Sustainability in the extended global supply chain
Good, afternoon. I'm, Dane Halligan as the. Alpha Rho chapter of Sigma Pi fraternities, Project Officer I'm here, along with Sean Lynch to present the award for the 2008, dr., Michael and Compton public affairs essay contest, dr.. Compton was one of the prime founders, for the Institute of development, of ethics and leadership or as we call it ideal. Ideal. Is a nonprofit organization established, by Missouri State Sigma Pi alumni to teach ethics and leadership to, the undergraduate, members, of our chapter, before. He died in 2014. Dr., Compton stated that his desire to see, ideal support. The public affairs mission of MSU. This. Contest, is a vehicle we use to accomplish his desire and honor his memory, this. Contest heightens interest in each year's public affairs theme and this, spring's conference among the undergraduate, students, of Missouri State University, the. Contest is coordinated, and funded by ideal, the. Active chapter promotes the contest and the university, administers, the contest we. Would like to acknowledge the cooperation, of all the college Dean's in our efforts to promote this contest we're, happy to note that we doubled the amount of entries from last year to this year and we had entries from colleges we had never had entries from before. We. Also want to say thank you to associate provost dr. Rochelle, de Robbie and the office of the public affairs support for enabling us to run such an effective competition in particular. We want to note the efforts of Stacey Troy witha bak and administering the contest and coordinating the judging Thank You Stacey. The. Grand prize for this contest is $500, cash for the author of a winning essay presenting. This award is our chapter president Easton Haas before. We announce the winner we want to say thank you to everyone who competed, in this year's contest we, had a lot of excellent entries and choosing a winner was very difficult. This. Year's winner is Delaney, O'Donnell, a senior, animal science major from Henrico, Virginia. Oh. The. Author of the winning essay also receives a $500, cash prize for a donation to the charity or non-profit of, their choosing Delia, chose to donate to the equilibrium Therapy, Center located in Rogersville Missouri. This. Is one of the largest equine Assisted Therapy services, in the state accepting. The donation on their behalf is executive, director and founder Kent, crumbly. Congratulations. Till Delaney Oh Donald and the equilibrium, Therapy Center may we have a round of applause recognizing, their efforts. Thank. You very much we look we'll be back next year with an even bigger and better competition. Good, afternoon ladies and gentlemen my name is Mike Burton I'm serving as the chair, of the public affairs conference this year and it's been my great blessing, to work with our administrators, staff, faculty and students, to put, together what we hope you found to be an exciting program already.
Anybody, Participated. In a in, one of the panel's yet this morning or. The event last night with dr. Ballard very good thank you continue. I hope that you will find this to be illuminating. And exciting, and that, you'll have the opportunity to even interact, with our panelists, I know that they are eager for that as well as you. Know most. Universities, around the country you find two or three things that they'll want to brag about on their website to, demonstrate. Their commitment to their communities, at, Missouri State University, we of course have the public affairs mission and we, hope that all of our students, will, be more than exposed, to the priorities, of the public affairs mission but they will come to embrace it so. That you will leave here having been trained in ethical leadership that, you will have, competence. With other cultures, and of. Course finally that you will engage in your community, now. You, will see this modeled, in the panels and, many. Of you who have participated in the panel program so far this morning will have noticed that there's at least one expert. On the, panel and then, another two or three persons. Who are simply informed, citizens, we, do this so that we can make them uncomfortable. I'm. Joking, that the goal is not to make our panelists, uncomfortable, but rather for you all to, see the importance, of being an informed citizen, that you have an opinion a perspective, and that. You have some choice to make so. It, may be that one day in the future that you'll be serving on one of these panels we draw heavily on our alumni so, I hope that you will see that, your, role as an informed, citizen, is in. Part lifting. Up the educational. Experience, of others and I. Hope that you'll take that seriously, I hope you take the conference, seriously, I hope you also enjoy. The expertise, of the persons that we're about to hear from now. In a moment we'll hear from mr. Ron Ireland, and the, topic that you're all here to. Listen, to but in order to provide an appropriate, traduction dr., Courtney Pham from, business will be able to provide a. Proper, introduction, Courtney. Thank. You dr. Burton I am. My name's Courtney Pham I'm from the College of Business and I teach marketing. So. Ron. And I go. Way back and, a lot of people late like how way back and I'm like well. At. Least four or five years, because every, time. He. Does come to visit Springfield. I always. Tried to snack, a couple of hours of his time to come to my class to, speak and. This year, it's. It's a great joy to see, that he was able to accept, our invitation to, come and be our plenary speaker. And. So, I I, would like to say something, about him, that a lot of people don't know, is.
