For the August 2025 episode, co-hosts Ted Stank and Tom Goldsby spoke with Doug Gray, VP of integrated supply chain for Trane Technologies, about driving resilience in the aftermarket business, embedding sustainability into strategic decision-making, and upskilling long-tenured employees to create value in a landscape of AI and automation.
Gray, a member of the GSCI Advisory Board, joined Trane’s executive leadership in 2024. In his role, he is accountable for the company’s supply distribution, including SIOP, order management, quality and packaging, inventory management, and distribution center operations. A global climate innovator, the company provides heating, ventilation, and air conditioning (HVAC) systems, refrigeration solutions, and connected building technologies, while maintaining a focus on reduced energy use and carbon emissions. Prior to Trane, Gray spent more than 16 years in various supply chain functions for Caterpillar Inc.
Listen in for insights on AI adoption, aftermarket performance, inventory management, and talent development. Plus, Ted and Tom dig into the latest news about U.S. tariffs and trade relationships, the proposed merger between Union Pacific and Norfolk Southern, and more.
The episode was recorded during the GSCI Advisory Board meeting at the Haslam College of Business on August 20, 2025.
Related links:
- U.S. hikes steel, aluminum tariffs on imported appliances, railvars, and EV parts
- How Trump’s tariffs, the AI boom, and the leadership shake-up at the Bureau of Labor Statistics will impact the economy
- Doug Gray named a 2025 Rainmaker by DC Velocity
- Learn about UT’s new master’s degree in global supply chain management
- Download our latest white paper on reshoring manufacturing and the talent skills gap for U.S. labor.
- GSCI leaders on five points of consideration from the proposed UP-NS merger
- Save the date for the fall Supply Chain Forum, November 4–6 in Knoxville
- Download the white paper “Future-Ready Procurement” or read our blog series
- Join the Advanced Supply Chain Collaborative, where forward-thinking leaders and companies, like Trane, explore advanced concepts in SCM with UT scholars.
- Sign up for one of our virtual credentials in Finance (Sept. 15-Nov. 16) and Procurement (Sept. 15–Nov. 16).
- Become a
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (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 inpressing 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.
Speaker 2 (00:28):
Hello and welcome to the Tennessee on Supply Chain
Management podcast, professorTom Goldsby coming to you from
Rocky Top with the back toschool edition of the podcast.
What do you think of?
Speaker 3 (00:38):
that, hey, ted, how you doing Absolutely.
I'm doing great, Tom, how youdoing Great to be here.
Speaker 2 (00:43):
It's Professor Ted Stank alongside me here, and hey
, we've got another individualin the room today.
You want to introduce our guest?
I do.
Speaker 3 (00:51):
I do Doug Gray, vice President of Integrated Supply
Chain with Trane Technologies.
Proud University of TennesseeExecutive MBA alum.
Doug and I have been friendsfor a long time Not quite as
long as you and I, tom.
Speaker 2 (01:02):
Okay, let's go back a ways, though.
We've done Gay Street together,tom.
We have absolutely Thanks forhaving me.
Guys, I appreciate the invite.
What brings?
Speaker 4 (01:11):
you to town, the Global Supply Chain Advisory
Board, in here from dinner lastnight and today and getting to
hear all the great things thatUT is working on.
Speaker 2 (01:19):
That's right.
So, as I said at the outset, itis our back to school edition.
I kind of threw Ted off withthat, but we didn't talk about
that beforehand.
Speaker 3 (01:28):
We're here with 40,705 of our favorite
undergraduate and graduatestudents.
Speaker 2 (01:33):
It is bustling here on Rocky Top.
We just started classes acouple of days ago.
Hey, I'm really excited becausewe launched the new MS in
Global Supply Chain ProgramReimagining for some time.
So we're really proud to have15 students in our introductory
cohort there.
But you're right, they're inthe larger context of nearly
41,000 students, a record numberhere at UT Knoxville, and you
(01:57):
know there's just so muchexcitement when the kids come
back.
You know it's harder to find atable at a restaurant and I can
never get a machine at thefitness center, but despite
those, challenges.
Speaker 3 (02:09):
You have to time when you come on campus.
Speaker 2 (02:11):
You do that's right.
Speaker 3 (02:12):
Finding a parking spot is impossible, but there is
an excitement to it.
Speaker 2 (02:14):
There is, and we haven't even played a football
game yet.
No Right.
Speaker 3 (02:17):
I'm thinking Tennessee Vols are going to win
the national championship thisyear.
Oh, my goodness this year Ipredict 42-17 over University of
Michigan in the final.
I like that.
Speaker 2 (02:28):
That was a pointed comment, I think, to Doug.
We talked about this beforehand.
Speaker 3 (02:32):
We weren't going to bash the University of Michigan
in this, but anyway, doug is aUniversity of Michigan undergrad
but he's got the big orangegraduate.
Speaker 2 (02:42):
That's right.
He eventually got it right, andas we all have for that matter.
But yeah, with regard to backto school, a lot going on here,
rocky Top, also a lot out andabout in the world.
Where do you think we ought tobreak the ice in terms of
talking about supply chain?
So I'll tell you what.
Speaker 3 (02:58):
I am freaking tired of talking about tariffs.
Okay, real brief tariffs.
Are there Probably at somepoint in the future going to
gravitate to like a 15% acrossthe board?
Aluminum and steel just got 50%tariff put on it, so that's
causing a lot of uproar.
One of the things I think weall have to kind of take a
(03:21):
tempered view of.
These like okay, canada is atcorrect me if I'm wrong are they
at 25%, 35%?
Speaker 2 (03:29):
Somewhere in there.
Speaker 3 (03:30):
But over 75% of products coming in from Canada
are exempted.
Speaker 2 (03:37):
Right USMCA coverage.
Speaker 3 (03:38):
Same with Mexico, so it's a lot grayer than what you
kind of originally see in themedia.
But that said, prices are goingto go up.
Speaker 2 (03:49):
Yeah, something you see the economists or hear them
talk about is the effectivetariff rate right.
So if you look at the summationof goods, coming in to your
point, those that might alreadyhave some provision in place,
protections, if you will, youreally have to kind of get that
and ultimately it comes down tothe individual company right and
what they're facing.
And, doug, I'm just curious,what's the nature of the tariff
(04:12):
conversation to the extent youcan share with us anyway at
Train?
I mean, you all not only buyinga lot of stuff from overseas
but also selling a lot of stuffaround the world too.
Speaker 3 (04:21):
I saw in the Wall Street Journal logistics
briefing this morning.
I can't remember whose quote itwas, but it said basically
anything shiny is going to getimpacted by these aluminum and
steel tariffs.
Well, you sell some stuff thathas a lot of shininess to it,
Absolutely.
Speaker 4 (04:34):
It's really interesting because I started my
career out early on in tradecompliance and I'm now using all
of those muscles again.
Right, I'm talking aboutsubstantial transformation of
compressors out of Mexico andhow that's going to drive our
sourcing.
I think from the traintechnologies perspective we've
come out and said it's probablyplus or minus $150 million of
(04:58):
risk for us.
