February 15, 2024 • 31 mins
For our February episode, co-host Ted Stank was joined by guest host Lance Saunders, associate professor of supply chain management. They spoke with Jen Kelly, vice president of planning for North America at Schneider Electric, about shortening supply chains, nearshoring and supplier capacity challenges, adding visibility into planning, generative AI for forecasting, and standardizing practice across a global organization.
Kelly was in town for a meeting of the GSCI Advisory Board. Schneider Electric, ranked by Gartner as No. 1 for best supply chain in 2023, is a longtime partner of the Supply Chain Forum and a member of the Advanced Supply Chain Collaborative, which brings together industry professionals and UT faculty to tackle issues of critical importance to the discipline.
To start the episode, Ted and Lance discussed U.S. job growth, freight surges, disruption of global trade, regulatory constraints, tensions with China, and much more.
The episode was recorded on February 8, 2024.
CORRECTION: At 11:05 in the episode, our host says that Target acquired Whole Foods. It was Amazon that purchased Whole Foods in a $13.7 billion deal in June 2017.
Related links:
- Job growth surges in the U.S., 353,00 jobs added in January
- US container import volumes surge amid global supply chain challenges
- Mortgage rates jump back over 7 percent
- Consumer sentiment races to two-and-a-half year high
- Why are the Houthis attacking Red Sea ships
- Walmart growing, adding 150 stores across US
- China’s 17-year run as top source of US imports ends Mexico rises
- Download our latest white paper on Advanced Supply Chain Planning
- Register for the SCM Finance Academy
- Subscribe to GSCI’s monthly newsletter
- Read the latest news and insights from GSCI
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Introduction (00:00):
Welcome to the Tennessee on Supply Chain
Management podcast.
Listen in as co-hosts Ted Stankand Tom Goldsby set sail into
the world of end-to-end supplychain management, diving deep
into today's most relevantbusiness topics.
They'll share insights andpressing industry issues and
tackle the challenges keepingsupply chain professionals up at
night.
If you're enjoying the ride,download and subscribe to
(00:22):
Tennessee on Supply ChainManagement on your favorite
podcast platform now.
Ted Stank (00:28):
Welcome everyone to our second podcast of 2024,
Tennessee on Supply ChainManagement.
We've got lots of interestingthings going on in the world
today and we're going to touchon a lot of those and then bring
in a guest speaker to talkabout some specifics about
network redesign and how she islooking at her organization and
reacting to some of the thingsthat are happening in the world.
First let me introduce myco-host today, Lance Saunders,
(00:50):
not Tom Goldsby.
Today, Lance Saunders many ofyou know Lance, one of our
rising faculty.
He's going to sit in for TomTom's.
Actually attending the ManifestConference out in Las Vegas is
what he says he's doing, but Ialso happen to know he has U2
tickets.
Lance Saunders (01:04):
I don't know if they say what he told you.
I saw him buying U2 tickets inthe classroom.
Ted Stank (01:07):
Yeah, he has tickets to U2 in the what's it called
the sphere.
The sphere yeah, our guesttoday is Jen Kelly, vice
President of Supply ChainPlanning North America with
Schneider Electric, one of ourreally good partners.
Lance is going to talk a littlebit about some things happening
in the world today that areimpacting our supply chains.
We'll start talking about theeconomy.
Lance told me that he has areal deep economics background
(01:28):
and I'd like to talk about allthe underlying reasons for this.
Lance Saunders (01:31):
Yeah, the Baker Center has actually been over
here trying to get me to changecolleges.
Ted Stank (01:36):
Due diligence here.
Lance told me before we startedrecording don't ask him any
underlying reasons for these.
He knows they're happening.
My big thing about the economyis despite its demise Tom and I
have been talking about this forprobably two years.
Despite talk of its demise, theeconomy just seems to keep on
clicking along.
It's indicators that have comeout in the last few weeks.
For example, amazon's fourthquarter and full year earnings
(01:59):
surpassed expectations.
They saw a 14% year over yearjump in net sales in the fourth
quarter, including their primebig deal days in Black Friday
and Cyber Monday.
One big retailer, I thinkWalmart, reported some pretty
similar statistics.
A lot of other things comingout too, lance.
What are you seeing?
Lance Saunders (02:17):
It's really interesting.
I'm like you.
The time I go to the WallStreet Journal, I see jobs,
added economy grows, and then wealso see that people aren't as
pessimistic about it.
I don't really know what tothink.
Overall, I think it's reallyinteresting.
There still is an appetite forpeople to buy goods.
I think those retailers thatare doing a good job of giving
(02:38):
people what they want and doingthe predictions which we're
going to talk about planningtoday are really seeing some of
those investments since COVIDpaying off now.
Ted Stank (02:46):
One sector of the economy that had been suffering
for quite a while now wastransportation and logistics
sector, as we had so muchinventory after COVID because we
just stocked up and all thisperiod of de-stocking.
There's actually recently someindications that freight is
starting to surge again.
We can start seeing some ofthat excess capacity go away and
probably expect freight ratesto rise.
We're already seeing it inocean shipping something we'll
(03:09):
talk about later on because ofthings that are happening in the
ocean environment that arecausing prices to increase.
I think it was the middle oflast week the jobs report came
out.
The expectation was, I think,150,000 jobs added and instead
353,000 jobs were added.
Unemployment rate was expectedto tick up and it stayed at 3.7%
(03:29):
.
My friend, bill Simon, who doeshave a bit of an economics
background I think he's formerCEO of Walmart North America and
has been a guest on here he'sbeen telling me for two years
that the United States has neverhad a full employment recession
.
He kept saying don't listen toit.
We're not going to have arecession as long as we keep
full employment.
So far, bill, you've been right.
Lance Saunders (03:49):
I guess it makes sense.
People have jobs, they canspend money right.
Ted Stank (03:52):
I think I've read that American savings is double
or triple what it was pre-COVIDlike in 2019, in the trillions.
Lance Saunders (04:02):
So seeing at home, not spending our money.
Ted Stank (04:04):
I think a lot of that has to do with housing.
Housing prices are still high.
I know I have three millennialchildren and they are all
bemoaning the fact that theycan't afford to buy houses
because housing prices are sohigh and interest rates are high
.
Of course, they live in threehot markets to Nashville,
atlanta and Charleston, butKnoxville, tennessee Raise your
hand out there, podcastlisteners, if you're dying to
(04:26):
move to Knoxville Tennessee.
Our housing prices are out ofcontrol.
Lance Saunders (04:29):
I mean we've almost doubled since I moved
here in 2017.
Ted Stank (04:34):
What interest rate do you have?
Lance Saunders (04:37):
I don't want to brag to people buying now, but
it has a three in front of it,maybe a two.
I'm at two and a half.
Yeah, I think I might have atwo actually.
Ted Stank (04:45):
Consumer sentiment is rising.
For a while it was weird thatpeople were spending.
This is a Tom's big thing.
Consumers are spending if theyhave a real pessimistic view on
the economy.
Actually, consumer sentiment inJanuary is up to 78.8, up from
69.7 last month and 64.9 a yearago.
Lance Saunders (05:02):
Do you think that's just because the media,
everything we see, is justeverybody's telling us how bad
it is, so it's just perpetuatingitself?
Ted Stank (05:08):
We talk about economists and economics.
I've had this long held theorythat if there are three
consecutive reports in the newsabout the economy doing great,
we all feel really good aboutthe economy.
It's mass psychology.
Then if you see three reportsabout it being bad, then we all
get pessimistic.
So I do think it's somewhatdriven by media, especially the
social media, and headlinegrabbing.
Lance Saunders (05:30):
You see it, we don't usually even read the
story, but you see the headlineand self-perpetuates.
Ted Stank (05:36):
You can't also dissociate it from the political
cycle we happen to be.
I think one of the other bigthings that we'll track over the
course of this year is not onlywhat's happening with the
economy, but what's happening inthe political world.
You can't dissociate the two.
Lance Saunders (05:49):
You mean the lack of things happening in the
political world.
Ted Stank (05:52):
No, there's a lot of things happening in the
political world.
There's the lack of thingshappening in the government
world.
A lot of energy to get intooffice.
Once we're in office, let's notdo anything that the country
needs.
So what else is going on?
Lance Saunders (06:06):
All this really gets into what has an impact on
a lot of the people out there,which is interest rates.
Right, has a large impact onbusinesses Because of a lot of
this recent data.
Jerome Pouse poured a lot ofcold water on the notion they're
going to lower interest rates,which is going to have an effect
on almost every business outthere.