That He is an alumni. Of MSU, back then it was not MSU, it was, SMS. Southwest. Missouri State University. And he, was on the tennis team and I. Thought. Well, that's kind of neat and I found some pictures of him back then. But. After. It. Was too late so I didn't, have that but I just thought it's very unique. But. Ron has, 37. Years of experience. In business and, he's, one of the visionary. Founder of, the of. The supply. Chain management, the. Collaboration. And, so he was awarded the, Walmart, IT visionary. Of the year in 19 in 1995. For. His design and in the implementation, of. A war-winning, warmer, automated. Replenishment. Planning, and, then from there he went on to be the industry, leader an expert, in, the, standard. That's called collaboration. Planning. Forecasting and, replenishment. And we call that short cpf. Are, also. Wall. Street also, refer. To him as the Will Rogers of, the supply chain. He's the guy who brings, the simplicity, and humor to complex, and supply chains issues. He's. Assault, after speaker, at MIT, Harvard. Yale but, today I am, very happy that he's willing to come back to his Automator, and and. He, is going to share with us some, of the sustainability, in. The supply chain and. Please, welcome, mr.. Ron Ireland. Thanks. Bert. Well. Good afternoon. I was. Just we were talking earlier it's, been. Since. 1974. That I used to come to this building and go bowling, and I heard you still have the bowling alley down here and I'm. Glad you didn't have the pictures of me back playing tennis because I was a lot thinner back then I have. A good friend of mine Danny Quarles in the audience and he remembers, me with hair down to here and a mustache, and. So, a lot different, than that so anyway. Thanks for coming. This, is very, exciting. Subject. On my part and I'm. Really glad that I was invited, to talk to you about the. Supply chain and the extended, supply chain, and how. It impacts, sustainability. So, if we just start, with a simple.
Diagram. Of what a supply, chain is and it can go from gathering. Raw, materials. Whether it's wood. For, paper products. Or. Petroleum. You, know the raw materials, that we use in a supply chain and how that interacts, with suppliers. Who, might be making, packaging. Material, or or our. Component. Parts for manufacturers. And down, to our transportation. That, we have those all those trucks, you're seeing on interstate, 44, and, do. You realize that half, those trucks, tend to be empty, or, half. Less. Than half full, that. You see on the highway, and so. You're talking about sustainability. And the, cost of. Waste. And everything that goes on in there very much a passion. Of mine all, the way down to they. Call it a customer, here but that could be a retailer. Could. Be a customer. Of these and then certainly us in this room is the, in consumer. So. If we look at the supply, chain, pretty. Straightforward. But it gets complex. To. The point where it causes, a bullwhip. Effect in. Supply. Chain so, if I go look up here. To. The consumer, cells so, that's us that's, us going shopping whether, it's for cars or, for toothpastes. We. Find that our predictability, of, what we buy is, fairly. Easy to do especially, at an aggregate level that, we can forecast the, demand, for. The consumption, of let's, say toothpaste. We. Can forecast, that demand on average, around 95%. Accurate. Look in a month out but. When we share, that demand, and the, orders, through that supply, chain, instead. Of being this flat demand, up there, it starts. To have, amplifications. What. We call a bullwhip, effect and, all, these bumps, and Rises, that don't conform to, the. Smoother. Consumer. Demand is considered. Waste. It. Could be excess, inventory. Emergency. Runs. Air. Air, air shipping, products, you know nothing like having to airship toothpaste, to someone versus. Being able to ship it by by. Truck. Or whatever, so, when we start to get these amplifications. That, is where a lot of money is wasted, and a, lot of you, know issues. On global, warming or, you, know air pollution, or whatever we want in, sustainability. That's where a lot of waste occurs. Is that, we disconnect. From what the true consumer. Demand is through. The various links of the supply chain. Now. This is compounded. Because. All of us in this room, tend. To shop with these little devices. And. So it's just been in the last few years where. We use our iPhones. And. It's called omni-channel, because. Now we no longer go to physical. Brick-and-mortar, stores. To. Buy our products, but, if you're like me I buy quite, a few of my products. Online and. Very. Seldom go, to stores, for a lot of things and now we've got to predict, that, consumer. Demand, coming. From our iPhones, or through, brick-and-mortar, stores. Or other, places I might shop so the compounds. These issues, of this bullwhip, effect going. On within the supply chain. One. Of the things that I found when, I've consulted. All, these years. That I've worked in 35, different countries. With. The who's who of companies, around the world the, fortune, 500 companies. And smaller companies and part. Of the. Visits. That I do with them we call it diagnostic. And one of the main questions I always ask the executives, I said you know tell me what your company, does best. And normally. You would think that if I ask that question they're, gonna say all we really make great products. We're. Good innovators. We're. Really good in that but, the number one answer that I get from the executives, of these companies, is that we fight fires, really, well, we. Constantly, are fire fighting, but, we've got great people, and you, kind of sit back thinking. You, know that's really, true, because. When you ask people and, I imagine, a lot of you in this room would. Know that when you go into work. And. You have a plan for the day of. What you're going to work on. Something's. Going to happen that, prevents, you either from working on that or not being able to spend as much time on that because. You got surprised, you had some fire, some. Emergency, pop-up, and this, tends, to be an everyday occurrence. Especially. In our supply chain but I think it happens in all industries is we're, constantly fighting. Fire we're always working, emergencies. So. Some, of that result, is when, you look at is inefficient.
