You Cannot Win And That’s a Good Thing
Logistics is like a sports referee: If you’re doing your job right, nobody will notice your good work. But when things go bad…
Nobody knows this better than Tom Rowbotham, Vice President Supply Chain at Uponor. Tom sits with Colissa and Jeff to talk about how to shorten your supply chain, what diversification does for logistics, and the importance of good partnerships — the last of which is indispensable.
Join us as we discuss:
- Analyzing the cost of your supply chain
- How to shorten your supply chain
- Knowing when and when to not bring supply in house
Analyzing the cost of your supply chain
Uponor, a billion dollar company that’s been around for over 100 years, provides plumbing essentials like polyethylene pipe to the plumbing industry everywhere — From mom-and-pop stores all the way up to the largest wholesalers in the country.
Dealing with this level of complexity means logistics is crucial. Tom explains, “We have to have a very wide, flexible fleet to satisfy all those different demands from very large orders of truckloads, and multiple truckloads, down to less-than truckload shipments that are going to a huge number of various destinations inside the US and Canada. So it becomes very, very important for us to have a strong channel and strong partners to get those deliveries where they need to be.”
Cost of COVID and natural disasters
Handling logistics in the best of times is a challenge. So, when the pandemic began, alongside other natural disasters like the winter storm in Texas, it forced Tom to anticipate new kinds of risk:
- Loss of people
- Loss of supply
- Ripple effects of suppliers supply shortage
“We learned very quickly how to go back deeper and deeper in our supply chain and try to assess risk. For us, it was about diversification of our supply base the best we can.” — Tom Rowbotham
These soft costs, as Tom calls them, help us understand the total cost of ownership — Navigating all the hidden costs of doing business:
- Low-cost countries versus local suppliers
- Storage cost of keeping inventory
- Risk of product loss
- Quality problems
Ownership means leaving no stone unturned. Every risk, no matter how small or unlikely, has to be taken into account. Tom shares his response when a problem impacts his entire supply chain:
“First thing we do is try to assess: Are there other products available that will meet those needs that we can get our hands on, either domestically or internationally from a supplier? And then we start looking at expedited freight. Do we need to air it? Depends on how big it is, and how much it weighs, and a lot of other things that we need to take into consideration.”
How to shorten your supply chain
With so many hidden risks, one of the best things Tom can do is to shorten his supply chain — mitigating how many risks he might have to account for:
- Carry your own inventory to buffer yourself
- Have multiple suppliers close by
- Get suppliers that are agile and can respond quickly to issues
It’s important to remember, however, that every perceived benefit has the potential of introducing new risks into the supply chain. For this reason, no decision can be made lightly.
Carrying your own inventory comes at a capital cost. The expense of suppliers close by may outweigh the risk of low-cost countries. Agile suppliers are very effective but hard to come by.
Knowing when and when to not bring supply in house
There’s also the option to become your own supplier; but to do so means securing the right talent, skills, and capital necessary to take on such an endeavor. You must also ask if taking on the task is in-line with your company vision.
“If you want to run an injection molding house, you better know how to do that,” Tom explains, “It’s not something you just walk in and learn. You need to have people who know what they’re doing. So yes, you can’t have more control over quality than what you have inside your four walls. And the delivery time is obviously very, very quick when you’re your own supplier. But what’s the business vision? Does it make sense to actually do that? Those are questions that have to be answered more holistically. In the logistics area, we can be part of that solution. But ultimately, the business has to decide whether that’s a vertical integration step they want to move towards.”
Balancing risk will never be perfect — there will always be a situation you didn’t anticipate. Accept this to take the pressure away, but also let it motivate you to continue learning and improving.
Connect with Tom at https://www.linkedin.com/in/tomrowbotham/
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