Ted Stank (06:25):
Yeah, Heading into January, there were signs from
the Fed that March was going tobe potentially an interest rate
cut and I think one of the Fedboard presidents said
potentially five or six interestrate cuts this year.
Given that the economy isclicking along so strong, that's
probably not going to happen inMarch.
At least that's what they'resaying now.
The interesting thing is themarket seems to have baked that
(06:46):
in.
The market didn't take a bigcrash after.
It looks like we're not goingto have interest rates cuts.
So I think that most analystsout there are thinking well,
okay, the economy's good.
There's a lot of other thingsthat drive market value, so
let's not overpanic on that.
Cpi Consumer Price Index camein at 3.1% in January, so lower
than December.
So again, this proverbial softlanding of being able to maybe
(07:10):
get interest rates down withoutcausing a recession and layoffs
is potentially within sight.
Lance Saunders (07:16):
Yeah, hopefully we'll see some of that Consumer
Price Index at the grocery storesoon.
Ted Stank (07:20):
Yeah, yeah.
And again, housing.
We talked about housing.
That's probably one of the bigareas that it hasn't hit yet.
Of course, a lot of thisdepends on what happens in the
war.
Hold, right, I think we'vetalked about on this podcast
before how we came out of COVID.
We're expecting stability, andimmediately when we were coming
out of COVID, the Russia-Ukrainewar spiked and caused all kinds
(07:40):
of craziness and pricing, andnow we're seeing the increased
unrest in the Middle East, andwhenever you talk about unrest
in the Middle East, you can'tdissociate it from fuel prices,
right?
So I think we need to talk alittle bit about what's going on
over in the Middle East.
Lance Saunders (07:56):
I mean shooting missiles at tankers in Yemen.
Yeah, I mean it's obviously.
I've never thought we'd be in apodcast talking about Houthi
rebels in Yemen disrupting roletrade, but that's where we are
right now.
Ted Stank (08:07):
Right, yeah yeah, absolutely, and we heard a
geopolitical person here oncampus talking about what's
happening over there and shesaid that it is acknowledged now
as a proxy war with Iran.
I mean, probably, as we speak,we're launching lots of missiles
at several of these differentgroups that are Iranian-backed
and that's not common down.
They're not backing down.
Lance Saunders (08:27):
No, I thought the interesting thing she said
is that you know, we keepwaiting for there to be a break
in a lot of this fighting withUkraine and the Middle East and
all of this, and her commentthat really stuck out to me was
it's not going to calm down.
This is kind of the new normal,and there are a lot of
conflicts that affects supplychains that we don't even hear
about, like Sudan and all theseothers, and that's just the way
(08:50):
of life and we're going to haveto adapt to it.
Ted Stank (08:52):
Yeah, and if it becomes a hot shooting war with
Iran, then all kinds of crazythings are going to happen and
we're going to see fuel pricespike and lots of different
things that impact us in thesupply chain.
Some supply chain managementnews, other than those
geopolitical things that impactus Walmart announced that
they're going to grow again,expanding to 150 stores, which I
(09:13):
think is really significant,particularly in consumer
products and consumermarketplace, because essentially
that's the equivalent of themsaying they're going to open 150
order fulfillment centers Right, and I know they're also
remodeling a lot of their.
Lance Saunders (09:26):
They tried those smaller format stores.
That really didn't work forthem and I think it's
interesting how this has evolved.
You know, when they firststarted, amazon really was the
big thing.
You saw a lot of these storesthink, all right, we have to go
online.
And what they figured out isthose stores are the advantage
they can have over Amazon andwhen we adapt those stores to
(09:46):
get the customers that arewilling to actually come there,
we can actually do a really goodjob of winning those customers.
But they're not.
If they're going to go online,they're going to go to Amazon.
Ted Stank (09:56):
Yeah, but have you ever bought from Walmart?
Yeah, I love it.
I mean not to have delivery.
I love the buy online pickup instores.
Lance Saunders (10:03):
That's the key.
I can remember talking to you10 years ago and we talked about
if they could look at online,like they do, the oil change,
which sounds really weird.
But you know, the oil change isa completely separate part of
the building and so if they makethe pickup easy like that,
where you can go into the store,there's a big segment of
customers that really want to dothat.
Ted Stank (10:22):
You can park right up front.
Yep, you go right in the frontdoors.
I bought a TV not too long agofrom Walmartcom buy online,
pickup in store, and theexperience was fantastic.
Lance Saunders (10:31):
And you don't even have to go in if you don't
want.
You know, now, if you want togo in, you can but think.
When they first started doingthis, you know a lot of these
pickups were in the very back ofthe store.
But if you're buying online topick up in store, what's the
last thing you want to do mostof the time?
Walk through the store.
Yeah, the car walk through thestore, so once they've kind of
figured out what these customerschanged their inventory models.
You know it's really great tohave little kids and you never
(10:51):
believe this, but they like toysand they think my middle name
is, you know, toy and that's thenumber, and so it's great.
You know Walmart target.
You can look and see ifsomething's actually in stock.
You know exactly where it isbefore you go.
Ted Stank (11:05):
I tracked Walmart's change to 2017 when Target
bought Whole Foods and when itturned out really, Target bought
Whole Foods not because theywanted to own those brick and
mortar stores but because theyneeded a footprint, essentially
an order fulfillment footprintfor perishable grocery goods,
and I think a light bulb went onat Walmart that like, hey, we
(11:25):
got 4700 of those orderfulfillment centers, you know.
Lance Saunders (11:29):
They've had to change how they manage inventory
because the worst thing theycan do is try to manage it with
us legacy inventory models.
Ted Stank (11:36):
and you come in, it says something's there, it's
gonna be there, and you go insure being able to have that
transparency Across their entirenetwork of DCs and stores, to
know where the inventory is andwhere's the most efficient place
to fall.
Lance Saunders (11:47):
You know, even those DCs have become a huge
advantage for them because theycan have, you know, maybe the
stock, white and if you wantthat you know, or black, or
whatever the colors, if you wantthat piece of furniture, they
have sitting there.
But it's something I canactually go look at it and see
it and then then they have allthe other colors.
I'm deep, it is that you know.
I was buying a piece offurniture and I like the piece
of furniture, not the color.
They had.
Within two days is from a DC tothe store to my home.
Ted Stank (12:10):
It's a pretty ingenious way to do things, yep
sure is Something else happeningin the world, so let's keep
that.
I like in a parking lot,because I want to get Chen's
take on some of this from aplanning and inventory placement
standpoint.
But we talked about the Houthiattacks, you know the, the
drought in Panama that's causingcapacity restrictions in the
Panama Canal all these thingsthat are impacting global
(12:30):
shipping Tensions with Chinacontinue.
Some recent data came out thatChina is now, I think, only the
fourth largest trade partnerwith us, which is a big change
from a couple years ago.
Mexico number one, I think.
Uk number two, canada numberthree.
So that's pretty significant.
Lance Saunders (12:46):
That's a good trivia question for next Tuesday
.
Ted Stank (12:48):
Absolutely is but other things that are happening
from a regulatory standpointPresident Biden's executive
order on supply chain resiliency, signifying a turning point for
US business, saying thatthere's going to be regulatory
Constraints, if you will, oncertain industries and where
they source from, and reallytrying to drive near shoring or
even reshoring for someindustries.
I think that's a prettyimportant happening on the
(13:10):
supply chain world that we needto keep our eye on.
So a lot of these things thatkind of Boiled down to supply
chain managers having to beDynamic in looking at economic
issues, geopolitical issues,obviously competitive issues
that are causing people to haveto constantly dynamically
realign their supply chains.
So we asked Jen to join us Jenagain VP of supply chain
(13:33):
planning.
So assume you have bigresponsibility, jen, for all the
placement of inventory in yournetwork for Schneider Electric.
Absolutely you want to tell us alittle bit about your job and
how you come to SchneiderElectric.
I know it's recent for you,right?
Jen Kelly (13:47):
Yeah, so I've been with Schneider now almost three
years leading planning for NorthAmerica.
So really what that encompassesDemand planning, production
scheduling, materials planningreally that end-to-end planning
piece for our supply chain.
And before I got into this roleWith Schneider I actually
worked for Morton salt some arecommodity based where I was with
their supply chain planningOrganization and then sales and
(14:08):
marketing and really started mycareer with Exxon mobile as an
engineer.
So what I've loved about myrole in planning right now with
Schneider I think is so reallyimpactful is just the fact that
of having engineering operations, background, sales and
marketing really makes itbeneficial when you think about
planning, because planning isall pieces, all parts of that
company coming together.