Transportation. Already mentioned the trucks on the highway and how many of them are empty there was a a collaborative. Transportation. Group that's, what I like about your competitions. That you had here I went to one in Denver. And saw. The cop the competitors. From different universities. Competing. At that and I believe it was a gentleman. From JB Hunt trucking, that was talking about how, empty. A lot of the trucks are on the highway it's. Because of what they call backhauls, or lack of backhauls, where they drop their loads off and then, once they drop their load off that truck that trailer, is going, back to, where it needs to go it's home base or whatever and it's empty, or it might only be half full so. They're trying to work on collaborative. Transportation. So, they can share loads, and and, try to get these trailers filled, up more often so that initiatives. Going on in a collaborative, environment, so. You can see. Modes. Of transportation, it's, not cheaper if I use rail than. It is to use airplanes. And I. Was, II when one, company selling oil and. There, they, had some customers, that were running out of cases, of oil and they. Were actually shipping oil to them using FedEx. Yeah. So I'd, call that a loss leader, you. Know losing money besides all the inefficiencies there. Certainly. Manufacturing. Issues, poor inventory, management. Daily. Firefighting. Huge. Impact, on sustainability. So. If we can focus our. Change. On the consumer, then, what we'll have here, is a. Communication. That's integrated, between all the various links of the supply chain that if, we all spend, our attention. On the. In consumer. Then. Maybe we can start to smooth that bullwhip, effect having. Visibility, of it and this what's kind. Of new in our industry. Because, a lot of retailers. You. Know and I came out of Walmart a lot. Of our focus, was more, on our distribution. Centers, versus. What's actually happening. On in the stores and Sam. Walton, the founder, of Walmart used, to say you, know if you mind your pennies, the dollars, would take care of themselves and so. Back in the early 90s. When, I was brought into Walmart my, challenge, that was given to me as say Iran. Why don't you try to smooth, the bullwhip effect and, so, I implemented. A process, at the time called vendor, forecasting. Where. We forecasted. Every, product, and every. Store. For. The next 52 weeks what they're gonna sell a hundred. And fifty, million store, item combinations. That, we were forecasting, the, consumer. Demand by, store, by product, and we were sharing that with our suppliers, now. That's way too much, information, so you can aggregate, that up and that's the great things about the, internet, and being able to have access to this data is. To say if I can share that consumer. Demand. With. The various, links, in the supply chain maybe. We can start making decisions, a little more, proactively. Versus. Reactive, and, collaborate. Within those processes. So. The idea, is to take that true demand and. Put. It across the. Various, links and try, to eliminate the, bullwhip effect all. Those, wastes. One. Of the things that we come across is. Organizations. Internally. Are not. Very well integrated.
Collaboration. Internally, is hard to do it's sort of like, be. Collaborating. With. You. Know close relatives, her families, it's hard to do internal. Collaborations. A lot harder to do than external collaboration. And, when. I get into this area I look at companies, through these Diagnostics. I see. This kind, of mishmash here. That everyone's. Go in there different directions, you've got sales, going, over here you've got. Manufacturing. Going over here, you got finance. They're doing their own thing. Everyone's. Playing, I said I kind of relate this to candy, garden soccer, yeah. It's called bunch ball they. All just kind of chase the ball they don't have positions. They don't they're, just trying to get the ball and the goal you might, see little Johnny over there playing in the grass he's not even in the game but. The whole idea here, is to, get them more aligned, more. Like a professional, soccer, team where. We have. Strategies. We, have goals, we, have positions. That if I'm going to like kick, the ball, over. Here I've already got someone running to that position, that spot, before, I actually even kick it and, so. The idea here, is in a within, an internal. Organization. Is. To say how do i align myself, like. This I had someone say well this reminds me of a flock of geese, where. The head, goose if it turns everyone, else turns and I know at Walmart, we used to say we, could turn this mighty battleship. As if it's a speed boat and be. Able to react really quick may. It tough to work at Walmart because it was like scream. If you want to go louder because. Sometimes, it turned a lot and so. It caused us to really work a lot of extra hours to do that but. The, idea is how do i integrate my processes. Taking it away from bunch, ball where. Everyone's, kind of taken, care of themselves, as individuals or, as individual. Departments, and how, do we work together as, a team, and to. Be able to set, to satisfy. Our consumer, demand, working. As a team not only internally. But also with our trading partners. What. Happens, is you've got these three processes, and I don't know if you guys have heard this before it's pretty common in business, to talk about people. Processes. And tools, so. We have to look at where. Are the people are they trained, what. Kind of behaviors, do they have do. We have formal. Processes. On, defining. What their roles are there, what. Are they supposed to do there accountabilities. So. Do we you know I'm trying to get all these individual. Bunch. Ball players to. Understand. What their position, is and and, get them trained for that and then, what software, technology. Or tools do, they need to help do that better. And so. When we look at it a lot, of companies, will form, initiatives. And, have. Different. Initiatives, to, try to fix some of their issues I. Work, for a company we all had little, badges. And stuff called Project Challenge and so, you'll see a lot of companies that they're going to have the initiative, of the year, or five initiatives of, the year and they're, trying to really put, together some, buzz type, things to fix, some of these problems and. When. They end up doing it a lot of times they'll say well. You, know our biggest problem, is is we have really, bad computer, systems. You. Know a tool will fix everything we've, got and they. Leave the. Processes. Out here. So. They say it can't be our processes. People we have great, people. People. Are really good they got good behaviors. Good, manners, but. The process, is oh that's, not important, as long as we have good people and we have computers. That can actually do all that thinking, for us. The. Old garbage in garbage out, syndrome. Right we, can have the best, computers, in the world but. If we don't have this together so we've got this issue. If. I have old. Processes. Plus. New. Technology. It, equals, e o, P, any, guess on what EEO P, stands, for so. I've got old processes. I got a new computer. System, and. It equals e o P, any guess and. The. Answer is expensive. Old processes, in. Other words I can make my mistakes, a lot faster. And bicker, when. I worked at Martin Marietta aerospace. I was. A head of IT for, manufacturing. Building. Titan rockets and I remember, we. Were building a, duplicate. Titan rocket by mistake. That's. Expensive fortunately, we the government was our partner. So we just charged them for it. But. You know in that crazy to. Think that the, computer, is always, right and yet. It's. Garbage in garbage out, and. I, can't I've got so many stories I couldn't tell with.