We're going to figure out howwe manage that and where we need
to manage that cost structure,whether we take that or we look
to pass on some costs to ourcustomers.
I was reading an article lastweek about Caterpillar, where I
used to work, and their number'sin the billions.
They're like $1.2 to $1.5billion.
(05:19):
We've had a strategy at TrainTechnologies to in-region,
for-region for a number of yearsand we think that's helping us
manage through some of theambiguity and uncertainty that
all of these tariffs reallyprovide.
Speaker 3 (05:33):
A wise approach.
I think there was a bookwritten in 2013.
Speaker 4 (05:37):
Something about Epic.
Maybe Something about Epic thatrecommended yeah, in-region,
for-region.
Speaker 2 (05:43):
Yeah, that proposition of regionalization
was really ahead of its time.
Right, you still have exposureperhaps there.
But you know something else?
I was listening to a podcastjust yesterday, I think S&P
Global offered a really goodupshot on tariffs and there was
kind of a conclusive comment.
You know we're tending to viewthis all from a US-centric
(06:04):
perspective and that makes sense.
That's where we're sitting,that's where we live and work.
But one of the economists fromS and P said keep in mind, the U
?
S really only controls orinfluences about 15% of global
GDP.
There's 85% of trade takingplace that's not involving U S
companies or in and out of the US.
I think the comment was andthey're doing just fine.
(06:27):
Thank you very much.
Speaker 3 (06:28):
Well, not only that, it's sparking a lot of
discussions among those othercountries.
China and India are engaged inconversations.
China and Brazil are engaged inconversations that ultimately,
will have an impact on USproducts.
Speaker 4 (06:42):
It was only four years ago, five years ago, when
you saw India and China asdirect competitors to each other
in very unfriendly terms.
We were trying to get people toget visas between the two
countries and they weren'tallowing them to happen.
Speaker 2 (06:56):
Now they're talking about strategic partnerships,
yeah their trade leaders arecoming together having photo ops
, right, and you know it couldbe some element of posturing,
but there's probably also goingto be some substance behind it.
For sure, you've unloaded alittle bit on tariffs and, doug,
thanks for your perspective onhow you're navigating the
situation.
What do you want to move on tonext?
Speaker 3 (07:13):
I would say you know as you look across the supply
chain landscape.
I think one of the mostimpactful news events of the
last couple of weeks, at leastfrom a US domestic standpoint,
is the pending UP NorfolkSouthern merger to create, for
the first time in history, atrue transatlantic United States
domestic railroad.
I just read again this morningthat some of the more proactive
(07:38):
shareholders of CSX arechallenging them, at the risk of
firing the CEO, to engage inpotential mergers with BNSF and
Canadian Pacific to counter thatUPNS potential merger.
Doug, I don't know how muchshipping, probably with CAT.
(07:58):
You probably did more.
I don't know how much railshipping you do and how you
think that might influence thedomestic transportation
landscape.
Speaker 4 (08:06):
Yeah, we don't do a whole lot of rail shipping in
the train side, so most of myexperience is from the
Caterpillar side.
But you know, it's interestingto think about.
We're going to have thispossibility, but how much now
pricing power and control reallyis seated to that relationship,
and is that going to make itless competitive or more
competitive?
(08:27):
I think those are some of thethings that we might see play
out over time right.
Are they going to provide abetter service at a lower cost,
or are they going to provide amediocre service at a higher
cost, which you know?
That's some of the challenges,I think, with Rails.
Speaker 3 (08:40):
Yeah, and you know it's interesting.
On our faculty we have peoplefrom across the spectrum with
expertise areas.
I think Tom and I maybe less soyou definitely one railroad.
You lose degrees of freedom.
They're going to squeezepricing and you know and do all
(09:08):
kinds of things.
But others said, well, you gotto take into account some of the
efficiencies that will comefrom that.
Does that enable better serviceat lower cost?
That kind of stuff?
Speaker 2 (09:18):
Yeah, and I think there's also.
You know, those of us that havefairly long memories think the
last time, you know, time weentered into consolidation, the
rail industry you know the BNSFwasn't a great combination from
the outset A lot of servicedisruptions, and I'm going back
more than 20 years ago now butit resulted in a moratorium
being placed on any furtherconsolidation in that industry.
(09:41):
And so I think there's concernthat, hey, just because
conceptually this might make alot of sense to have East
meeting West and vice versa.
You know you can't just wave amagic wand and expect those
efficiencies to come about.
You know we're only talkingabout having a couple of Eastern
railroads and a couple ofWestern railroads, but then the
CN and the CP to the North theylike, oh yeah, well, we can get
(10:03):
involved south of the border,and they started taking direct
ownership of some considerableassets here and connecting to
Mexico, so truly having acontinental railroad.
So I think there's a bit of afeeling if the Canadians can do
it, why can't we do it righthere?
Speaker 3 (10:18):
I feel like we're playing a board game.
What is that?
There's this railroad boardgame.
I can't remember what it is.
Speaker 2 (10:23):
Are you talking about Monopoly?
Speaker 3 (10:25):
No, it's not.
No, no, it's a railroad.
It's specifically a railroad,and you kind of try to buy up
territory and put your assets inplace and all that kind of
stuff.
Okay, I'll have to think aboutwhat the name of it is Between
Monopoly and Risk.
I mean that's kind of likesupply chain games to me anymore
.
Speaker 2 (10:41):
I was thinking risks yeah.
Okay, so that's out there,that's out there and you know, I
think there are kind of betsbeing placed as to whether or
not this is going to be approvedultimately.
But it is interesting to seehow you know, the shipper
community is responding.
But also to your point, youknow the CSX and those
shareholders going, hey, we needto be ready to play.
Speaker 3 (11:00):
Of course you know it goes beyond just railroads too.
I mean inter.
Of course you know it goesbeyond just railroads too.
I mean intermodaltransportation, et cetera.
All gets impacted by that.
Speaker 2 (11:06):
Well, I remember, actually not long after
Berkshire Hathaway acquired theBNSF, I was on faculty at Ohio
State.
Warren Buffett came to campusactually not long after that
acquisition he was so excitedabout quote unquote his railroad
.
And you know he was talkingabout how the 21st century was
going to be the century of therailroads again.
(11:26):
And you know it was making abig play on sustainability, the
carbon footprint of moving thesame ton by truck-rail-truck
combos, far less.
You know, various times we'redriver shortages we're dealing
with on the highways and bywaysand you know this seems like a
natural solution.
You know that said, intermodalhasn't quite taken off to the
(11:48):
level we thought.
You know it seems like whenfuel prices get up, you know,
four or five, six dollars agallon suddenly it's like hey,
let's talk intermodal and shiftthat.
But, doug, you're saying you'renot a big user of the railroads
and intermodal.
Is that right?
Speaker 4 (12:00):
No, we really don't.
I think to your point.
It's a commodity drivenconversation, because I don't
think it works that smoothlyfrom an operational efficiency
perspective.