Ted Stank (14:26):
So, jen, given all these crazy things happening I
know you said that that one ofthe your big areas of focus is
your Changes in the way you'relooking at your network design
and and how you're planning yourinventory and where you're
placing things.
Could you go into a littledetail on that?
Jen Kelly (14:41):
Yeah, absolutely, I would say.
You know, starting out of cova,probably like all companies, it
was really that focus of sayinghow do we localize or how do we
bring our production back intoNorth America.
One of the things I thinkSchneider did very well was take
advantage of our globalproduction footprint and really
try to optimize our Supply chain, but realizing that we need to
make sure that we have speed tothe market, we can act quickly.
(15:03):
We started bringing things backwithin North America, within
the region, even from amanufacturing stem correct,
correct, yep.
We are investing heavily in ourproduction footprint in the US,
also in Mexico, so reallytrying to shorten our supply
chain wherever possible andwherever we can.
Again, that was kind of comingout of the agility play looking
to, you know, have less leadtimes, less disruptions, but now
(15:25):
we're seeing that reallycontinue when you think about
the chips act made in America,all the industrialization
efforts coming to the US.
So it was great to kind of geta little ahead of that, that
work stream there.
Ted Stank (15:36):
Yeah, that's interesting you bring that up.
I was gonna ask you how muchthat's impacting.
You know, I just talked aboutthe executive order and you know
this emphasis on Criticalproduct lines and clearly in the
business you're in electricutility and provision of lecture
that's a that's a prettycritical Business area.
Jen Kelly (15:51):
So yeah, when you think about the
industrialization or all of thenew companies or manufacturing
that's built up, the equipmentthat Schneider Electric puts
into those new facilities issignificant.
So we need to make sure thatwe're producing Locally to
support all the other companiesor peer companies we're talking
to, to make sure that we cansupport their growth plans as
well.
Ted Stank (16:11):
Do you contract out maintenance of all your
equipment, or is that part ofSchneider's business as well?
Jen Kelly (16:15):
I'm, it's part of our , so we do have a services
department that does all themaintenance to and and
maintenance.
Ted Stank (16:20):
So tell me ballpark figures, how many SKUs are you
dealing with?
Jen Kelly (16:24):
Globally we have about 290,000 excuse.
I was gonna say I'm workingwith him on a project.
Ted Stank (16:29):
Lance is working on it.
Lance Saunders (16:30):
I was gonna tell you the technical answer.
It's a whole bunch.
Ted Stank (16:34):
You're an engineer.
You said yes, okay.
I'm an industrial engineer, sothat's not more like an
economist answer than anengineering?
Lance Saunders (16:39):
I'm an imaginary engineer, I would say it's way
too many so if anyone's outthere listening.
Jen Kelly (16:44):
Skew rationalization is a passion of mine and one
that we need to deploy raiseyour hand if you're in supply.
Ted Stank (16:48):
Jenin skew rationalization isn't a passion,
but yeah.
What other kind of internalchanges are you making in
response to these?
I know we've talked a lot aboutplanning and planning
technology, those kinds ofthings.
Lance, working a project withyou on planning as well be
interesting.
Lance Saunders (17:02):
I think they use Excel for everything.
Jen Kelly (17:04):
No, no, no, no, no, no you can't get number one on
Gartner if you're using Excel.
Ted Stank (17:10):
Exactly right, exactly right.
Thank you for mentioning that.
Congratulations.
Jen Kelly (17:13):
Thank you, thank you.
You know you ask kind of whatelse we're doing.
Some of the things that we'redoing is really looking at our
supplier base.
So we've invested heavily inourselves, which is fantastic,
right.
We see the demand coming, thegrowth coming, and we're
investing in our productionfootprint, but one of the key
things for us has been makingsure that our suppliers are
investing at the same rate andcan keep up with us.
(17:34):
So, you know, I mentioned wehave over 290,000 finished good
references.
That doesn't cover all thematerials that we plan and over
the 3,000 suppliers that we haveand need to manage within North
America as well.
So it's a very extensivenetwork that we have.
And so trying to grow with, youknow, 3,000 suppliers, double
digit growth year after year,has proven to be a little bit
(17:54):
more challenging than probablyone would hope.
So that's been a big focus forus.
Ted Stank (17:58):
And while you're trying to reshore or at least to
Mexico too, has that been astruggle finding supplier
capacity, as you've tried topivot back to kind of a more of
a nearshoring philosophy.
Jen Kelly (18:08):
Yeah, we've actually deviated a bit from that.
So long term view strategy isabsolutely still kind of
nearshoring with our suppliers.
But what's been so critical forus is trying to keep up with
the growing market and so, wherewe've needed to, we have looked
at some supplier developmentback overseas, back in Asia,
just with their kind of speed tomarket and to supplement the
suppliers that we have in the USand Mexico.
(18:29):
Mainly how about talent.
Ted Stank (18:31):
Have you seen that as a challenge, as you've?
You know you've broughtcapacity back either onshore or
to Mexico.
Have you been able to findenough talent, not only in
planning but in your supply base?
Jen Kelly (18:40):
Yeah, I mean, I would say overall, from a talent
perspective, it was really tightcoming out of the COVID
timeframe Something Schneiderdid very well with Stay on Top
of the Market, the market trends, as you guys just spoke to and
made sure that we were payingcompetitive wages and that we
could stay ahead of not tryingto play catch up but retain our
talent that we had.
It's going to continue to be achallenge, though, you know.
(19:01):
I think that's one of thethings that we see is even, you
know, partnering with Universityof Tennessee.
We're getting great talent,great recruits coming.
It's really keeping people intheir jobs long enough to make
that impact.
What we see is a lot of peoplelooking every year saying, OK,
I've checked this box, what'snext?
So we're challenging ourselvesto say how do we change the
mindset of some of our neweremployees and say how do we
(19:24):
retain them and really make animpact in their current roles?
Lance Saunders (19:26):
Are you finding a lot of?
You're paying the competitivewages.
What I find from students,especially today's generation,
is they're focused on thingsthat you know.
Even people my age salary wasjust such a big deal and there's
things outside of salary thatseems to drive them.
How have you guys focused onthose issues for retainment?
Jen Kelly (19:45):
Yeah, I would say one of the things that drew me to
Schneider Electric in the firstplace was just what we stand for
from a sustainabilityperspective.
If you think about theelectrification that's going on
right now, schneider Electric isat the heart of that and
bringing clean energy globallyand bringing energy to, you know
, locations in the world thathaven't had the benefit of
having access to energy.
(20:06):
So, for us, we've really triedto tap into that and show that
we're more than just a salary ora dollar figure to people, but
that what you do when you workfor Schneider Electric is that
you're having a sustainableimpact on the world around you,
and so I think that, for us, hasbeen a great differentiator.
Ted Stank (20:23):
This is kind of off topic, but I know Schneider has
traditionally a French company,european company.
How does that culture?
Obviously the sustainabilityissue probably is a function of
that.
I know that benefits tend to bepretty different for Schneider
than most US based companies.
Jen Kelly (20:39):
Yeah.
So I would say we've done a lotreally to globalize Schneider
Electric.
We were at a conference inBarcelona even in September with
some of our top leaders andsome of my peers were like if
you were at this 10 years ago,it would have been only
Frenchmen, and now, when youlook at it, it's a great diverse
mix.
You have men, women, you havepeople from all over the world
really coming together and Ithink part of that, we had
(21:02):
obviously great leadership thatrecognized the need for
diversity, that helped startthat change.
And then we also have a globalhub strategy where we don't just
have one location and say, okay, paris is our central hub, but
we have locations in Boston andin Hong Kong, really trying to
bring the global benefits anddiversity to Schneider, to
everyone.
Lance Saunders (21:22):
And is your planning?
How much do they interact inthose locations?
From planning?
Because I think that's one ofthe interesting things about a
global supply chain when you dohave people in all those
different locations, they allbring different perspectives and
different knowledge.
How do you bring all thatknowledge together from it?
An overall planning standpoint.
Jen Kelly (21:39):
So we actually have a global planning organization
that sits across the variousregions.
So I have planning for NorthAmerica and then I have a peer
that has planning for Europe,and then we have someone that
has planning for Asia with aglobal planning head, and we
actually have weekly connects,connects or battles.
But we all try to kind of gettogether and make sure that
we're doing things in a standardway or working together,
(22:00):
because a lot of our productsthat we do for final assembly
with the North America, it's allbased on parts and components
we're buying from Schneider inEurope or buying from Schneider
in Asia as well.
So we've got to stay veryclosely connected.