Companies. That have gone there and, installed. These expensive. Processes, only to find that the tool of choice is, Excel. Spreadsheets. Because. They can't use the computer they can be trained on how to sign on and I'll, see them over there on Excel, spreadsheets. Calculating. What the orders need to be and then go over to that multi-million. Dollar system and type in the answer, it's. Crazy but. That's because, they lack the proper, processes. We. Also have found that. When you look at we talk about me. Being a tennis, player if. You've played tennis, before golf, any sport you have the sweet spot you. Know really feels good if, you hit it in a sweet spot like. On a tennis racket that's the middle here that's. Where I've integrated, by. People, I've got them educated, trained on what's best practices. How they do their job, what's, the processes. That support they know their position, they, know what they do they. Are fully integrated, in the processes, and we provide them the right tools. So. They can do that job that's the sweet spot and a business. When. We talk to our clients, and say after, you've gone through all this you've drank the kool-aid you've. Listened, to Ron and the other guys talk, about these. Good things to do when they sit back and they say what's most important. Business, to adopt they. Said well really the. Most important, thing is to make sure our people are trained and we. Have the right processes. And the, tools they're, just a minor part, of this, where. So. Many companies, will go off and buy multi-million. Dollar. ERP. Systems, enterprise, resource planning systems. They'll, buy them without thinking about. The other part, and then, find out that they used less than 10% of the functionality. Because, they lack the other so, just a point says, you can't to yourself, out of this. Our. Goal just, like a jigsaw, puzzle is, to, put this in these. Pieces. In proper order so the very first thing we always do is put, in the corner pieces, so. You want to have one Genda, in one set of numbers. So. Many companies, I'll go into and I'll say well let show, me your numbers on, your. Demand, for your products, and. Every. Department tends, to have their own set of numbers I'll, see the, CFO, the finance, guy will have his set of numbers but he thinks the business is going to do sales. Will have their numbers marketing, will have their numbers supply, chain, manufacturing. Customer. Service they'll. All have their numbers, and they won't even add up they don't even come close to, adding, up if. You're going like how in the world do I have an integrated, business process. When. We internally. Can't. Even agree on, what, we're doing or, what we're measuring so. One of the corner pieces is how do we just get to one set, of numbers that we all can agree to, can. We have processes. That everyone, follow. Do. We have ownership, who. Owns the process. Can. We keep to our plans can, we do what we said we're going to do, can. I do I trust you, do. I trust that you're gonna do that do I trust the numbers that, are going on but. Once I get all these things together. Then. In the middle. Finally, I can bring in tools I can. Automate, some of those processes. So. How. Do you do that I've told you all the the, gloom of reality. About. How the. Who's who of companies. That. I've worked with around, the world. Fall. Into these traps I, just showed, so. How do we fix it and the, way we do it is through integrated, business planning, used. To be called Sales, and Operations planning. So a lot of you students. I think that's in your textbooks, is, talking, about snop. Sales, and Operations planning, we've. Now changed, the name, to be more of an integrated business, planning the. Name makes more sense but, here's a definition just, kind of focus on the red saying. Its first of all it's led by senior. Management. That's. The highest levels, of the company lead, this process. What. We found is if they don't own it they delegate, it down to mid management. Then, the senior, guys tend, to override what the decisions, are and then all bets are off so, we're saying the, executives, of the company have, to own the, integrated. Business planning, or IBP, process. They're. Going to look at things about their products, what, products, are we selling, what our new product, what products, are we going to get rid of there. Or services. What's. The demand, what. How much supply, do I need to satisfy those and when do I need the supply window I need to get the raw material, when do I need to organize transportation.