You know, you look at itconceptually, it looks like a
great solution, but all theserailroad interchanges,
congestion can get to be a realproblem, and how they manage
that track in and out, and itcan add days of time and you
(12:23):
just don't know what's happening.
It's like a black hole from thevisibility perspective.
Speaker 3 (12:28):
But you would think that if they could figure this
out, if that merger happens,they could figure it out.
Think of the potential ofbringing something in from
Europe or Asia to US East Coastport and intermodal railing it
across the country to, you know,to Denver, or you know Denver,
or even all the way to the WestCoast.
Speaker 4 (12:47):
Yeah, with consistency.
Speaker 3 (12:49):
With consistency and visibility Exactly.
Transparency.
Speaker 4 (12:53):
Yeah, we always think about that concept of standard
deviation.
Right, and how much standarddeviation in that transit time
do we have that's driving thatkind of volatility in your
planning signals.
Speaker 3 (13:03):
Well, I would say, the other thing that's kind of
the ongoing, it's almost aspervasive as tariffs is AI and
how are we using AI?
Here at our advisory boardmeeting today we had a
presentation from Sean McLeod ofAxel Logistics talking about
how they're implementing AI intheir freight brokerage business
and it was fascinating andwe'll continue to have these use
(13:25):
cases.
But that's out there.
It has technology implications,it has talent development
implications.
It, you know, just across theboard.
It has economic implicationsfrom headcount standpoint.
The most extreme of the techbros out in the West Coast, you
know, are saying by 2030, we'regoing to have 20% unemployment
because of AI replacing people.
(13:48):
I mean, that's an ongoingconversation and if it happens,
I would say that in manysituations, supply chain roles
will be some of the firstimpacted, because we do so much
rote manual work, bothadministrative and physical.
Speaker 4 (14:05):
Yeah, if you listen to the tech bros, they'll
basically say you guys are outof business because there's
going to be no entry-level jobs.
I'm not sure.
I really believe that.
I think that same kind of noisecame about when they talked
about the ATM machine, but Ithink it's going to change the
nature of work.
Speaker 3 (14:23):
Although I just heard a podcast Ezra Klein New York
Times podcast with a woman namedNatasha Saron.
She's an economist from Yaleand they said that we always use
the ATM example and for decadesit did not decrease the number
of bank tellers as predicted,but now it is.
So they said that there is somekind of lagged effect.
(14:45):
So AI may do that, but probablynot by 2030.
Speaker 4 (14:49):
But it makes you wonder is that really the ATM
machine or is that onlinebanking that really disrupted?
That Great point I don't gointo a bank branch.
Speaker 3 (14:58):
It would be the worst thing for me is if I actually
had to go into a bank branch.
Speaker 2 (15:03):
I actually bank with a company that does not have a
branch within three hours ofKnoxville, and how liberating is
that.
Yeah, but to your point though,you know it does seem the
nature of work is going tochange, and it was really great
to hear from Sean today, becausewe visited the shop at Axel
just earlier this summer and Icommented to him afterwards it's
(15:23):
like, wow, you all continue todouble down.
And I gave him so much creditfor having the gumption, the
courage to be innovating in thatspace.
And you know, my comment wasthat it seems like you are
fulfilling that prophecy of andthat they are able to create
better service provision fortheir clients and to do so at a
lower cost.
However, I was asking him about, you know, any aversion that
(15:47):
the clients have if they learnabout how AI is being used?
You know, are we taking some ofthe human touch out of the
business?
And he said you know they hadto be very selective about that
right.
Speaker 3 (15:57):
Well, the last thing he talked about was that AI
answering phones and how they'vebeen able to make it really
sound like it's in a beta phase,but really sound like somebody
truly answering the phone.
And, of course, my thoughtswent immediately, as I'm
starting to become one of theprime targets of scammers.
As a quasi elderly person, youknow it's like when somebody
(16:18):
calls me up.
How do I know it's Tom askingme for money?
Speaker 2 (16:21):
Like he always does.
I always do, that's right.
Speaker 3 (16:24):
Just keep saying yes, Ted, and we'll be all right.
Speaker 2 (16:26):
This is my Venmo really going to where I think
you need to go buy those Amazoncards, but I mean, those are the
downside of technology, right?
Speaker 3 (16:34):
I mean Doug and I were talking during the break
after that about we can make itdo so many things, but it makes
us upload our data, and so we'renot able to truly plumb the
opportunities because we have toworry about data security.
Speaker 4 (16:50):
Do you really want everything to be public?
Speaker 2 (16:52):
Right.
Speaker 4 (16:52):
There's so many things, personally and
professionally, you don't wanteveryone in the world to know
about, and I think that's one ofthe reasons why I think on the
internal side of ourorganization, we're moving at a
very measured pace because we'vegot an internal tool.
I think you were mentioning UThas one as well.
It's okay and we're improvingit, but it's really the
(17:14):
safeguards of our informationthat we have.
And it was kind of the samething when I was using ChatGPT.
Personally, I'm not going toput my personal specific
information out there, but I'mgoing to put information that
maybe it gives me a moreintelligent response than just a
simple Google search.
So you got to be reallycautious about that.
But Sean's presentation wasfantastic.
(17:35):
I think they're doing somereally great things on not only
driving efficiency but drivingmore revenue opportunity.
The numbers he was talkingabout of like the number of
loads that they're bidding onevery day with a 3% take rate.
I mean think if you wereputting people against that, how
many people it would take totry and just grow that increment
.
Speaker 3 (17:54):
And I was thinking of cashflow issues too their
ability to automatically capturebills of ladings and invoices
and proof of delivery.
How long would that take?
I think he had said one timewhen we went and visited that it
was usually like three to fourdays to get an email and capture
that proof of delivery beforeyou could bill somebody.
Well, now it happensinstantaneously.
So what does that do to yourcash flow?
Speaker 2 (18:16):
On that volume of business they're doing.
Speaker 4 (18:18):
Yeah, no, on the opposite side, we're very
focused on things that are goingto help our customers from an
AI perspective.
Ai perspective, we just boughta company in January called
BrainBox AI and how it's goingto help our large commercial
customers understand what'sgoing on within their
complicated building solutionslike the one we're in right now.
Right, thank you, by the way,for you guys.
(18:38):
Being a great customer of TraneTechnologies, I'm sure there's
a lot of good product in here.
But these implementations youthink about, we just assume the
temperature is going to be right.
That's just natural for us, andall the complexity that goes
into how you control thetemperature across X number of
rooms across X number ofenvironments is sort of that
(18:59):
secret sauce, and we're using AIto really help our customers in
that space.
Speaker 3 (19:03):
I think it's going to be a bottom up.
I mean, obviously, when there'sgood use cases, we're going to
adopt them.
It'll be top down, but I thinka lot of the innovation with AI
is going to be bottom up.
Doug, I mentioned to you that Ialways use your example when
you were with CAT and your teamwas kind of intimidated, I guess
, by using precursors to AI toautomate some of your
administrative processes, andyou kind of gamified it and had
(19:26):
them come up with ways thatdeveloped tremendous benefits
and all of a sudden everybodyembraced it and thought, oh,
this is cool, let's figure outwhat else we can use it for.
