the last year and a half, and the role Finance Business Partners play in building resiliency and value creation into this complex part of the business.  It's going to take time, but your ship will come in!  Join us.

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Matt

Transcript

SPEAKER_02: 0:02

Hi, this is Matt Cooley, host of the podcast Upside Downside, where we explore what it takes to be the best finance business partners possible. I'm a finance business partner myself by day and former president of the New York City chapter of Financial Executives International. Today, we welcome Mark Rancourt, supply chain professional, to talk about all the crazy supply chain issues we've all been facing the last year to two years and how this important value driver affects us as finance business Mark's experience is deep. It encompasses multiple industries in over 20 years, and I'm very grateful that you can join us today. Welcome, Mark. Hi, Matt. Thank you for having me. I appreciate the invite. Pleasure's all ours. Let's jump into it, sir. From your experienced eyes as a supply chain professional, what are some of the key lessons learned over this last year and a half or so?

SPEAKER_00: 0:57

Well, that's a good question. I guess I'd say there's like three things that come to mind quickly. First, you know, look in your own backyard, right? When I say that, I mean, your new supplier might be right under your nose. Some of the big, large manufacturing centers around the world came to a quick halt in COVID or during COVID. Many companies, you know, they began looking closer to home for raw materials and goods.

SPEAKER_01: 1:20

I

SPEAKER_00: 1:20

myself finding local regional sources can reduce, you know, transportation time, allow you to acquire products in a more, you know, and sometimes hours versus days, right? And not only that, local and regional distributions can and should, you know, they're good. They'll provide global reach and planning. So that would be like the first one is, you know, look in your backyard. Two is, if it's not one thing, it's going to be another. We all learned that through COVID, right? It was always something changing. That's for sure. It still is. Oh, yes. I mean, we can see it today. We've got 100 vessels just sitting out in the ocean, right? Exactly. That is just one little bottleneck. But as we saw, some companies during COVID that were successful to kind of get back up in the early stages of the pandemic they found quickly facing new obstacles like lack of transportation capacity. You know, with the e-commerce booming and the driver shortage was already underway before COVID, the capacity to turn these companies to get, you know, creative, to get their products from point A to B. And you have to think in new ways. And a few suggestions of new ways were, you know, inserting pre-negotiation premium price escalators, you know, to protect yourself against upturn in prices with your carriers. Join a Sherpa co-op. I did that with a few companies because we weren't large enough. You get a larger number of companies to gain a more collective clout on behalf of your members. So you get a bigger price discount if you're small. And a good freight broker or freight forwarder can manage all your transportation nightmares or issues, should I say, right? Supporting customer services, such as getting containers. The rates for containers are jumping dramatically. Lead times are just going exponential. So getting a good freight forwarder will definitely help you get your product to market faster.

SPEAKER_02: 3:10

Wow. I mean, those are really good tips and reminders in times like this, because this whole disruption has really challenged finance business partners from a planning perspective and forecasting, right? So we're all sort of in this together. We've heard a lot about reshoring manufacturing capacity back to the US, but in our preparations for this episode, we discussed how tough that can be. And it was already going on pre-pan What are some of those complexities of reshoring supply chain back home?

SPEAKER_00: 3:47

Well, you're right. I mean, the talk of reshoring has been going on since 2010, right? Yeah, it just really started getting traction, say, in 2017. And like you said, there's a host of difficulties when addressing the decision of whether to reshore, right? And how we can look at it. And I'll take two looks at it today, right? It may be internal and externally really quickly. Internally, a company must decide whether the time and money that they've spent over the last decades or whatever sourcing overseas. In the interconnected supply chain that they build up to make that happen, is possible, right? I mean, that's a large undertaking. It's a momental pass for a company to look at. It takes an army to make that supply chain work, right? Then you have the internal, yeah. Then you have the external factors to consider, which are, you know, your marketplace in the country of production, you know, what's your presence there, the consideration of compliance is both within that country and the US and taxation and regulatory perspectives as well, right? The nuances within the country you deal with. Side note, companies also have to weigh the pros and cons of, say, a single source strategy. As they foster that closer relationship with the supplier in question and build stronger partnerships, they also expose themselves, like the OEM, the risk of disruption on that critical source. So at the end of the day, it's a balance.

SPEAKER_02: 5:12

Right. And I think lots of companies took strong advantage, obviously, of single source strategies. And then, you know, it seems like that all went out the window when, you know, we couldn't keep toilet paper on the shelves and chips moving and everything, you know, pretty crazy. finance business partners from your perspective, and I know you work with finance folks all the time, help companies wade through all of this, all the data, the scenarios, the replanning, et cetera, in order to drive value creation in this kind of environment.