What's. My financial. Plans behind it I want. It to, be on a monthly, basis, I want to review all these and I want to make sure everything's, integrated, with each other so I've got if, I got new product, launches I want to see that there's demand for it I want to see that there's supply for it and I want to make sure that I'm making money off of it through financial. Evaluations. And the, executives, own it and I'll agree to it and we want to review it monthly not, in a detailed, level but, at. At level so we could try to, find. If there's anything, disconnected. Anything, wrong for. Example a product launch might be coming out late we, like that we need to let everyone else know that that's going to happen and also. We want to be long-range, and we're saying you, need to look at this aggregate, level a lot of times two years out I, was. Working with warehouse, or corporation, you know the timber corporation, up in Washington, they. Do this, thirty two years out, because. That's how long it takes to grow a tree. So. They planned thirty-two years out working. With Intel, Corporation they, go out ten years on. Something. That has a shelf life typically. Of less than three months and, they've. Got to try to predict, what's the next tech technology. And. What I just read this week Apple is thinking about taking and getting. Rid of Intel, they Intel chips out of their iPads, and all that and producing their own well, that's got to raise a lot of issues with Intel, and, you've got to be reinventing. Yourself, a little. Sam Walton used to say if you've always done it that way it's probably wrong. So. They're constantly reviewing. Themselves, lots, of companies Procter & Gamble goes three years out on this process. So. We. Want to come down consensus. It's the decision making process, have, a single, plan one set of numbers people. Are executives. Are held accountable and, the. Whole thing is to satisfy our customers, and make money. At the same time so. Here's a model kind, of talks about these reviews, in a monthly basis, but. We got our product review. Normally. Occurs in the first part of the month. To. A demand review to. A supply review, doing. Financial. Assessments. All along the way saying financially. Do these decisions, make sense we. Might have. Integration. Issues, that we have to reconcile, there. Might be someone's, got an issue because, supply, can't manufacture something. They don't have the the, manufacturing. Capacity. The capability. They, might not have the raw material, to do it. Might. Be that product, is like I said might be behind, a launch and then. That all reports up to the management Business Review and that's, where the, CEO says. The executive, set and, we want the CEO, really, focused, on their strategy. We. Don't want the CEO, presidents. On the floor, over. There trying to get product, out the door and I've seen that I've. Seen the CEO, going from cubicle, to cubicle, fighting. Fires and, yelling. Fire fire fire. Where. They actually should be the ones that are thinking three, years five years out to, say hey I think this. Ecommerce. Or, this online, shopping. Is really something, and you. Go look at online shopping, you know like I. Think, it was Walmart. Or our Toys R Us or whatever you know the 40%. Of their shopping it has actually done online and, so.
You Kind of look at like hey, they're not the Amazons, out there but yet they still have it a bit gamma, electronic. Shopping. Presence. Out there and they're seeing that growing and growing and we, need to see what's, going on because as we change it's, changing, our formats, so just like Amazon's, thinking, about getting brick-and-mortar. Stores. Even. Walmart's. The saying hey my footprint. Are these. Smaller stores, now like you see here in Springfield, the grocery stores you're. Starting to see more and more are those pop up versus, the gigantic, super centers but, these executives. They're thinking about this stuff three years four years five years out and that's, what a lot of people, in business have to look at - we, don't want the executives, trying, to get product out the door that's not their job I worked, with the consultant, George Palmateer, he had a great quote he. Said if you got two people doing the same job, fire the one that makes the most money, now. That makes sense, I forgot the CEO trying to get product out the door firing, because, he makes too much money for doing what he's doing. So. Now if we spread, this down a little bit we. Say that. IBP, the executives, are at an aggregate level monthly. We, don't want them looking at detail individual, products for a particular, store but. When we get below this line, this. Is details. We. Are going to do, detail. Scheduling. You. Know production, floor scheduling. We. Are going to do you know individual. Replenishment. That's. Down, below the line here, but, where we end up having the arguments. In this model, has. To do with who owns these processes. So I go, over here to the product, management, review, will. Say well whose owns. Product. Management we say this highest. Level person. In that division or that. Company. Vice. President senior. Vice president, whoever, might, be in charge of product, development might. Be marketing. That owns that area but, we want the top dog, in charge. Of this, whole process, of what. Products, do we have out, what's. Our portfolio. What, products are we going to sell when are we going to sell them when do I have to make adjustments, you. Know 50% of. The products, at a Walmart, are considered, new every year, might. Be new packaging, new and improved but, they're still considered a new product yet, that could be a hiccup, that could cause a bullwhip effect because. Now it's different, and so, how do we handle that so. We have that the. Biggest argument, we have is who owns demand. Who's. The demand, owner so that who. Owns the, consumer, demand for the products, my, customer. If. I'm, Procter, & Gamble, and I sell to Walmart, who. Owns that demand, plan who's, the highest level. Executive. That owns. That demand, plan and the. Answer is the sales organization, makes. Sense, but. The vast majority of, companies, that we work with, Oh No. That. Supply, chain owns, the, demand and when we go in there I'm going to like supply. Chain what part of demand, is in the term supply. And. I. Was up in Kansas City a few years ago as, a speaker, at a conference. For. Organization. International, organization, called apex it's the association. Of production. And inventory control, society, they. Must had five or six thousand, people there at this conference and I was in a room auditorium. I had 500, people and they all had those, electronic. Scores. And so I asked some questions, and I asked him this question who. Owns who. Owns the, demand. Review, and here. Are all these certified. People. They all had their. You know Six Sigma Black Belts.
