About ten years ago I had the privilege of working with some extraordinary guys from Walmart, at the birth of Collaboration. Buzz words, software, and new careers were spawned after we all worked on CFAR, and then went off to other domains. But Ron Ireland is a believer. Ron has stayed the course and worked with firms all over the world to improve their supply chain processes and performance. Writing this book was a labor of love, considering Ron’s seven day a week working pace. I sat down with my old friend, after he drove himself to finish his book: Supply Chain Collaboration- How to Implement CPFR and Other Best Collaborative Practices
Ann: What motivated you to take the time to write the book?
Ron: My passion for Supply Chain. I have seen success from the early times of CFAR, so I wanted to help my customers gain success, too. Companies think it is hard to implement; so I thought if I could write a book—a common sense approach to supply chain collaboration—it could help. If I could reach more people, then we could get the adoption rate up.
Ann: Ron, please tell our readers a bit about yourself and what gets you inspired and motivated.
Ron: My career started in the Aerospace industry in Martin Marietta. That is where I was introduced to Class A and S&OP, closed loop and other meaningful supply chain practices. We were implementing Class A MRP, and after doing six implementations I got excited about taking a business approach rather than a pure technology approach to supply chain.
Ann: Those were the days when you had to sign a certificate that you were committed to Class A.
Ron: Right, we were always rolling out expensive software, speaking at conferences on how fast and how far we had come. After a few months we had to pull the plug. The users were working the old way. We did not change the policies and were still doing things like ordering 3 years worth of inventory, although we had technology to improve the situation. The fact was that business users had no process learning. So we hired a consultant (Oliver Wight and Associates), and looked at the people and the processes. Then we had lasting change, real improvements.
Ann: So, on to Wal-Mart and CFAR—that was a defining period of your life!
Ron: I was in Information Technology there. Wal-Mart already had the practice, you are a retailer first and a programmer second. In other words, it was about the business process. At Wal-Mart, everybody had to work in the stores and the Distribution Centers every year—one week a year minimum. So at Christmas, IT had to work on Saturday at the store. We stocked shelves, did lay-away, removed shopping carts from the parking lot, every job.
But we also had to travel with the business. I personally traveled with Lee Scott, Don Soderquist, and Robert Bruce, to name a few, and the regional VP’s. Wal-Mart’s philosophy was that the most important people at Wal-Mart were the cashiers. So if you were not working on something to support the stores, you were not working on the right stuff. So, we did Retail Link to get data from the cash register to the back office and to the suppliers. Every one had to know what was happening at the cash register!
Ann: Retail Link, that was the primo system, then. I guess it still is the primo system at Wal-Mart.
Ron: Right. So after 5 years, 1995, I was award the Visionary of Year…which included the CPFR work we had started.
Ann: A lot of people really don’t know much about CFAR, though they have heard the term.
Ron: In those days, the forecast was just plain wrong—wrong seasonality trends, wrong promo list, wrong product introductions, etc. So we thought we ought to partner—the best of the supplier’s know-how, like promotional lift and new product introductions and the best of Wal-Mart Merchandizing. We knew who shopped at our stores, where the best locations where, the best of retail management practices. With that, we could create a real process and begin to get a better forecast, better instock, better turns, better sales. We could create, as you say Ann, that single version of the truth.
Ann: So, process collaboration, policy changes. I don’t see any whiz-bang technology here. Are executives who are chasing the cool technology software misguided here?
Ron: New tech is great, but what we found is that you need world class business processes in the front or you can’t take advantages of the technology.
Ann: But most managers today would like to outsource, get rid of the people and use technology, not only as the substitute for labor, but for intelligence.
Ron: We found that that is not true. We used all that neural nets stuff. Data–data you heard about the 100 terabytes at Wal-Mart…but at the end of the day, it was going to be the experts asking, “How is that product really going to sell?” You can’t capture that experience in software. Systems are not a substitute for people and their understanding of behaviors. In fact, many of the problems are caused by people. Though technology does have its place. If I understand the day to day routine, I can automate that and then I can turn to focus on exceptions.
Ann: I am bugged, though, by this people thing. You talk in your book about People Process and Enabling technology, but firms are not investing in people.
Ron: The best example I saw…was when I was at Martin Marietta. The banner went up; we were Class A MRP II. Our execs went to speak at conferences. Everyone wanted to get credit. As I said, six months later we had to turn off the system because everyone was doing things the same old way.