Speaker 4 (19:35):
Yeah, exactly, you have to create that environment
where it's kind of safe to playand experiment and then show the
results and tell your storyreally well.
When we're talking earlierabout in the planning
conversation, about thiscompelling conversation skill, I
call that storytelling, andit's as much about how you can
communicate, what is the impactof what you're doing, what's
(19:57):
that burning platform, the whybehind it, and I think that is
an underdeveloped skill set, Ithink in the business world.
Speaker 2 (20:06):
So how have you brought that logic, that
experience that you had at CATT,to your current role at Train?
Have you been able to bringmost or all of that goodness and
integrate it into your currentfunctioning role, or what are
you finding in the way ofdifferent?
Speaker 4 (20:22):
opportunities.
It's been a really interestingprocess for me.
I've been at Train now forabout 15 months and before I
joined Train, probably one ofthe reasons why they asked me to
join Train was there was quitea bit of disruption in the
network and the aftermarketspace that was impacting our
customers and at the same timethat they decided to move to a
(20:44):
regional structure, they alsocreated an aftermarket business
unit, separate from where it wasbefore that, and they said we
want to go run this as abusiness, but we need to improve
our performance to ourcustomers.
So really the first 12 monthsfor me was getting back to
basics.
How are we going to functioninto distribution center and
(21:05):
improve our overall performanceto our customers?
You know we have these differentorder types.
We have emergency orders andstock orders and when I was
looking at the metrics, we hademergency orders that were at
like 65% same day on time, butthey had an overall on time
measure, which included all thestock orders, of like 90% and I
(21:26):
said we're really not taking ourcustomer's point of view.
So we went, we focused onemergency orders and year we're
seeing a 30-point improvement inthose emergency orders on time
and the overall SLA has gone upas well.
So we've created that basicstability.
So our emergency orders havegone down by about 40%.
(21:47):
So get the availability outthere.
If you think about ourcustomers in the residential and
light commercial space, iftheir equipment's not running,
they're in an uncomfortableenvironment.
It's either the hottest day ofthe year or the coldest day of
the year.
That's when your stuff goes downAbsolutely and they don't want
to wait.
And when you're talking to awarehouse associate out in the
(22:09):
environment that they're workingin, what do they see?
Brown boxes, that's what theysee.
That they're working in, whatdo they see?
Brown boxes, that's what theysee.
So how do you make thatpersonal to them and talk to
them about hey, this brown boxis probably that part that you
needed when your airconditioning was down and it was
95 degrees in your house andmaking that more realistic to
them.
So we've done a lot on kind ofback to basics to drive
(22:32):
performance improvement andreally drive stability from an
availability side.
And now we're working on howwe're going to take our planning
capability and automation tothe next level.
So we just started with you guyson a project in the advanced
supply chain collaborative ondemand and how we need to do
better advanced demandsegmentation, customer
(22:52):
segmentation, because we've gota long skew of part numbers, a
really long tail in that skewset and all of those are
customers that their units aregoing to go down in the field if
we don't have those partsavailable to them and if we
can't get them, they're going togo find a solution somewhere
else.
And the really cool thing aboutTrane is we're in this growth
(23:14):
period From roughly March 2020,we kind of spun out from
Ingersoll Rand and became a pureplay climate control innovator
and we've grown from like $12.5billion to $20 billion in that
time period.
So we still have a long runwayto really take advantage of the
(23:36):
market that's out there for us,but we've got to be able to not
just have the product, but haveit where they need it and when
they need it at the right price.
Speaker 3 (23:46):
Right, I mean, it's that typical supply chain that
you talk about, and especiallywith after parts, I mean after
market.
That's really the businessthere, exactly.
If I'm getting a new unit inand a new build or something,
okay, if you're delayed a coupledays one way or the other,
that's fine.
Speaker 4 (24:00):
Not that big of a deal, right.
And then we also, as a part, wesupport our services business,
which is going into places likethese large chillers in your
buildings here and doing eitherpreventive maintenance or repair
if something's happening to it,doing either preventive
maintenance or repair ifsomething's happening to it.
And those technicians arehighly skilled, highly capable
individuals that we put years oftraining into.
(24:20):
We don't want them thinkingabout parts.
They shouldn't be spending anytime or energy thinking about
how am I going to have the partsto do this job, because that's
your asset utilization.
Play is to get that technicianto be most efficient.
So really those are kind of twobig pieces of what we're trying
to do in aftermarket is how dowe help services be more
effective and efficient andutilize their assets, and then
(24:42):
how do we drive availability toour customers so that they stay
in their comfortable environment.
Speaker 2 (24:47):
Well, and to the extent that you talk about new
build and you talk aboutmaintenance, sustaining
equipment, you know it takes meto some of the conversations
we've had with some previousguests that are talking about
kind of lifecycle management andjust kind of being that ongoing
steward of the technology thatyou're implementing and hey,
when it's time to move out intosomething that's more efficient,
(25:08):
you know we can help younavigate that.
That's what in academia we werecalling the service dominant
logic right Long time ago, asopposed to just pushing product.
But would you say Trane haskind of taken on some of that.
You know being a consultant orsteward of the assets and not
just someone who manufactures,distributes and sells the
hardware.
Speaker 4 (25:27):
Absolutely.
That's again, that's ourservices side of our business.
If you think about thecomplexity of controls right,
you remember we went through allthis chip shortage a few years
ago after COVID hit.
These controls get updatedevery three to five years and
you're kind of on that nextversion of capability and what
that means for the customer ismore energy efficiency, less
(25:48):
emissions, so us being able tohave those service contracts and
stay connected with thosecustomers and talk about, hey,
your unit could get a controlsupdate, for example, and then
you might see a 5%, 6%, 7%improvement on efficiency.
Because if you sort of look atthe built environment right now,
(26:08):
if you take from the meter towhere we're sitting right now,
you tend to lose 30% of theenergy available.
It's really incredible to thinkabout that.
Speaker 2 (26:18):
Yeah, it really is.
Speaker 4 (26:26):
You put another set of controls on that.
That can maybe take that from30 to 27 or 25, and it's
meaningful from the dollars andcents that your facilities
people are looking at every day.
Speaker 3 (26:31):
Yeah, that's huge.
I had no idea how much else dowe lose.
So that's just that one little.
I had no idea how much else dowe lose.
So that's just that one littlepart of the distribution grid.
How much do we lose upstreamfrom that?
Speaker 2 (26:39):
But it talks about raising the level of the
conversation from a justpurchase price right to the life
of the unit and total cost ofownership something we talk
about quite often.
But train becomes that partnerin helping to navigate those
conversations.
Speaker 4 (26:55):
And we'll go in for, say, a large chiller
installation, we'll go in andpropose to do a complete
refurbishment of that chiller.
So roughly between 15 and 20years we will tear that down,
rebuild it.
It is a like-new product.
We warranty it as if it's newand you get another 20 of life
cycle out of it, which is partof our sustainability.