And They're highly. Certified to, apex exams, and everything as close. To seventy percent of, them said the supply chain owns that, ten. Percent says, its finance owns that and only, 20 percent said. It was the sales organization, I'm. Gonna like are you kidding who calls on the retailer. Who calls on the, consumer, who who, is out there selling, that knows what the promotions, are and the pricing, and all that and they, didn't want sales involved. So right off the bat when companies said we can't forecast, our demand, we're. Unique, i point. Them to this to say you've got the wrong Department. Even, in charge, of that so, that's the sales organization head, of sales, supply. Chain, manufacturing. Operations. Supply. The. Supply chain does the supply review, and then. That these. Are their everyday things with procurement, they. Have their daily. Activities, that add up to a monthly activity, for, that overall, review and then. That's a decision making, so they might, get up there and said hey I don't have the manufacturing. Capacity. To. Make this product, that I might make, some. Of these decisions months, out versus. A lot of companies, said, you can't plan our biz more than 30 days out and yet. We talk about lead times you. Know is that Tyson Foods down there their actual lead time for chickens is three years even. Though it takes 52, days to go from an egg to. Production. They'll. Have, to make decisions, three years out to determine, how many laying hens they need and and. All their facilities and products. And so, this review. Process says, it's decision, making when, we have yellows, or red flags coming, up we can make decisions several. Months out and be proactive and, hopefully. Stay away from fire fighting, all the time where we're doing short term detailed. Planning, that were surprised, all the time because we're all on different numbers. If. You do this and. You. Know I mentioned like Procter & Gamble's a great example of company that does this well and there, are several other companies that do this throughout the world but, if you do this this is tends. To be the the, benefits. That they get you. Know from, improved. Forecast, accuracy, which. Is normally, the most the times I get called in to consult, companies, that's. Probably the number one issue they've got is they can't forecast, their demand so they don't really know how much to make or. How much this ship and. Like. I said that's typically, because they have the wrong ownership, of it the wrong processes. For it but, you can see these huge. Huge. Production. I mean huge benefits, financially to, companies a lot less firefighting, as we go forward so. Then. When I joined Walmart, in 1992. I, started. This process. Along. With other people that I worked with at Walmart so I didn't do it all on my own but. We called it I told you earlier called, it vendor forecasting. And eventually. Eventually it became the CPF our that Courtney had mentioned, for, collaboration. So, the collaboration, effort, started in 1996. We. First named our first pilot C far, which. I really like the name C far for collaborative, forecasting. And replenishment, where, we would collaborate with our trading partners. We did a pilot with warner-lambert, on Listerine. Highly. Successful, present. The results, at Harvard. Ended. Up be becoming, an industry, standard. Where. They changed, the name from CE CE, far to see PFR, to. Say hey it's not just for casting, replenishment. But we need to look at planning, it. Could be new, product, planning, it. Could be logistics. Planning you. Mean it's like a lot. Of the online shopping sites, now are. Doing, pass-through, ordering, so you might order through Amazon, but, Amazon, is actually not the one shipping you the product, it, could be a supplier, of Amazon's. That's actually shipping you the product but you don't know that they'll. Still put it like in an Amazon box for example. They. Started, these industry, guidelines or, standards. We. First called it a standard, then one thing we discovers, there's nothing, standard, about a standard, so they call them guidelines, so. We had those we, wanted, to do get critical mass if we could get even, Walmart's. Competitors, get Target, Best Buy get, their competitors, to all also. Do this then for manufacturer, and suppliers if they can get at least 50% of, their, key retailers. To do this then they can really optimize their, manufacturing. Production. This. Is a laundry. List of companies, that were part of that industry standard, I'm not going to read them to you but, you see up there some.
Pretty Major corporations. That were all involved in this committee. There, a mission, statement simple, change, the relationship. Between. Our. Trading partners to create. Substantially. More accurate, information and, drive. Value, for greater sales and profits. Organize. Common, sense I call it it's just common sense we're. Gonna actually work together we're. Gonna have a win-win, partnership. Versus, I win you figure out how to win, you. Know so can, we change the behaviors, because, this is issues, changing. The behaviors, doing this between trading partners it's. Hard to do, even though it's simple can. We do joint business plans can we plan things like. Christmas. Or holidays, can we plan events together, advertising. Can, we have common, goals metrics. Can, we agree to collaborate, together. Can. We agree on our, behavior and how we work together as we do that. Unfortunately. When. You have a committee, of a. Lot. Of companies. We. Tend to add complexity. To everything this, is their simple, chart you should have seen the first one first. One was a flow chart you know where that little mouse was a miracle, happens here that was, the first chart we, went, and put this chart together because. Well a circle, that's. A warmer. Fuzzier feeling. But. The most important, part is we, put the consumer, in the middle. The. End consumer we're, no longer just focused, on the distribution. Center. Or. In, my own area I'm actually focused. On you guys, what's. Your demand what. Do you want to buy what, are you going to buy what are you going to buy next year two, years from now what's, that new product, so, as we focus on the consumer, in a collaborative, manner then. I can go do that joint business, planning, I could go work. Together to, improve my forecast, of, demand together. Because. What happens, is, a. Walmart. For example forecast. A man but so does walmart suppliers. They. Can get together and compare their forecasts. In a collaboration, environment, say why. Is our demand off. By, 30%, and they, can talk that through and then collaborate. To come up with an agreed, to plan that, they can execute in the extended. Supply chain logistics. Performance. Measurements, scorecards. You. Can do a lot with it you can do flex be very flexible you don't have to do it all you can just do one part a. Simplified. Way of how to do, it is, first educate. Each other let me teach you about my supply chain. When, I was working with Tyson, I was. Helping them and Wendy's Wendy's, hamburgers on, their chicken chicken, sandwiches, and Wendy's. Over there running promotions a, lot, of times on their spicy. Chicken sandwiches, and all that but not telling, Tyson's they're about to do that and. Tyson's. And them got together and says well why we educate, each other about our supply chain and how we do demand planning and how we do these various things and that's.