SPEAKER_00: 5:57

Yeah. So, you know, when speaking with other supply chain professionals on this type of topic and, you know, their CFOs as well, you know, businesses look to compete in this new world. The role of that, you know, finance roles are changing in the CXOs, right? They're converging. So the CFO, the CMO, the CIO, they have to start becoming business, strategic business partners with the CEOs to jointly, you know, drive that organization forward. A lot of the CFOs I've worked with, the they've also been the champion or taken on the task of changing the organization's dna you know to succeed um the finance professionals that i've worked with and this isn't you know this is just it's all good you know but i find them you know i say left-brained right but they're logical analytical and fact-based and uh

SPEAKER_02: 6:48

hey we'll take that as a compliment mark

SPEAKER_00: 6:50

okay thank you however right on the other here we go here we go as we move into the new as we're moving into to the new generations, right? You just have to take that right brain and bring a little bit more of the right brain in, say, right, with, you know, including visualization, creativity, imagination. But the finance executive of the future will succeed, and they're probably going to have these four competencies, which is, you know, they're going to provide leadership, big on building relationships. They demonstrate commercial awareness and they take initiative. And most of the CFOs I've seen succeeding are doing these things. And that's where they're going, you know, And

SPEAKER_02: 7:34

the companies are growing. versus where we've just been.

SPEAKER_00: 8:06

I guess I would say emerging supply chain technology, they're going to be a major source of competitive advantages. Digital remains a strategic importance for organization supply chains. Without being said, you have to keep that IT going. From what I've read and looked at, we can see potentially happening through 2023, the demand for robotic goods to person systems will increase possibly, probably four times. to help enforce social distancing and warehouse following the COVID pandemic, you know, you just look at the mandate, right? If that actually goes into place, you know, and you're looking at AI having to come in there because people are going to lose jobs, right? How do you reinforce that workforce? 50% of the global, you know, product-centric enterprise will have invested in transportation, there's an ability platform. So you're going to be looking at, you know, like an Amazon world ship and all these platforms that we're using right now. That's huge. That's huge. Exponentially larger, correct.

SPEAKER_02: 9:08

Wow.

SPEAKER_00: 9:08

Right. I'd say it's probably just going to, you know, through 2024, probably another 50% capacity of supply chain organizations are going to have to invest in applications to support the AI world, along with advanced analytical and capabilities. Sorry. And I'd say by 2025... you know, more than half of the supply chain organizations will have technology leader roles reporting directly to the supply chain operations I see. Relying solely on, you know, IT for technology needs can slow down the digitalization of a supply chain and the way the world's going, having a dedicated technology leader within the supply group puts the supply chain in a much better position to advance their digital transformation and create a more optimal technology mix.

SPEAKER_02: 9:59

Yeah, that's interesting. So it really aligns with a lot of overall strategies and changes that we're seeing elsewhere, right? With data analytics and stuff. So this is the supply chain flavor of that. And yeah, it totally makes sense. Wow, that's a lot of change and disruption. Right, and your AI is gonna just be getting larger and larger. Right. Right. Also a great opportunity for those of us that need to augment our skills. I mean, times of change are great, great times for career opportunities. So that's wonderful. So I'd like to ask my guests, what can finance business partners do now to brush up on their knowledge of supply chain issues and prepare for the future that's coming, whether it's five years or 10 years from now? We do have early career folks that listen to this podcast as well. What are the most important things that we can do to prepare for this?

SPEAKER_00: 10:55

Some of the simple things is just reading supply chain periodicals, Associated Students for Supply Chain Management, ASCM, which I'm a member of, publishes a monthly magazine. There's a lot of good data in there as far as where the supply chain is going and what's happening in it. Try and touch basically a supply chain manager as often as you can. And if you can, even get down to the lower level to those buyers. you'd be surprised how much information that buyers can have with what's happening in the marketplace, because they're actually touching your vendors and on a daily basis and finding out, Hey, this, this raw material, we just went from two weeks to seven weeks, right? I went from 21 weeks to 32 weeks on a piece of equipment. So they know that they know why, and they're their best, you know, stop gap on those critical parts. So, you know, don't be afraid to get down there and talk to them and, and, uh, and realize that those lower level employees actually have quite a vital role in that supply chain taking place and stopping the late of shipment of your product.

SPEAKER_02: 12:01

Yeah, that's excellent. And they are in the front line. So they're going to be the first to know before folks sitting in the C-suite. Yeah. Oh, that's excellent. Okay. Wow. This is really cool. And I really appreciate, Mark, you sharing your insights with us today.

SPEAKER_00: 12:16

Oh, thank you very much. You know, like I said, I appreciate you having me on here. And hopefully I was of some help Absolutely.

SPEAKER_02: 12:25

And to the subscribers of Upside Downside, thank you for listening today.