Speaker 3 (27:18):
I was just going to bring that up.
I said that sounds like asustainability.
Speaker 4 (27:21):
If you look at our sustainability report, this is
something I knew to me as I waslearning more about HVAC.
It doesn't say we have astrategy around sustainability.
It says sustainability is ourstrategy and it's how we
differentiate for the customers.
You know we've got a by 2030,we have a pledge to help our
customers reduce one gigaton ofemissions.
(27:43):
I had to look up what a gigatonwas.
Speaker 1 (27:46):
Sounds like a lot, it's a lot.
Speaker 4 (27:47):
Sounds really heavy One billion tons of emissions
and we started that in 2020.
And we're about 25% of the waythere right now and it's a
flywheel effect, so you canimagine it's going to pick up as
we progress along.
That's the product innovationside electrification of heat,
reduction of emissions based onefficiencies, and then we've got
(28:10):
the whole piece of what are wedoing in our own operations.
And I was talking a little bitabout how we've seen that
revenue growth from 2020 to 2025.
In that time period we'vereduced our energy consumption
at our facilities by 3.2% andyou would say, well, 3.2% is not
that much, but think about 60%growth, at the same time
(28:33):
reducing your overall energyoutput by 3.2%.
And now in 2024, we kind ofstarted this whole effort on
what we call embodied carbon.
So it's how do we help improvethe overall supply chain for
emissions?
So we kind of move from helpour customers then go focus on
(28:54):
our own facilities and driveimprovement in energy
consumption, water consumptionand emissions.
And now we're focused on how dowe work on that upstream value
chain and we're taking the bigkey components of emission
creators.
You can imagine what they areLike.
We have now 20% of our steel islow carbon steel, Like we have
(29:15):
now.
20% of our steel is low carbonsteel and we've been the leader
in that space, trying to getother both peer groups and
people in the industry to go outand use low carbon steel as
part of their products, Becausethat's one of the ways that we
could try to take embodiedcarbon out.
So it's really interesting,coming new into the HVAC
industry and seeing Trane reallybe a leader as a climate
(29:36):
innovator and what we're doingto really kind of put that into
action across customers, our ownoperations and our inbound
supply chain.
Speaker 3 (29:46):
That's fascinating.
It really is.
Let's pivot.
Our producer, brian, has givenus the high sign that we're
getting close to time.
Let's pivot.
Briefly, then, to talent.
We'd given Doug a bunch oftopics I think we gave him about
35 questions and we've gottento three of them so far.
So, listeners out there, if youhave another five hours we'll be
(30:06):
with you.
Let's pivot really quickly totalent.
Every supply chain leader thatwe have in here talking to us as
a guest has a lot ofcontent-oriented
responsibilities, but at the endof the day, talent is a big
part of what you do.
Can you talk to us a little bitabout the kind of things that
are challenging you from atalent development standpoint,
(30:28):
both for new hires as well asyour existing teams?
Speaker 4 (30:30):
Yeah, absolutely so.
Right when I was joining theteam at Train was talking about
coming and starting recruitingat Tennessee and I'm like, well,
hey, I know that process, Iknow we can get engaged really
easy and kind of got the collegerecruiting process started for
us because I knew from myCaterpillar time how much value
we could get from thatconnection and the kind of
(30:52):
students you guys are puttingout connection and the kind of
students you guys are puttingout.
So we're really focused on that.
From an early talentdevelopment perspective, I think
we're going to now start to tryand engage more in some
classroom interactions to getour name out there a little bit
more, because a lot of peoplewill say I don't know train, you
know, what do you guys do.
So that's kind of the.
On the early talent side I'mstarting now with my team.
(31:13):
We've sent a couple peoplethrough the Leadership Academy,
we've sent one person throughthe Planning Academy, so I'm
getting us into those executiveeducation type programs.
So the benefit we have at Trainis we have a lot of long
tenured employees.
The challenge with that is theydon't necessarily know all of
the things that everyone else isdoing right.
(31:34):
So getting people to come tothe forum and getting exposed to
what's happening, like I'vedone that already.
We've gotten people come to theforum, starting last fall now
putting them through these execed programs, really just trying
to expose them to how we canhelp build their skills and
develop them.
Because I think my overallmaterial strategy is let's find
(31:58):
the redundant manual work andlet's automate that, not for a
headcount reduction, but I needto redeploy to the higher value
add Because right now thattransactional work is pulling us
away from that higher value add.
So, as we've kind ofestablished that, back to basics
, get everything going in theright direction.
Now it's like how are we goingto start to do upskilling?
(32:20):
How are we going to start toreally drive the conversation
about where can we add value inthe integrated supply chain?
Speaker 3 (32:28):
Fascinating.
Well, Doug, you've always beena great partner of ours.
As I mentioned earlier, we'vehad a relationship from several
years ago when you were in theexecutive MBA program.
It's been a real joy for me tokind of watch your career as you
moved up in Caterpillar and nowmoved over to Trane and really
have a huge responsibility formanaging the end-to-end supply
(32:48):
chain for your business.
Speaker 2 (32:50):
And brought Trane into our fold as well.
We always have a little bit ofa hang when we lose someone at
one of our corporate partners,but oh, he's going to train and
you've really helped toreinforce that relationship, so
we're very appreciative of that.
Speaker 3 (33:02):
Yeah, you mentioned that.
You know you're working on oneof our advanced supply chain
collaborative projects too.
Lance Saunders is working thatproject.
He's talked to me a little bitabout what you guys are looking
at.
Exciting stuff.
Speaker 2 (33:12):
Yeah, plugging in in a lot of different ways.
And, hey, thank you very muchfor allowing us to be in
climate-controlled comfort on avery hot and steamy day here in
Rocky Top.
And again, we appreciate thebusiness at a lot of different
levels.
But what do you think, ted,have we kind of closed out?
We didn't have anyundergraduates barge in on us in
the middle of this recording inthe house of business.
Speaker 3 (33:34):
It's too early in the semester.
They're not working on theirprojects yet.
Yeah right, fair enough.
Doug, thanks again for spendingtime with us.
Great to have you with us, andwe'll continue this conversation
over the years, I'm sure.
Speaker 4 (33:45):
Thank you for having me both.
It's an honor and a privilegeto be here with you guys.
You're two legends in theindustry and it's great to call
you friends.
Thanks so much, doug.
Speaker 2 (33:55):
All right, folks.
With that, we'll close out.
Be well, go, vols, and staytuned for a lot of great
podcasts coming to you theBalance of the Fall.
Oh, and one more thing beforewe go, we need to remind folks
to sign up now for the FallSupply Chain Forum, november 4th
through 6th.
Registration is open.
(34:18):
Go to gsciutkedu and all thedetails you need to get
registered will be right therewaiting for you.
Hope to see you here on RockyTop in November.
Speaker 1 (34:23):
Thanks for tuning in to Tennessee on Supply Chain
Management.
If you enjoyed the episode,subscribe today on your favorite
listening platform to get allof our episodes as soon as they
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
(34:45):
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 inpressing 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.