Ted Stank (22:13):
Did you do capacity sharing across regions?
We?
Jen Kelly (22:16):
do.
We do that part of our fiveyear plan.
So there's a strategy groupthat again sits across all the
regions based on our businessunits.
That way they can really lookand understand and say what is
that long-term strategy looklike for the company.
Ted Stank (22:31):
Obviously major growth areas, probably in
Western Europe and North America, but where are your other big
growth areas globally?
Jen Kelly (22:38):
Right now we're also seeing Middle East.
Ted Stank (22:40):
Middle East.
Jen Kelly (22:41):
So North America, I would say we're continuing to
see very strong double digitgrowth across the board.
Slowed down a bit in Asia, butthe Middle East and Africa we're
seeing a lot of growth.
But I think it comes to thedevelopment too of in that area
of bringing energy, management,distribution, manufacturing,
industrial automation.
So it's growing well as well.
Ted Stank (23:01):
You know there's been a lot of talk over the last I
don't know 10 years or so aboutthe US electric grid and the
need for growing that capacity.
Are you seeing that happeningin your business?
Jen Kelly (23:10):
Absolutely, we're seeing it quite a bit.
We're also seeing a lot withthe government funding and new
initiatives of partnering withgovernment agencies in order to
continue to support that growthand that made in America.
But I mean really we talk aboutit of saying, okay, you know,
industrial revolution was a hugemilestone in the US, the launch
of the internet was a hugemilestone in the US, and now
(23:31):
it's like we're in the thirdrevolution, right of this
electrical revolution that we'reseeing.
Ted Stank (23:36):
That's good to hear, you know.
I mean just anecdotally.
We just came through across theSouth some pretty severe
weather and as compared to lastyear, I think there weren't
reports of rolling blackouts oranything like that.
Lance Saunders (23:48):
You know.
Another thing you're talkingabout is you're seeing these
trends and I know you guys arepretty heavy in analytics.
From working with you, I thinkone thing that stood out to me
is you do a really good job ofrelying on the numbers, that the
numbers are telling you, butyou have all these employees and
planners that have contextright.
That's why I tell all of ourstudents, like, you're always
gonna have a job because youhave context that analytics
(24:09):
can't know.
How do you guys blend those?
Because I mean, I've beenfascinated working with your
group that they do a really goodjob of knowing what the numbers
tell them but then taking theirown knowledge and blending
those two.
Like, how do you do that whenyou're managing all this growth?
Jen Kelly (24:24):
So I think the way that we've been structured and
the way that we have kind of ourteams mapped is that they're
linked to a business unit andthen with planning, I really
stress the importance of theteam is being connected with
understanding of your key marketdrivers and what's happening,
as opposed to just saying here'sa number or a staff that we're
reporting.
So we've done a very nice job.
I think of that partnershipwith ourselves and marketing
(24:45):
organization to make sure thatif something is happening with
order growth that we canarticulate as well and say it's
linked to this customer, it'slinked to this opportunity, it's
linked to this market trend,and I think that's made us a
much better supply chain end,because we're able to then take
that information and share itwith procurement too.
So when procurement'snegotiating with suppliers,
we're linking it back to.
(25:06):
These are the key market trends.
Here's why we're growing,here's why we're the horse to
ride.
Invest and we'll invest andgrow together.
Lance Saunders (25:13):
Did you just say sales talk to supply chain talk
to procurement.
Jen Kelly (25:16):
It's a foreign concept, isn't it?
Lance Saunders (25:18):
This is groundbreaking stuff too.
Jen Kelly (25:19):
Some days I don't want to, but most days yeah.
Ted Stank (25:21):
We said you had a little bit of a sale background
too.
There's value in it, yeah.
Jen Kelly (25:25):
Being on the other side of it in sales and
marketing.
You know the close partnershipthere.
Ted Stank (25:28):
So I worked in sales for a while too, and I shudder
every time I think about some ofthe things I did to the supply
chain from a planning standpoint.
Lance Saunders (25:36):
I had someone in my class last week and we were
talking about the planningprocess and I think the students
were surprised that the firstthing he talked about is the
real intel that we have to talkto the sales and marketing or
we're going to miss.
Ted Stank (25:50):
I gamed it because I was paid on a like a base salary
plus bonus, and we were kind ofencouraged to game it.
The game was you wanted to comeup with a forecast target
number that was high enough thatwouldn't get thrown back at you
, low enough that you knew youcould beat it to get your bonus.
And, yeah, we did some awfulthings.
This was 30 some years ago,though, so we weren't
(26:10):
sophisticated.
Lance Saunders (26:10):
So the statute of limitations has passed?
Yeah, I think so.
Ted Stank (26:13):
I didn't tell you who I worked for either, so so, on
the planning front, what otherkinds of initiatives are you
looking at to try to improve theway you're able to accurately
have SKUs in the right place,the right time?
Jen Kelly (26:24):
What we've done at Schneider is we've built our own
end to end control towers.
So it's really bringingvisibility to kind of planning.
But every single order you canget visibility, you can get
alerts of if there might be arisk to an order shipping on
time.
So we're really trying to bringthat visibility for all teams
to see and have access to, tohonestly be self-serve too,
because so much is changingwhere we can't rely on someone
(26:47):
to call someone, pick up thephone, wait for Asia to wake up.
You can go in the system, lookit up real time, and that's been
a huge game changer for us.
So continuing to think abouthow we leverage everyone's
access to real time data hasbeen a game changer for us and
will continue to be a gamechanger for us.
We are leveraging more to whatwe call our act capabilities
(27:07):
from that, so really drivingautomation within our end to end
control tower as well.
Lance Saunders (27:12):
So how do you manage with all this data,
focusing it on the importantparts so that the people making
these decisions don't getoverwhelmed?
Jen Kelly (27:21):
So what we think we've tried to do the most is
categorize our SKUs and soreally say, okay, here are your
fast movers, or these are theones that are linked to our high
revenue products.
That way we can help and letthe system just run for what we
call our medium or rare moversand keep our eyes focused on the
most impactful for theorganization.
Otherwise, as you mentioned, Imean it's way too much for
(27:41):
anyone to manage via Excel or tomanage every single reference.
So segmentation, whether it'swith our customer, segmentation
within our supply chain, is verycritical to our success.
Lance Saunders (27:52):
Yeah, I mean.
I personally think one of thebig trends in the next five to
10 years is people are gonnarealize that you can
differentiate your planningprocess for different SKUs and
different customers and we don'thave to have this off the shelf
, everything looks the same froma C to an A to every customer.
I think more businesses aregonna start going that way.
Jen Kelly (28:10):
Yes, schneider does a nice job of that.
If we have, for all of our SKUs, they basically fall
automatically into a quadrantthat's updated every month, so
we can then look in and say youknow, how are we setting the
right stocking policies, theright parameters around these
SKUs, based on order patterns.
So that's been, I think, agreat example of how we're
leveraging data and analytics tohelp us drive a more efficient
(28:31):
supply chain.
Ted Stank (28:32):
Everybody's talking about generative AI these days.
What kinds of initiatives yougot going on in there,
particularly in the planningspace?
Jen Kelly (28:38):
So right now, I'd say our main focus is looking at
demand forecasting.
If you think typically aboutusing a stat forecast, I think
the only thing we know at thispoint is that it's wrong.
So really we're looking andtrying to say what do we need to
do differently?
Coming out of COVID and justthe unknown and the growth that
we're seeing is fantastic, butwhat key trends do we need to
map our business performance to,to understand what growth looks
(29:01):
like, as opposed to looking inthe rearview mirror?
So that's probably the biggestplace for us right now is really
with demand planning.
That's exciting.
Ted Stank (29:08):
All right, we're nearing the edge of our time,
Jen.
We've really appreciated youhave time to spend with us.
Any final parting shots you?
Jen Kelly (29:15):
have.
Thank you for having me, and Itold my son, if I got a chance,
I was going to tell him hello,so I will say hello to my
daughter and my son, and we'llthrow in my husband Awesome.
Ted Stank (29:27):
I meant to mention early on that Jen comes from a
true basketball blue blood.
She's a UCLA grad.
For those of you who aren't oldenough, UCLA won about nine in
a row and 10 out of 11 a whileback in the 60s and 70s of
basketball nationalchampionships and won in 95.
Jen Kelly (29:43):
I think one in 95.
Ted Stank (29:44):
Yeah, and so here she is at this football school.
Was able to attend a Tennesseebasketball game last night, a
win versus LSU.
Jen Kelly (29:51):
I'll note so yeah, it was a great first experience
and get the win.