Ann: So what made that situation turn around?
Ron: Martin Marietta sent 1,000 people to training…now we were talking processes and not systems. They required senior management to attend the training. In fact, the senior managers had to be the instructors.
Ann: So your boss is not telling you, he is training you—he is leading!
Ron: Right. Education is by far the most important – to lead on the principles…you have to believe it first, in the principles.
Ann: So, what do you think about the web, then, for training?
Ron: My concern as we go into e-learning is that the question will be how will the passion and principles really be transmitted? It’s really difficult. The other thing which is important is the coaching concepts. Coaching in the culture is critical. There is no substitute for being with other high performance people. At Wal-Mart we used to say, ‘If you learn from your mistakes you have to make your mistakes faster’.
Ann: Managers are not leading; they are not even around.
Ron: Wal-Mart is the great example, again. Sam Walton traveled. He knew what was going on in the stores. And he instilled that in the management ranks. Sam knew the data at a store level, and when he asked one of his managers, he’d better know the answer. And at the stores, he didn’t want to know what was working well, he wanted to know what was broken. He would constantly ask the customers what was wrong, not working, etc.
Ann: Michael Dell is the same way, calling his managers and checking the details, real details about sales, inventory, and the processes. There is a real lesson here about superior management. Michael Dell was also into execution cycles, learning fast.
Ron: After we left Wal-Mart, we went to consult with Kmart. We went there and we saw that Kmart had the same technology basically that Wal-Mart had. But how they executed was totally opposite.
Ann: That’s why Kmart is history…
Ron: Kmart vs. Wal-Mart is the story of personnel and execution. For example, at Kmart, buyers had never been to suppliers or to DCs…They weren’t visiting stores to see how the merchandize was displayed, talking to customers. Kmart buyers didn’t travel. They were throwing technology at the problem rather than having people learn and lead. You know, people don’t understand their process and jobs, and so they are mesmerized by the blinking lights (the technology). So they fail, and then blame the technology. Really, there was a real lack of participation at Kmart, in the company, with the customers, with the suppliers.
Ann: So, why do you think supply chain is hotter than even now, and there is a resurgence of interest in S&OP, Collaboration etc? What’s different now?
Ron: The issues that I saw 10 to 15 years ago, whether in Aerospace or Retail, are just as prevalent, but now people are interested and asking questions, because they are concerned about the competitors, and competitor supply chains. Technology, competition, globalization, mergers and acquisitions, global sourcing—bad (and good) practices are getting exposed.
And the competition is intensifying.
Ann: Private label, imitation…
Ron: You know, a lot of these brand companies are only surviving on their brand…I can’t believe some of the practices–terrible chains….The piper is coming though. With the emergence of private label, or a competitor who can really satisfy the customers, who can provide new services. Retailers want to do business with those who are easy to do business with, and if I can do that with another brand…I will. There is a large sector of consumers who are not that brand conscious.
Ann: So, what’s next for Ron Ireland, from tennis pro to supply chain author and consultant?
Ron: (laughter!!!) I have been blessed to have worked with some of the best people….
It’s been ten years since we did the first CFAR pilot. A lot of people think it is dead…Supply Chain Collaboration or CFAR what ever you want to call it. Although the CFAR pilot was 10 years ago, it really was just getting started.
I have been to Vietnam, Taiwan, Europe, all over, and Collaboration is more critical than ever. With longer supply chains, the risks are higher, the lead times longer, and companies have got to communicate with each other.
And there are so many untapped process areas and industries that are just thinking about collaborating in the manufacturing, engineering processes, etc. Collaboration is just common sense!
CFAR will be a major contributor to best in class supply chains in our century; and Collaborating will be the way the world works! I just want to help people start and take some action. David Glass used to say, the fastest way to lose your job is to form a committee and study. So, roll up your sleeves and go do it…pilot…don’t wait. Stop the Excuses—and let’s make it work.
About the Authors of Supply Chain Collaboration
Ron is a Principal with Oliver Wight and works with client companies around the world on their supply chain best practices journey. Ron worked at Wal-Mart where he spearheaded such efforts as Retail Link and was a key player on the CPFR (Collaborative Forecasting and Replenishment).
He co-authored Supply Chain Collaboration with Colleen Crum, a fellow Supply Chain professional.