Speaker 2 (00:28):
Hello and welcome to the Tennessee on Supply Chain
Management podcast, professorTom Goldsby coming to you from
Rocky Top with the back toschool edition of the podcast.
What do you think of?
Speaker 3 (00:38):
that, hey, ted, how you doing Absolutely.
I'm doing great, Tom, how youdoing Great to be here.
Speaker 2 (00:43):
It's Professor Ted Stank alongside me here, and hey
, we've got another individualin the room today.
You want to introduce our guest?
I do.
Speaker 3 (00:51):
I do Doug Gray, vice President of Integrated Supply
Chain with Trane Technologies.
Proud University of TennesseeExecutive MBA alum.
Doug and I have been friendsfor a long time Not quite as
long as you and I, tom.
Speaker 2 (01:02):
Okay, let's go back a ways, though.
We've done Gay Street together,tom.
We have absolutely Thanks forhaving me.
Guys, I appreciate the invite.
What brings?
Speaker 4 (01:11):
you to town, the Global Supply Chain Advisory
Board, in here from dinner lastnight and today and getting to
hear all the great things thatUT is working on.
Speaker 2 (01:19):
That's right.
So, as I said at the outset, itis our back to school edition.
I kind of threw Ted off withthat, but we didn't talk about
that beforehand.
Speaker 3 (01:28):
We're here with 40,705 of our favorite
undergraduate and graduatestudents.
Speaker 2 (01:33):
It is bustling here on Rocky Top.
We just started classes acouple of days ago.
Hey, I'm really excited becausewe launched the new MS in
Global Supply Chain ProgramReimagining for some time.
So we're really proud to have15 students in our introductory
cohort there.
But you're right, they're inthe larger context of nearly
41,000 students, a record numberhere at UT Knoxville, and you
(01:57):
know there's just so muchexcitement when the kids come
back.
You know it's harder to find atable at a restaurant and I can
never get a machine at thefitness center, but despite
those, challenges.
Speaker 3 (02:09):
You have to time when you come on campus.
Speaker 2 (02:11):
You do that's right.
Speaker 3 (02:12):
Finding a parking spot is impossible, but there is
an excitement to it.
Speaker 2 (02:14):
There is, and we haven't even played a football
game yet.
No Right.
Speaker 3 (02:17):
I'm thinking Tennessee Vols are going to win
the national championship thisyear.
Oh, my goodness this year Ipredict 42-17 over University of
Michigan in the final.
I like that.
Speaker 2 (02:28):
That was a pointed comment, I think, to Doug.
We talked about this beforehand.
Speaker 3 (02:32):
We weren't going to bash the University of Michigan
in this, but anyway, doug is aUniversity of Michigan undergrad
but he's got the big orangegraduate.
Speaker 2 (02:42):
That's right.
He eventually got it right, andas we all have for that matter.
But yeah, with regard to backto school, a lot going on here,
rocky Top, also a lot out andabout in the world.
Where do you think we ought tobreak the ice in terms of
talking about supply chain?
So I'll tell you what.
Speaker 3 (02:58):
I am freaking tired of talking about tariffs.
Okay, real brief tariffs.
Are there Probably at somepoint in the future going to
gravitate to like a 15% acrossthe board?
Aluminum and steel just got 50%tariff put on it, so that's
causing a lot of uproar.
One of the things I think weall have to kind of take a
(03:21):
tempered view of.
These like okay, canada is atcorrect me if I'm wrong are they
at 25%, 35%?
Speaker 2 (03:29):
Somewhere in there.
Speaker 3 (03:30):
But over 75% of products coming in from Canada
are exempted.
Speaker 2 (03:37):
Right USMCA coverage.
Speaker 3 (03:38):
Same with Mexico, so it's a lot grayer than what you
kind of originally see in themedia.
But that said, prices are goingto go up.
Speaker 2 (03:49):
Yeah, something you see the economists or hear them
talk about is the effectivetariff rate right.
So if you look at the summationof goods, coming in to your
point, those that might alreadyhave some provision in place,
protections, if you will, youreally have to kind of get that
and ultimately it comes down tothe individual company right and
what they're facing.
And, doug, I'm just curious,what's the nature of the tariff
(04:12):
conversation to the extent youcan share with us anyway at
Train?
I mean, you all not only buyinga lot of stuff from overseas
but also selling a lot of stuffaround the world too.
Speaker 3 (04:21):
I saw in the Wall Street Journal logistics
briefing this morning.
I can't remember whose quote itwas, but it said basically
anything shiny is going to getimpacted by these aluminum and
steel tariffs.
Well, you sell some stuff thathas a lot of shininess to it,
Absolutely.
Speaker 4 (04:34):
It's really interesting because I started my
career out early on in tradecompliance and I'm now using all
of those muscles again.
Right, I'm talking aboutsubstantial transformation of
compressors out of Mexico andhow that's going to drive our
sourcing.
I think from the traintechnologies perspective we've
come out and said it's probablyplus or minus $150 million of
(04:58):
risk for us.
We're going to figure out howwe manage that and where we need
to manage that cost structure,whether we take that or we look
to pass on some costs to ourcustomers.
I was reading an article lastweek about Caterpillar, where I
used to work, and their number'sin the billions.
They're like $1.2 to $1.5billion.
(05:19):
We've had a strategy at TrainTechnologies to in-region,
for-region for a number of yearsand we think that's helping us
manage through some of theambiguity and uncertainty that
all of these tariffs reallyprovide.
Speaker 3 (05:33):
A wise approach.
I think there was a bookwritten in 2013.
Speaker 4 (05:37):
Something about Epic.
Maybe Something about Epic thatrecommended yeah, in-region,
for-region.
Speaker 2 (05:43):
Yeah, that proposition of regionalization
was really ahead of its time.
Right, you still have exposureperhaps there.
But you know something else?
I was listening to a podcastjust yesterday, I think S&P
Global offered a really goodupshot on tariffs and there was
kind of a conclusive comment.
You know we're tending to viewthis all from a US-centric
(06:04):
perspective and that makes sense.
That's where we're sitting,that's where we live and work.
But one of the economists fromS and P said keep in mind, the U
?
S really only controls orinfluences about 15% of global
GDP.
There's 85% of trade takingplace that's not involving U S
companies or in and out of the US.
I think the comment was andthey're doing just fine.
(06:27):
Thank you very much.
Speaker 3 (06:28):
Well, not only that, it's sparking a lot of
discussions among those othercountries.
China and India are engaged inconversations.
China and Brazil are engaged inconversations that ultimately,
will have an impact on USproducts.
Speaker 4 (06:42):
It was only four years ago, five years ago, when
you saw India and China asdirect competitors to each other
in very unfriendly terms.
We were trying to get people toget visas between the two
countries and they weren'tallowing them to happen.
Speaker 2 (06:56):
Now they're talking about strategic partnerships,
yeah their trade leaders arecoming together having photo ops
, right, and you know it couldbe some element of posturing,
but there's probably also goingto be some substance behind it.