But I would say if UCLA wasplaying last night I would have
had to go for them.
Ted Stank (29:59):
I get it, Lance.
Thank you for sitting in.
Lance Saunders (30:01):
No, thanks for having me.
Ted Stank (30:03):
So this is a wrap.
This is Tennessee on supplychain management.
You can find our podcast on anyof your favorite podcast sites.
As always, if anybody has anyideas, questions for us that
you'd like us to cover, GSCI atutkedu is the email address for
you to send things in, and withthat we will sign off.
Thanks everybody, We'll see younext month.
Introduction (30:26):
Thanks for tuning in to Tennessee on supply chain
management.
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Join us next time as wecontinue pulling back the
(30:49):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
Welcome to the Tennessee on Supply Chain
Management podcast.
Listen in as co-hosts Ted Stankand Tom Goldsby set sail into
the world of end-to-end supplychain management, diving deep
into today's most relevantbusiness topics.
They'll share insights andpressing industry issues and
tackle the challenges keepingsupply chain professionals up at
night.
If you're enjoying the ride,download and subscribe to
(00:22):
Tennessee on Supply ChainManagement on your favorite
podcast platform now.
Ted Stank (00:28):
Welcome everyone to our second podcast of 2024,
Tennessee on Supply ChainManagement.
We've got lots of interestingthings going on in the world
today and we're going to touchon a lot of those and then bring
in a guest speaker to talkabout some specifics about
network redesign and how she islooking at her organization and
reacting to some of the thingsthat are happening in the world.
First let me introduce myco-host today, Lance Saunders,
(00:50):
not Tom Goldsby.
Today, Lance Saunders many ofyou know Lance, one of our
rising faculty.
He's going to sit in for TomTom's.
Actually attending the ManifestConference out in Las Vegas is
what he says he's doing, but Ialso happen to know he has U2
tickets.
Lance Saunders (01:04):
I don't know if they say what he told you.
I saw him buying U2 tickets inthe classroom.
Ted Stank (01:07):
Yeah, he has tickets to U2 in the what's it called
the sphere.
The sphere yeah, our guesttoday is Jen Kelly, vice
President of Supply ChainPlanning North America with
Schneider Electric, one of ourreally good partners.
Lance is going to talk a littlebit about some things happening
in the world today that areimpacting our supply chains.
We'll start talking about theeconomy.
Lance told me that he has areal deep economics background
(01:28):
and I'd like to talk about allthe underlying reasons for this.
Lance Saunders (01:31):
Yeah, the Baker Center has actually been over
here trying to get me to changecolleges.
Ted Stank (01:36):
Due diligence here.
Lance told me before we startedrecording don't ask him any
underlying reasons for these.
He knows they're happening.
My big thing about the economyis despite its demise Tom and I
have been talking about this forprobably two years.
Despite talk of its demise, theeconomy just seems to keep on
clicking along.
It's indicators that have comeout in the last few weeks.
For example, amazon's fourthquarter and full year earnings
(01:59):
surpassed expectations.
They saw a 14% year over yearjump in net sales in the fourth
quarter, including their primebig deal days in Black Friday
and Cyber Monday.
One big retailer, I thinkWalmart, reported some pretty
similar statistics.
A lot of other things comingout too, lance.
What are you seeing?
Lance Saunders (02:17):
It's really interesting.
I'm like you.
The time I go to the WallStreet Journal, I see jobs,
added economy grows, and then wealso see that people aren't as
pessimistic about it.
I don't really know what tothink.
Overall, I think it's reallyinteresting.
There still is an appetite forpeople to buy goods.
I think those retailers thatare doing a good job of giving
(02:38):
people what they want and doingthe predictions which we're
going to talk about planningtoday are really seeing some of
those investments since COVIDpaying off now.
Ted Stank (02:46):
One sector of the economy that had been suffering
for quite a while now wastransportation and logistics
sector, as we had so muchinventory after COVID because we
just stocked up and all thisperiod of de-stocking.
There's actually recently someindications that freight is
starting to surge again.
We can start seeing some ofthat excess capacity go away and
probably expect freight ratesto rise.
We're already seeing it inocean shipping something we'll
(03:09):
talk about later on because ofthings that are happening in the
ocean environment that arecausing prices to increase.
I think it was the middle oflast week the jobs report came
out.
The expectation was, I think,150,000 jobs added and instead
353,000 jobs were added.
Unemployment rate was expectedto tick up and it stayed at 3.7%
(03:29):
.
My friend, bill Simon, who doeshave a bit of an economics
background I think he's formerCEO of Walmart North America and
has been a guest on here he'sbeen telling me for two years
that the United States has neverhad a full employment recession
.
He kept saying don't listen toit.
We're not going to have arecession as long as we keep
full employment.
So far, bill, you've been right.
Lance Saunders (03:49):
I guess it makes sense.
People have jobs, they canspend money right.
Ted Stank (03:52):
I think I've read that American savings is double
or triple what it was pre-COVIDlike in 2019, in the trillions.
Lance Saunders (04:02):
So seeing at home, not spending our money.
Ted Stank (04:04):
I think a lot of that has to do with housing.
Housing prices are still high.
I know I have three millennialchildren and they are all
bemoaning the fact that theycan't afford to buy houses
because housing prices are sohigh and interest rates are high
.
Of course, they live in threehot markets to Nashville,
atlanta and Charleston, butKnoxville, tennessee Raise your
hand out there, podcastlisteners, if you're dying to
(04:26):
move to Knoxville Tennessee.
Our housing prices are out ofcontrol.
Lance Saunders (04:29):
I mean we've almost doubled since I moved
here in 2017.
Ted Stank (04:34):
What interest rate do you have?
Lance Saunders (04:37):
I don't want to brag to people buying now, but
it has a three in front of it,maybe a two.
I'm at two and a half.
Yeah, I think I might have atwo actually.
Ted Stank (04:45):
Consumer sentiment is rising.
For a while it was weird thatpeople were spending.
This is a Tom's big thing.
Consumers are spending if theyhave a real pessimistic view on
the economy.
Actually, consumer sentiment inJanuary is up to 78.8, up from
69.7 last month and 64.9 a yearago.
Lance Saunders (05:02):
Do you think that's just because the media,
everything we see, is justeverybody's telling us how bad
it is, so it's just perpetuatingitself?
Ted Stank (05:08):
We talk about economists and economics.
I've had this long held theorythat if there are three
consecutive reports in the newsabout the economy doing great,
we all feel really good aboutthe economy.
It's mass psychology.
Then if you see three reportsabout it being bad, then we all
get pessimistic.
So I do think it's somewhatdriven by media, especially the
social media, and headlinegrabbing.
Lance Saunders (05:30):
You see it, we don't usually even read the
story, but you see the headlineand self-perpetuates.
Ted Stank (05:36):
You can't also dissociate it from the political
cycle we happen to be.
I think one of the other bigthings that we'll track over the
course of this year is not onlywhat's happening with the
economy, but what's happening inthe political world.
You can't dissociate the two.
Lance Saunders (05:49):
You mean the lack of things happening in the
political world.
Ted Stank (05:52):
No, there's a lot of things happening in the
political world.
There's the lack of thingshappening in the government
world.
A lot of energy to get intooffice.
Once we're in office, let's notdo anything that the country
needs.
So what else is going on?
Lance Saunders (06:06):
All this really gets into what has an impact on
a lot of the people out there,which is interest rates.
Right, has a large impact onbusinesses Because of a lot of
this recent data.
Jerome Pouse poured a lot ofcold water on the notion they're
going to lower interest rates,which is going to have an effect
on almost every business outthere.
Ted Stank (06:25):
Yeah, Heading into January, there were signs from
the Fed that March was going tobe potentially an interest rate
cut and I think one of the Fedboard presidents said
potentially five or six interestrate cuts this year.
Given that the economy isclicking along so strong, that's
probably not going to happen inMarch.
At least that's what they'resaying now.
The interesting thing is themarket seems to have baked that
(06:46):
in.
The market didn't take a bigcrash after.
It looks like we're not goingto have interest rates cuts.
So I think that most analystsout there are thinking well,
okay, the economy's good.
There's a lot of other thingsthat drive market value, so
let's not overpanic on that.
Cpi Consumer Price Index camein at 3.1% in January, so lower
than December.
So again, this proverbial softlanding of being able to maybe
(07:10):
get interest rates down withoutcausing a recession and layoffs
is potentially within sight.
Lance Saunders (07:16):
Yeah, hopefully we'll see some of that Consumer
Price Index at the grocery storesoon.