When Tyson's, came and kind of opened the eyes up, at the Windies guys saying well you know our our. Thing is, is we have to make decisions, 52, days out whether or not we break eggs or not or. We. Have to make decisions, three years out to say hey, chicken. Is starting, to sell a lot more than beef and, so. Maybe three years out I need to start building facilities, to, raise more chickens. So. It happens in in all industries, I was, with the the, BlackBerry. Corporation. And they're working with Vodafone, and and. 18t. And Verizon, and looking at all the various launches. And and promotional. Plans he'll, get two for one on my phone and. Blackberry. At the time it's called research in motion they, didn't even know about the promotions, and all of a sudden they're seeing it on TV these advertisements. For two-for-one. Phones and they, didn't even know about it yet their supply chain their lead times to get it is months because. They have component. Manufacturers. All over the world they're, making this and no one knows about a promotion that's, hitting the, street on Monday. You're. Huge disconnects, the bullwhip, going. Crazy, firefighting. Going, wild. So. Once we can educate our on, our, flows our promotional, plans our new products, then, we can decide what information, to share it's. All proprietary I, don't. Want this information to, go out to everybody, so. I'm going to be real careful on who I share, it with when. I share, how I share, how I'm going to protect it because I don't want that. Information. To get out to my competitors, so. We have to make, sure we all agree on, who gets it I don't want everyone to get it I want, to make sure we, agree on who gets it and then, we're gonna go start collaborating, and, executing. It. Different. Forms of collaboration, it could be as. Simple as basic, data sharing I'm not really going to collaborate with you I'm just gonna share information, with you hey let's collaborate on a forecast, maybe. We could collaborate actually. On the consumption, or planned orders, or we, can go up there all the way to business, planning that says hey I want to really optimize the, supply chain I want to do a lot of other stuff Walmart. Has a building, down there in Bentonville, I saw, a few months ago called the collaboration. Center four-story, high building, that they, really work on a lot, of different other areas of collaboration, not just what I've been talking to you about. Big. Benefits. So. You take these benefits. You take the ones from integrated, business planning and, you, really start to see financial. Gains as well, as the fact that we're smoothing the bulb. Now. The. Last committee, I chaired, for the voluntary, inter. Industry commerce solutions, was the integration of, IBP. With, C PFR where. We first saw here, was the what, we call the pitch and the catch you can be, one. Trading partner that. You're sharing information through, the internet to the other but. If that trading, partner doesn't have a catcher's. Mitt to internalize, that, then. You can't do this and. What we have is behaviors, here because some companies, say, the only ones with, the catcher's, mitt at our company is the sales organization and, the sales organization says. I'm not allowed to, share that with anyone else in my company because that's all proprietary, we're. Gonna no we. Want you to share this with, manufacturing. And product development, and marketing and Finance we, do want it protected, we, do want to put security, around that but. It's important, that you have a catcher's, mitt into. Your internal. IBP, processes. So. Timeframe typically, I BPI. Here one to two, years out could go 30 years out depending. What your industry is 10 years three, years but. Normally two years is the minimum we'd like to see we're, CPF, ours normally, a year, out it'll. Be detailed, in the short-term like one to three months out we could be down to an item level, three.