For sure, you've unloaded alittle bit on tariffs and, doug,
thanks for your perspective onhow you're navigating the
situation.
What do you want to move on tonext?
Speaker 3 (07:13):
I would say you know as you look across the supply
chain landscape.
I think one of the mostimpactful news events of the
last couple of weeks, at leastfrom a US domestic standpoint,
is the pending UP NorfolkSouthern merger to create, for
the first time in history, atrue transatlantic United States
domestic railroad.
I just read again this morningthat some of the more proactive
(07:38):
shareholders of CSX arechallenging them, at the risk of
firing the CEO, to engage inpotential mergers with BNSF and
Canadian Pacific to counter thatUPNS potential merger.
Doug, I don't know how muchshipping, probably with CAT.
(07:58):
You probably did more.
I don't know how much railshipping you do and how you
think that might influence thedomestic transportation
landscape.
Speaker 4 (08:06):
Yeah, we don't do a whole lot of rail shipping in
the train side, so most of myexperience is from the
Caterpillar side.
But you know, it's interestingto think about.
We're going to have thispossibility, but how much now
pricing power and control reallyis seated to that relationship,
and is that going to make itless competitive or more
competitive?
(08:27):
I think those are some of thethings that we might see play
out over time right.
Are they going to provide abetter service at a lower cost,
or are they going to provide amediocre service at a higher
cost, which you know?
That's some of the challenges,I think, with Rails.
Speaker 3 (08:40):
Yeah, and you know it's interesting.
On our faculty we have peoplefrom across the spectrum with
expertise areas.
I think Tom and I maybe less soyou definitely one railroad.
You lose degrees of freedom.
They're going to squeezepricing and you know and do all
(09:08):
kinds of things.
But others said, well, you gotto take into account some of the
efficiencies that will comefrom that.
Does that enable better serviceat lower cost?
That kind of stuff?
Speaker 2 (09:18):
Yeah, and I think there's also.
You know, those of us that havefairly long memories think the
last time, you know, time weentered into consolidation, the
rail industry you know the BNSFwasn't a great combination from
the outset A lot of servicedisruptions, and I'm going back
more than 20 years ago now butit resulted in a moratorium
being placed on any furtherconsolidation in that industry.
(09:41):
And so I think there's concernthat, hey, just because
conceptually this might make alot of sense to have East
meeting West and vice versa.
You know you can't just wave amagic wand and expect those
efficiencies to come about.
You know we're only talkingabout having a couple of Eastern
railroads and a couple ofWestern railroads, but then the
CN and the CP to the North theylike, oh yeah, well, we can get
(10:03):
involved south of the border,and they started taking direct
ownership of some considerableassets here and connecting to
Mexico, so truly having acontinental railroad.
So I think there's a bit of afeeling if the Canadians can do
it, why can't we do it righthere?
Speaker 3 (10:18):
I feel like we're playing a board game.
What is that?
There's this railroad boardgame.
I can't remember what it is.
Speaker 2 (10:23):
Are you talking about Monopoly?
Speaker 3 (10:25):
No, it's not.
No, no, it's a railroad.
It's specifically a railroad,and you kind of try to buy up
territory and put your assets inplace and all that kind of
stuff.
Okay, I'll have to think aboutwhat the name of it is Between
Monopoly and Risk.
I mean that's kind of likesupply chain games to me anymore
.
Speaker 2 (10:41):
I was thinking risks yeah.
Okay, so that's out there,that's out there and you know, I
think there are kind of betsbeing placed as to whether or
not this is going to be approvedultimately.
But it is interesting to seehow you know, the shipper
community is responding.
But also to your point, youknow the CSX and those
shareholders going, hey, we needto be ready to play.
Speaker 3 (11:00):
Of course you know it goes beyond just railroads too.
I mean inter.
Of course you know it goesbeyond just railroads too.
I mean intermodaltransportation, et cetera.
All gets impacted by that.
Speaker 2 (11:06):
Well, I remember, actually not long after
Berkshire Hathaway acquired theBNSF, I was on faculty at Ohio
State.
Warren Buffett came to campusactually not long after that
acquisition he was so excitedabout quote unquote his railroad
.
And you know he was talkingabout how the 21st century was
going to be the century of therailroads again.
(11:26):
And you know it was making abig play on sustainability, the
carbon footprint of moving thesame ton by truck-rail-truck
combos, far less.
You know, various times we'redriver shortages we're dealing
with on the highways and bywaysand you know this seems like a
natural solution.
You know that said, intermodalhasn't quite taken off to the
(11:48):
level we thought.
You know it seems like whenfuel prices get up, you know,
four or five, six dollars agallon suddenly it's like hey,
let's talk intermodal and shiftthat.
But, doug, you're saying you'renot a big user of the railroads
and intermodal.
Is that right?
Speaker 4 (12:00):
No, we really don't.
I think to your point.
It's a commodity drivenconversation, because I don't
think it works that smoothlyfrom an operational efficiency
perspective.
You know, you look at itconceptually, it looks like a
great solution, but all theserailroad interchanges,
congestion can get to be a realproblem, and how they manage
that track in and out, and itcan add days of time and you
(12:23):
just don't know what's happening.
It's like a black hole from thevisibility perspective.
Speaker 3 (12:28):
But you would think that if they could figure this
out, if that merger happens,they could figure it out.
Think of the potential ofbringing something in from
Europe or Asia to US East Coastport and intermodal railing it
across the country to, you know,to Denver, or you know Denver,
or even all the way to the WestCoast.
Speaker 4 (12:47):
Yeah, with consistency.
Speaker 3 (12:49):
With consistency and visibility Exactly.
Transparency.
Speaker 4 (12:53):
Yeah, we always think about that concept of standard
deviation.
Right, and how much standarddeviation in that transit time
do we have that's driving thatkind of volatility in your
planning signals.
Speaker 3 (13:03):
Well, I would say, the other thing that's kind of
the ongoing, it's almost aspervasive as tariffs is AI and
how are we using AI?
Here at our advisory boardmeeting today we had a
presentation from Sean McLeod ofAxel Logistics talking about
how they're implementing AI intheir freight brokerage business
and it was fascinating andwe'll continue to have these use
(13:25):
cases.
But that's out there.
It has technology implications,it has talent development
implications.
It, you know, just across theboard.
It has economic implicationsfrom headcount standpoint.
The most extreme of the techbros out in the West Coast, you
know, are saying by 2030, we'regoing to have 20% unemployment
because of AI replacing people.
(13:48):
I mean, that's an ongoingconversation and if it happens,
I would say that in manysituations, supply chain roles
will be some of the firstimpacted, because we do so much
rote manual work, bothadministrative and physical.
Speaker 4 (14:05):
Yeah, if you listen to the tech bros, they'll
basically say you guys are outof business because there's
going to be no entry-level jobs.
I'm not sure.
I really believe that.
I think that same kind of noisecame about when they talked
about the ATM machine, but Ithink it's going to change the
nature of work.
Speaker 3 (14:23):
Although I just heard a podcast Ezra Klein New York
Times podcast with a woman namedNatasha Saron.