Ted Stank (07:20):
Yeah, yeah.
And again, housing.
We talked about housing.
That's probably one of the bigareas that it hasn't hit yet.
Of course, a lot of thisdepends on what happens in the
war.
Hold, right, I think we'vetalked about on this podcast
before how we came out of COVID.
We're expecting stability, andimmediately when we were coming
out of COVID, the Russia-Ukrainewar spiked and caused all kinds
(07:40):
of craziness and pricing, andnow we're seeing the increased
unrest in the Middle East, andwhenever you talk about unrest
in the Middle East, you can'tdissociate it from fuel prices,
right?
So I think we need to talk alittle bit about what's going on
over in the Middle East.
Lance Saunders (07:56):
I mean shooting missiles at tankers in Yemen.
Yeah, I mean it's obviously.
I've never thought we'd be in apodcast talking about Houthi
rebels in Yemen disrupting roletrade, but that's where we are
right now.
Ted Stank (08:07):
Right, yeah yeah, absolutely, and we heard a
geopolitical person here oncampus talking about what's
happening over there and shesaid that it is acknowledged now
as a proxy war with Iran.
I mean, probably, as we speak,we're launching lots of missiles
at several of these differentgroups that are Iranian-backed
and that's not common down.
They're not backing down.
Lance Saunders (08:27):
No, I thought the interesting thing she said
is that you know, we keepwaiting for there to be a break
in a lot of this fighting withUkraine and the Middle East and
all of this, and her commentthat really stuck out to me was
it's not going to calm down.
This is kind of the new normal,and there are a lot of
conflicts that affects supplychains that we don't even hear
about, like Sudan and all theseothers, and that's just the way
(08:50):
of life and we're going to haveto adapt to it.
Ted Stank (08:52):
Yeah, and if it becomes a hot shooting war with
Iran, then all kinds of crazythings are going to happen and
we're going to see fuel pricespike and lots of different
things that impact us in thesupply chain.
Some supply chain managementnews, other than those
geopolitical things that impactus Walmart announced that
they're going to grow again,expanding to 150 stores, which I
(09:13):
think is really significant,particularly in consumer
products and consumermarketplace, because essentially
that's the equivalent of themsaying they're going to open 150
order fulfillment centers Right, and I know they're also
remodeling a lot of their.
Lance Saunders (09:26):
They tried those smaller format stores.
That really didn't work forthem and I think it's
interesting how this has evolved.
You know, when they firststarted, amazon really was the
big thing.
You saw a lot of these storesthink, all right, we have to go
online.
And what they figured out isthose stores are the advantage
they can have over Amazon andwhen we adapt those stores to
(09:46):
get the customers that arewilling to actually come there,
we can actually do a really goodjob of winning those customers.
But they're not.
If they're going to go online,they're going to go to Amazon.
Ted Stank (09:56):
Yeah, but have you ever bought from Walmart?
Yeah, I love it.
I mean not to have delivery.
I love the buy online pickup instores.
Lance Saunders (10:03):
That's the key.
I can remember talking to you10 years ago and we talked about
if they could look at online,like they do, the oil change,
which sounds really weird.
But you know, the oil change isa completely separate part of
the building and so if they makethe pickup easy like that,
where you can go into the store,there's a big segment of
customers that really want to dothat.
Ted Stank (10:22):
You can park right up front.
Yep, you go right in the frontdoors.
I bought a TV not too long agofrom Walmartcom buy online,
pickup in store, and theexperience was fantastic.
Lance Saunders (10:31):
And you don't even have to go in if you don't
want.
You know, now, if you want togo in, you can but think.
When they first started doingthis, you know a lot of these
pickups were in the very back ofthe store.
But if you're buying online topick up in store, what's the
last thing you want to do mostof the time?
Walk through the store.
Yeah, the car walk through thestore, so once they've kind of
figured out what these customerschanged their inventory models.
You know it's really great tohave little kids and you never
(10:51):
believe this, but they like toysand they think my middle name
is, you know, toy and that's thenumber, and so it's great.
You know Walmart target.
You can look and see ifsomething's actually in stock.
You know exactly where it isbefore you go.
Ted Stank (11:05):
I tracked Walmart's change to 2017 when Target
bought Whole Foods and when itturned out really, Target bought
Whole Foods not because theywanted to own those brick and
mortar stores but because theyneeded a footprint, essentially
an order fulfillment footprintfor perishable grocery goods,
and I think a light bulb went onat Walmart that like, hey, we
(11:25):
got 4700 of those orderfulfillment centers, you know.
Lance Saunders (11:29):
They've had to change how they manage inventory
because the worst thing theycan do is try to manage it with
us legacy inventory models.
Ted Stank (11:36):
and you come in, it says something's there, it's
gonna be there, and you go insure being able to have that
transparency Across their entirenetwork of DCs and stores, to
know where the inventory is andwhere's the most efficient place
to fall.
Lance Saunders (11:47):
You know, even those DCs have become a huge
advantage for them because theycan have, you know, maybe the
stock, white and if you wantthat you know, or black, or
whatever the colors, if you wantthat piece of furniture, they
have sitting there.
But it's something I canactually go look at it and see
it and then then they have allthe other colors.
I'm deep, it is that you know.
I was buying a piece offurniture and I like the piece
of furniture, not the color.
They had.
Within two days is from a DC tothe store to my home.
Ted Stank (12:10):
It's a pretty ingenious way to do things, yep
sure is Something else happeningin the world, so let's keep
that.
I like in a parking lot,because I want to get Chen's
take on some of this from aplanning and inventory placement
standpoint.
But we talked about the Houthiattacks, you know the, the
drought in Panama that's causingcapacity restrictions in the
Panama Canal all these thingsthat are impacting global
(12:30):
shipping Tensions with Chinacontinue.
Some recent data came out thatChina is now, I think, only the
fourth largest trade partnerwith us, which is a big change
from a couple years ago.
Mexico number one, I think.
Uk number two, canada numberthree.
So that's pretty significant.
Lance Saunders (12:46):
That's a good trivia question for next Tuesday
.
Ted Stank (12:48):
Absolutely is but other things that are happening
from a regulatory standpointPresident Biden's executive
order on supply chain resiliency, signifying a turning point for
US business, saying thatthere's going to be regulatory
Constraints, if you will, oncertain industries and where
they source from, and reallytrying to drive near shoring or
even reshoring for someindustries.
I think that's a prettyimportant happening on the
(13:10):
supply chain world that we needto keep our eye on.
So a lot of these things thatkind of Boiled down to supply
chain managers having to beDynamic in looking at economic
issues, geopolitical issues,obviously competitive issues
that are causing people to haveto constantly dynamically
realign their supply chains.
So we asked Jen to join us Jenagain VP of supply chain
(13:33):
planning.
So assume you have bigresponsibility, jen, for all the
placement of inventory in yournetwork for Schneider Electric.
Absolutely you want to tell us alittle bit about your job and
how you come to SchneiderElectric.
I know it's recent for you,right?
Jen Kelly (13:47):
Yeah, so I've been with Schneider now almost three
years leading planning for NorthAmerica.
So really what that encompassesDemand planning, production
scheduling, materials planningreally that end-to-end planning
piece for our supply chain.
And before I got into this roleWith Schneider I actually
worked for Morton salt some arecommodity based where I was with
their supply chain planningOrganization and then sales and
(14:08):
marketing and really started mycareer with Exxon mobile as an
engineer.
So what I've loved about myrole in planning right now with
Schneider I think is so reallyimpactful is just the fact that
of having engineering operations, background, sales and
marketing really makes itbeneficial when you think about
planning, because planning isall pieces, all parts of that
company coming together.
Ted Stank (14:26):
So, jen, given all these crazy things happening I
know you said that that one ofthe your big areas of focus is
your Changes in the way you'relooking at your network design
and and how you're planning yourinventory and where you're
placing things.
Could you go into a littledetail on that?
Jen Kelly (14:41):
Yeah, absolutely, I would say.
You know, starting out of cova,probably like all companies, it
was really that focus of sayinghow do we localize or how do we
bring our production back intoNorth America.
One of the things I thinkSchneider did very well was take
advantage of our globalproduction footprint and really
try to optimize our Supply chain, but realizing that we need to
make sure that we have speed tothe market, we can act quickly.
(15:03):
We started bringing things backwithin North America, within
the region, even from amanufacturing stem correct,
correct, yep.
We are investing heavily in ourproduction footprint in the US,
also in Mexico, so reallytrying to shorten our supply
chain wherever possible andwherever we can.