To, Twelve months out it could be at a product, family, level or an, aggregate, level might, be at a month level, but. When I get down to execution, I'll. Be down into the detail level. But. The, benefits, is is if we collaborate, and I have my own house in order then. I'm going to have a lot more accurate, demand forecast and what we have to do is we have to cover our. Forecasting. Sins, with. Excess, inventory with, safety stocks, with, additional, lead times so. The more, accurate. My, demand, forecast the, more efficient, my operations. Are going to be when I use that. So. Anyway, smooth. In the retail bullwhip was, the ultimate vision, that we had and, goal, as we went there this, was a after, that, committee. Got finished, Walmart. Came out sent this to their suppliers, saying. Hey first, of all we want you to it to adopt. IBP. Within, your companies, because. If you don't have a catcher's, mitt then I can't collaborate with you so. First go out. Develop. IBP. Come along, collaborate. With me, we'll make that information, even, more powerful, more accurate, we'll execute, to, that. Then. We go to the extended, supply chain so I worked with Nike, went. All the way to Vietnam, to their factories, there we showed this to, suppliers, of rubber, leather. Shoe. Laces say. What, could we do if we start sharing information like, this two years out three. Years out on what we think our products. Are going to do overall, demand we, might not know what individual. Tennis. Shoes or running. Shoes we're, going to sell three years from now but at an aggregate, level this, is what I think my demand, for rubber will be and so. We start integrating this even with suppliers, I worked. On a process. Over in Switzerland, they, had DHL. Working. With echo tech out of Hungary, working. With the Swiss. Phone company, and Swiss. Voice out of host cell as we worked on these processes, trying. To optimize, and synchronize, our. Entire, end in supply, chain, trying. To smooth that bullwhip, try to get that waste out try. To reduce, firefighting, I'm going to I only say reduce firefighting, because. We're still going to have things. Are going to hiccup things. Are going to happen we're not going to eliminate, it but, if I can at least reduce, it it's, you're going to make life a lot easier, sustain. It sustainability. A lot better as we, go forward so. Collaborative. Challenges. The number one failure, is the top one trust. If. I don't trust you, if. You said. You're going to do something and then you change your mind I'm. Not going to trust you anymore if. I don't trust the data all. Bets, are off because. I'm kind of taking, a chance here that, what you're telling me is what, you're going to do but. If all of a sudden I ship. You a product that we collaborated. That you wanted and then you cancel it and, say sorry I don't need it anymore and I'm left holding the bag I'm, not, going to do this with you anymore so the number one failure, of this is the lack of trust. We. Have to have the executive support, it because, they're normally the guys that override, it if. It, turns out to be a mid management. Process. You, know craft this happened to craft craft. Had an executive. Level and then, as time, will went, on they went and pushed it down pushed it down pretty. Soon the executives, would override it said oh we're not making our numbers we're gonna surprise Wall Street so. I want you to go ahead and do this go ahead and do this even. Though the, process, was working fine and they had their demand numbers were right they just over wrote it so. Now they had to real, I said a couple of years ago and it's back up at the executive level and, working, really well you. Have those cultural. Issues change, management. Organization. Getting rid of those silos, duma. But was promised, and having. A win-win, partnership. Versus, i when you figure out how to win. So. My, last slide here, and this. Is a real key one but this is change, management this, is behaviors. This. Is something that we can't teach you in school, this. Is something, that when you go out in the real world you. Should keep this in front of you do. What you said you're going to do if, I, said I'm going to deliver this, deliver. It. Do. Not promise more than you can deliver. Don't. Surprise. People, and say. Oh surprise. You know Walmart just put out fines, last, year, for. Companies, who had customer, service, levels also known on time in full that. If you're under a certain percentage, and a lot of their suppliers. Were under 50%, it's. A lot of them are under 70%, and they're going like why aren't you a hundred percent you promised. Me that so they started having to apply fines, because. They'd, open up the back doors of the trucks and say hey, this isn't what I ordered it's, half of what I ordered and, Walmart. Executing. As its doing you know that was a huge hiccup, and being out of stocks and retells the biggest thing you can have you, never want to be out of stock and retail.
Player. Position, if. You can't do it you know deliver what you promised, or communicate, if you can't player, position, open. And honest communications. Give, me the bad news early. Don't. Shoot the guy that told you don't shoot the messenger. It's. A replanting, process. So. Every month I update, by rolling, forecast for the next two years I, found. Companies, I was working with that come, December. They've. Only got one more month of forecasts and then in January they're, gonna roll out another year, don't. Go well what are you gonna make in December, or January, because you don't have a request for a product for a forecast well we'll. Just take care of that later so. It's a replanting. Process. Once. They have numbers and once again the. Trust issue, all. Right well that's all I got. Thanks. For your attention are, there any questions or anything. Any. Questions. Awesome. Thanks, for your time bye. You. Got one Oh. Oh. Did, you have a question. Hello. What, I was. Just wondering, what you thought the impact that artificial intelligence might, have on. That. Supply chain and everything sure and and I think AI is fantastic. In fact when, I had. A, team, of programmers worked. For me at Walmart, and I had a, couple of those guys that's, what they did was artificial, intelligence, back in the 90s, and we also had. A contractor. Out there and so, artificial. Intelligence. Allowed us to actually. Manage, better at that lower. Level so when you're dealing with a hundred and fifty million store. Item, combinations. Using. Artificial intelligence it, was great because you could do pattern recognition. You. Could use of. Models. Whether it's case based reasoning or, whatever to try to model, that so, it's a great tool and. But. Once again it's a tool and so. Unless you have the people processes. And all together then. The tools of tool but if you have the other together then, it's a great tool and I'm a strong supporter of it and I think, it's, really going to take off but, we got to get the people processes.
Down First so. Sorry follow-up question. Do. You feel that, with. The advent of AI and the growing, importance, of it do you feel that the tool, is going to gradually, become more important, than the processes, or the people no I never think, the tool will ever be more important the processes, I think it's still. People. People. Issues, that's going to be the, thing that they're they're the ones that can still change. Things or, their behavior, can be really bad and and we, see it we see it no matter where we're at, that people can sometimes not behave properly, or. Not play that position and so, it doesn't matter what. Kind of tool I have, if. People override, it I do think AI can, play a much more important, role and make things easier for people, makes. It even more important that we get our processes, aligned to work with that tool great, thank you. Any. Others. All. Right Oh. Got. One, no. All right well thanks for sticking around appreciate. It.