Again, that was kind of comingout of the agility play looking
to, you know, have less leadtimes, less disruptions, but now
(15:25):
we're seeing that reallycontinue when you think about
the chips act made in America,all the industrialization
efforts coming to the US.
So it was great to kind of geta little ahead of that, that
work stream there.
Ted Stank (15:36):
Yeah, that's interesting you bring that up.
I was gonna ask you how muchthat's impacting.
You know, I just talked aboutthe executive order and you know
this emphasis on Criticalproduct lines and clearly in the
business you're in electricutility and provision of lecture
that's a that's a prettycritical Business area.
Jen Kelly (15:51):
So yeah, when you think about the
industrialization or all of thenew companies or manufacturing
that's built up, the equipmentthat Schneider Electric puts
into those new facilities issignificant.
So we need to make sure thatwe're producing Locally to
support all the other companiesor peer companies we're talking
to, to make sure that we cansupport their growth plans as
well.
Ted Stank (16:11):
Do you contract out maintenance of all your
equipment, or is that part ofSchneider's business as well?
Jen Kelly (16:15):
I'm, it's part of our , so we do have a services
department that does all themaintenance to and and
maintenance.
Ted Stank (16:20):
So tell me ballpark figures, how many SKUs are you
dealing with?
Jen Kelly (16:24):
Globally we have about 290,000 excuse.
I was gonna say I'm workingwith him on a project.
Ted Stank (16:29):
Lance is working on it.
Lance Saunders (16:30):
I was gonna tell you the technical answer.
It's a whole bunch.
Ted Stank (16:34):
You're an engineer.
You said yes, okay.
I'm an industrial engineer, sothat's not more like an
economist answer than anengineering?
Lance Saunders (16:39):
I'm an imaginary engineer, I would say it's way
too many so if anyone's outthere listening.
Jen Kelly (16:44):
Skew rationalization is a passion of mine and one
that we need to deploy raiseyour hand if you're in supply.
Ted Stank (16:48):
Jenin skew rationalization isn't a passion,
but yeah.
What other kind of internalchanges are you making in
response to these?
I know we've talked a lot aboutplanning and planning
technology, those kinds ofthings.
Lance, working a project withyou on planning as well be
interesting.
Lance Saunders (17:02):
I think they use Excel for everything.
Jen Kelly (17:04):
No, no, no, no, no, no you can't get number one on
Gartner if you're using Excel.
Ted Stank (17:10):
Exactly right, exactly right.
Thank you for mentioning that.
Congratulations.
Jen Kelly (17:13):
Thank you, thank you.
You know you ask kind of whatelse we're doing.
Some of the things that we'redoing is really looking at our
supplier base.
So we've invested heavily inourselves, which is fantastic,
right.
We see the demand coming, thegrowth coming, and we're
investing in our productionfootprint, but one of the key
things for us has been makingsure that our suppliers are
investing at the same rate andcan keep up with us.
(17:34):
So, you know, I mentioned wehave over 290,000 finished good
references.
That doesn't cover all thematerials that we plan and over
the 3,000 suppliers that we haveand need to manage within North
America as well.
So it's a very extensivenetwork that we have.
And so trying to grow with, youknow, 3,000 suppliers, double
digit growth year after year,has proven to be a little bit
(17:54):
more challenging than probablyone would hope.
So that's been a big focus forus.
Ted Stank (17:58):
And while you're trying to reshore or at least to
Mexico too, has that been astruggle finding supplier
capacity, as you've tried topivot back to kind of a more of
a nearshoring philosophy.
Jen Kelly (18:08):
Yeah, we've actually deviated a bit from that.
So long term view strategy isabsolutely still kind of
nearshoring with our suppliers.
But what's been so critical forus is trying to keep up with
the growing market and so, wherewe've needed to, we have looked
at some supplier developmentback overseas, back in Asia,
just with their kind of speed tomarket and to supplement the
suppliers that we have in the USand Mexico.
(18:29):
Mainly how about talent.
Ted Stank (18:31):
Have you seen that as a challenge, as you've?
You know you've broughtcapacity back either onshore or
to Mexico.
Have you been able to findenough talent, not only in
planning but in your supply base?
Jen Kelly (18:40):
Yeah, I mean, I would say overall, from a talent
perspective, it was really tightcoming out of the COVID
timeframe Something Schneiderdid very well with Stay on Top
of the Market, the market trends, as you guys just spoke to and
made sure that we were payingcompetitive wages and that we
could stay ahead of not tryingto play catch up but retain our
talent that we had.
It's going to continue to be achallenge, though, you know.
(19:01):
I think that's one of thethings that we see is even, you
know, partnering with Universityof Tennessee.
We're getting great talent,great recruits coming.
It's really keeping people intheir jobs long enough to make
that impact.
What we see is a lot of peoplelooking every year saying, OK,
I've checked this box, what'snext?
So we're challenging ourselvesto say how do we change the
mindset of some of our neweremployees and say how do we
(19:24):
retain them and really make animpact in their current roles?
Lance Saunders (19:26):
Are you finding a lot of?
You're paying the competitivewages.
What I find from students,especially today's generation,
is they're focused on thingsthat you know.
Even people my age salary wasjust such a big deal and there's
things outside of salary thatseems to drive them.
How have you guys focused onthose issues for retainment?
Jen Kelly (19:45):
Yeah, I would say one of the things that drew me to
Schneider Electric in the firstplace was just what we stand for
from a sustainabilityperspective.
If you think about theelectrification that's going on
right now, schneider Electric isat the heart of that and
bringing clean energy globallyand bringing energy to, you know
, locations in the world thathaven't had the benefit of
having access to energy.
(20:06):
So, for us, we've really triedto tap into that and show that
we're more than just a salary ora dollar figure to people, but
that what you do when you workfor Schneider Electric is that
you're having a sustainableimpact on the world around you,
and so I think that, for us, hasbeen a great differentiator.
Ted Stank (20:23):
This is kind of off topic, but I know Schneider has
traditionally a French company,european company.
How does that culture?
Obviously the sustainabilityissue probably is a function of
that.
I know that benefits tend to bepretty different for Schneider
than most US based companies.
Jen Kelly (20:39):
Yeah.
So I would say we've done a lotreally to globalize Schneider
Electric.
We were at a conference inBarcelona even in September with
some of our top leaders andsome of my peers were like if
you were at this 10 years ago,it would have been only
Frenchmen, and now, when youlook at it, it's a great diverse
mix.
You have men, women, you havepeople from all over the world
really coming together and Ithink part of that, we had
(21:02):
obviously great leadership thatrecognized the need for
diversity, that helped startthat change.
And then we also have a globalhub strategy where we don't just
have one location and say, okay, paris is our central hub, but
we have locations in Boston andin Hong Kong, really trying to
bring the global benefits anddiversity to Schneider, to
everyone.
Lance Saunders (21:22):
And is your planning?
How much do they interact inthose locations?
From planning?
Because I think that's one ofthe interesting things about a
global supply chain when you dohave people in all those
different locations, they allbring different perspectives and
different knowledge.
How do you bring all thatknowledge together from it?
An overall planning standpoint.
Jen Kelly (21:39):
So we actually have a global planning organization
that sits across the variousregions.
So I have planning for NorthAmerica and then I have a peer
that has planning for Europe,and then we have someone that
has planning for Asia with aglobal planning head, and we
actually have weekly connects,connects or battles.
But we all try to kind of gettogether and make sure that
we're doing things in a standardway or working together,
(22:00):
because a lot of our productsthat we do for final assembly
with the North America, it's allbased on parts and components
we're buying from Schneider inEurope or buying from Schneider
in Asia as well.
So we've got to stay veryclosely connected.
Ted Stank (22:13):
Did you do capacity sharing across regions?
We?
Jen Kelly (22:16):
do.
We do that part of our fiveyear plan.
So there's a strategy groupthat again sits across all the
regions based on our businessunits.
That way they can really lookand understand and say what is
that long-term strategy looklike for the company.
Ted Stank (22:31):
Obviously major growth areas, probably in
Western Europe and North America, but where are your other big
growth areas globally?
Jen Kelly (22:38):
Right now we're also seeing Middle East.
Ted Stank (22:40):
Middle East.
Jen Kelly (22:41):
So North America, I would say we're continuing to
see very strong double digitgrowth across the board.
Slowed down a bit in Asia, butthe Middle East and Africa we're
seeing a lot of growth.
But I think it comes to thedevelopment too of in that area
of bringing energy, management,distribution, manufacturing,
industrial automation.
So it's growing well as well.
Ted Stank (23:01):
You know there's been a lot of talk over the last I
don't know 10 years or so aboutthe US electric grid and the
need for growing that capacity.
Are you seeing that happeningin your business?
Jen Kelly (23:10):
Absolutely, we're seeing it quite a bit.
We're also seeing a lot withthe government funding and new
initiatives of partnering withgovernment agencies in order to
continue to support that growthand that made in America.
But I mean really we talk aboutit of saying, okay, you know,
industrial revolution was a hugemilestone in the US, the launch
of the internet was a hugemilestone in the US, and now
(23:31):
it's like we're in the thirdrevolution, right of this
electrical revolution that we'reseeing.
Ted Stank (23:36):
That's good to hear, you know.
I mean just anecdotally.
We just came through across theSouth some pretty severe
weather and as compared to lastyear, I think there weren't
reports of rolling blackouts oranything like that.
Lance Saunders (23:48):
You know.
Another thing you're talkingabout is you're seeing these
trends and I know you guys arepretty heavy in analytics.
From working with you, I thinkone thing that stood out to me
is you do a really good job ofrelying on the numbers, that the
numbers are telling you, butyou have all these employees and
planners that have contextright.
That's why I tell all of ourstudents, like, you're always
gonna have a job because youhave context that analytics
(24:09):
can't know.
How do you guys blend those?
Because I mean, I've beenfascinated working with your
group that they do a really goodjob of knowing what the numbers
tell them but then taking theirown knowledge and blending
those two.
Like, how do you do that whenyou're managing all this growth?
Jen Kelly (24:24):
So I think the way that we've been structured and
the way that we have kind of ourteams mapped is that they're
linked to a business unit andthen with planning, I really
stress the importance of theteam is being connected with
understanding of your key marketdrivers and what's happening,
as opposed to just saying here'sa number or a staff that we're
reporting.
So we've done a very nice job.
I think of that partnershipwith ourselves and marketing
(24:45):
organization to make sure thatif something is happening with
order growth that we canarticulate as well and say it's
linked to this customer, it'slinked to this opportunity, it's
linked to this market trend,and I think that's made us a
much better supply chain end,because we're able to then take
that information and share itwith procurement too.
So when procurement'snegotiating with suppliers,
we're linking it back to.
(25:06):
These are the key market trends.
Here's why we're growing,here's why we're the horse to
ride.
Invest and we'll invest andgrow together.
Lance Saunders (25:13):
Did you just say sales talk to supply chain talk
to procurement.
Jen Kelly (25:16):
It's a foreign concept, isn't it?
Lance Saunders (25:18):
This is groundbreaking stuff too.
Jen Kelly (25:19):
Some days I don't want to, but most days yeah.
Ted Stank (25:21):
We said you had a little bit of a sale background
too.
There's value in it, yeah.
Jen Kelly (25:25):
Being on the other side of it in sales and
marketing.
You know the close partnershipthere.
Ted Stank (25:28):
So I worked in sales for a while too, and I shudder
every time I think about some ofthe things I did to the supply
chain from a planning standpoint.
Lance Saunders (25:36):
I had someone in my class last week and we were
talking about the planningprocess and I think the students
were surprised that the firstthing he talked about is the
real intel that we have to talkto the sales and marketing or
we're going to miss.
Ted Stank (25:50):
I gamed it because I was paid on a like a base salary
plus bonus, and we were kind ofencouraged to game it.
The game was you wanted to comeup with a forecast target
number that was high enough thatwouldn't get thrown back at you
, low enough that you knew youcould beat it to get your bonus.
And, yeah, we did some awfulthings.
This was 30 some years ago,though, so we weren't
(26:10):
sophisticated.
Lance Saunders (26:10):
So the statute of limitations has passed?
Yeah, I think so.
Ted Stank (26:13):
I didn't tell you who I worked for either, so so, on
the planning front, what otherkinds of initiatives are you
looking at to try to improve theway you're able to accurately
have SKUs in the right place,the right time?
Jen Kelly (26:24):
What we've done at Schneider is we've built our own
end to end control towers.
So it's really bringingvisibility to kind of planning.
But every single order you canget visibility, you can get
alerts of if there might be arisk to an order shipping on
time.
So we're really trying to bringthat visibility for all teams
to see and have access to, tohonestly be self-serve too,
because so much is changingwhere we can't rely on someone
(26:47):
to call someone, pick up thephone, wait for Asia to wake up.
You can go in the system, lookit up real time, and that's been
a huge game changer for us.
So continuing to think abouthow we leverage everyone's
access to real time data hasbeen a game changer for us and
will continue to be a gamechanger for us.
We are leveraging more to whatwe call our act capabilities
(27:07):
from that, so really drivingautomation within our end to end
control tower as well.
Lance Saunders (27:12):
So how do you manage with all this data,
focusing it on the importantparts so that the people making
these decisions don't getoverwhelmed?
Jen Kelly (27:21):
So what we think we've tried to do the most is
categorize our SKUs and soreally say, okay, here are your
fast movers, or these are theones that are linked to our high
revenue products.
That way we can help and letthe system just run for what we
call our medium or rare moversand keep our eyes focused on the
most impactful for theorganization.
Otherwise, as you mentioned, Imean it's way too much for
(27:41):
anyone to manage via Excel or tomanage every single reference.
So segmentation, whether it'swith our customer, segmentation
within our supply chain, is verycritical to our success.
Lance Saunders (27:52):
Yeah, I mean.
I personally think one of thebig trends in the next five to
10 years is people are gonnarealize that you can
differentiate your planningprocess for different SKUs and
different customers and we don'thave to have this off the shelf
, everything looks the same froma C to an A to every customer.
I think more businesses aregonna start going that way.
Jen Kelly (28:10):
Yes, schneider does a nice job of that.
If we have, for all of our SKUs, they basically fall
automatically into a quadrantthat's updated every month, so
we can then look in and say youknow, how are we setting the
right stocking policies, theright parameters around these
SKUs, based on order patterns.
So that's been, I think, agreat example of how we're
leveraging data and analytics tohelp us drive a more efficient
(28:31):
supply chain.
Ted Stank (28:32):
Everybody's talking about generative AI these days.
What kinds of initiatives yougot going on in there,
particularly in the planningspace?
Jen Kelly (28:38):
So right now, I'd say our main focus is looking at
demand forecasting.
If you think typically aboutusing a stat forecast, I think
the only thing we know at thispoint is that it's wrong.
So really we're looking andtrying to say what do we need to
do differently?
Coming out of COVID and justthe unknown and the growth that
we're seeing is fantastic, butwhat key trends do we need to
map our business performance to,to understand what growth looks
(29:01):
like, as opposed to looking inthe rearview mirror?
So that's probably the biggestplace for us right now is really
with demand planning.
That's exciting.
Ted Stank (29:08):
All right, we're nearing the edge of our time,
Jen.
We've really appreciated youhave time to spend with us.
Any final parting shots you?
Jen Kelly (29:15):
have.
Thank you for having me, and Itold my son, if I got a chance,
I was going to tell him hello,so I will say hello to my
daughter and my son, and we'llthrow in my husband Awesome.
Ted Stank (29:27):
I meant to mention early on that Jen comes from a
true basketball blue blood.
She's a UCLA grad.
For those of you who aren't oldenough, UCLA won about nine in
a row and 10 out of 11 a whileback in the 60s and 70s of
basketball nationalchampionships and won in 95.
Jen Kelly (29:43):
I think one in 95.
Ted Stank (29:44):
Yeah, and so here she is at this football school.
Was able to attend a Tennesseebasketball game last night, a
win versus LSU.
Jen Kelly (29:51):
I'll note so yeah, it was a great first experience
and get the win.
But I would say if UCLA wasplaying last night I would have
had to go for them.
Ted Stank (29:59):
I get it, Lance.
Thank you for sitting in.
Lance Saunders (30:01):
No, thanks for having me.
Ted Stank (30:03):
So this is a wrap.
This is Tennessee on supplychain management.
You can find our podcast on anyof your favorite podcast sites.
As always, if anybody has anyideas, questions for us that
you'd like us to cover, GSCI atutkedu is the email address for
you to send things in, and withthat we will sign off.
Thanks everybody, We'll see younext month.
Introduction (30:26):
Thanks for tuning in to Tennessee on supply chain
management.
If you enjoyed the episode,subscribe today on your favorite
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drop, and don't forget to take amoment to leave us a rating.
Have any questions, thoughts orfeedback?
We'd love to hear from ourlisteners.
Email us at GSCI at utkedu.
Join us next time as wecontinue pulling back the
(30:49):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
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