She's an economist from Yaleand they said that we always use
the ATM example and for decadesit did not decrease the number
of bank tellers as predicted,but now it is.
So they said that there is somekind of lagged effect.
(14:45):
So AI may do that, but probablynot by 2030.
Speaker 4 (14:49):
But it makes you wonder is that really the ATM
machine or is that onlinebanking that really disrupted?
That Great point I don't gointo a bank branch.
Speaker 3 (14:58):
It would be the worst thing for me is if I actually
had to go into a bank branch.
Speaker 2 (15:03):
I actually bank with a company that does not have a
branch within three hours ofKnoxville, and how liberating is
that.
Yeah, but to your point though,you know it does seem the
nature of work is going tochange, and it was really great
to hear from Sean today, becausewe visited the shop at Axel
just earlier this summer and Icommented to him afterwards it's
(15:23):
like, wow, you all continue todouble down.
And I gave him so much creditfor having the gumption, the
courage to be innovating in thatspace.
And you know, my comment wasthat it seems like you are
fulfilling that prophecy of andthat they are able to create
better service provision fortheir clients and to do so at a
lower cost.
However, I was asking him about, you know, any aversion that
(15:47):
the clients have if they learnabout how AI is being used?
You know, are we taking some ofthe human touch out of the
business?
And he said you know they hadto be very selective about that
right.
Speaker 3 (15:57):
Well, the last thing he talked about was that AI
answering phones and how they'vebeen able to make it really
sound like it's in a beta phase,but really sound like somebody
truly answering the phone.
And, of course, my thoughtswent immediately, as I'm
starting to become one of theprime targets of scammers.
As a quasi elderly person, youknow it's like when somebody
(16:18):
calls me up.
How do I know it's Tom askingme for money?
Speaker 2 (16:21):
Like he always does.
I always do, that's right.
Speaker 3 (16:24):
Just keep saying yes, Ted, and we'll be all right.
Speaker 2 (16:26):
This is my Venmo really going to where I think
you need to go buy those Amazoncards, but I mean, those are the
downside of technology, right?
Speaker 3 (16:34):
I mean Doug and I were talking during the break
after that about we can make itdo so many things, but it makes
us upload our data, and so we'renot able to truly plumb the
opportunities because we have toworry about data security.
Speaker 4 (16:50):
Do you really want everything to be public?
Speaker 2 (16:52):
Right.
Speaker 4 (16:52):
There's so many things, personally and
professionally, you don't wanteveryone in the world to know
about, and I think that's one ofthe reasons why I think on the
internal side of ourorganization, we're moving at a
very measured pace because we'vegot an internal tool.
I think you were mentioning UThas one as well.
It's okay and we're improvingit, but it's really the
(17:14):
safeguards of our informationthat we have.
And it was kind of the samething when I was using ChatGPT.
Personally, I'm not going toput my personal specific
information out there, but I'mgoing to put information that
maybe it gives me a moreintelligent response than just a
simple Google search.
So you got to be reallycautious about that.
But Sean's presentation wasfantastic.
(17:35):
I think they're doing somereally great things on not only
driving efficiency but drivingmore revenue opportunity.
The numbers he was talkingabout of like the number of
loads that they're bidding onevery day with a 3% take rate.
I mean think if you wereputting people against that, how
many people it would take totry and just grow that increment
.
Speaker 3 (17:54):
And I was thinking of cashflow issues too their
ability to automatically capturebills of ladings and invoices
and proof of delivery.
How long would that take?
I think he had said one timewhen we went and visited that it
was usually like three to fourdays to get an email and capture
that proof of delivery beforeyou could bill somebody.
Well, now it happensinstantaneously.
So what does that do to yourcash flow?
Speaker 2 (18:16):
On that volume of business they're doing.
Speaker 4 (18:18):
Yeah, no, on the opposite side, we're very
focused on things that are goingto help our customers from an
AI perspective.
Ai perspective, we just boughta company in January called
BrainBox AI and how it's goingto help our large commercial
customers understand what'sgoing on within their
complicated building solutionslike the one we're in right now.
Right, thank you, by the way,for you guys.
(18:38):
Being a great customer of TraneTechnologies, I'm sure there's
a lot of good product in here.
But these implementations youthink about, we just assume the
temperature is going to be right.
That's just natural for us, andall the complexity that goes
into how you control thetemperature across X number of
rooms across X number ofenvironments is sort of that
(18:59):
secret sauce, and we're using AIto really help our customers in
that space.
Speaker 3 (19:03):
I think it's going to be a bottom up.
I mean, obviously, when there'sgood use cases, we're going to
adopt them.
It'll be top down, but I thinka lot of the innovation with AI
is going to be bottom up.
Doug, I mentioned to you that Ialways use your example when
you were with CAT and your teamwas kind of intimidated, I guess
, by using precursors to AI toautomate some of your
administrative processes, andyou kind of gamified it and had
(19:26):
them come up with ways thatdeveloped tremendous benefits
and all of a sudden everybodyembraced it and thought, oh,
this is cool, let's figure outwhat else we can use it for.
Speaker 4 (19:35):
Yeah, exactly, you have to create that environment
where it's kind of safe to playand experiment and then show the
results and tell your storyreally well.
When we're talking earlierabout in the planning
conversation, about thiscompelling conversation skill, I
call that storytelling, andit's as much about how you can
communicate, what is the impactof what you're doing, what's
(19:57):
that burning platform, the whybehind it, and I think that is
an underdeveloped skill set, Ithink in the business world.
Speaker 2 (20:06):
So how have you brought that logic, that
experience that you had at CATT,to your current role at Train?
Have you been able to bringmost or all of that goodness and
integrate it into your currentfunctioning role, or what are
you finding in the way ofdifferent?
Speaker 4 (20:22):
opportunities.
It's been a really interestingprocess for me.
I've been at Train now forabout 15 months and before I
joined Train, probably one ofthe reasons why they asked me to
join Train was there was quitea bit of disruption in the
network and the aftermarketspace that was impacting our
customers and at the same timethat they decided to move to a
(20:44):
regional structure, they alsocreated an aftermarket business
unit, separate from where it wasbefore that, and they said we
want to go run this as abusiness, but we need to improve
our performance to ourcustomers.
So really the first 12 monthsfor me was getting back to
basics.
How are we going to functioninto distribution center and
(21:05):
improve our overall performanceto our customers?
You know we have these differentorder types.
We have emergency orders andstock orders and when I was
looking at the metrics, we hademergency orders that were at
like 65% same day on time, butthey had an overall on time
measure, which included all thestock orders, of like 90% and I
(21:26):
said we're really not taking ourcustomer's point of view.
So we went, we focused onemergency orders and year we're
seeing a 30-point improvement inthose emergency orders on time
and the overall SLA has gone upas well.
So we've created that basicstability.
So our emergency orders havegone down by about 40%.
(21:47):
So get the availability outthere.
If you think about ourcustomers in the residential and
light commercial space, iftheir equipment's not running,
they're in an uncomfortableenvironment.
It's either the hottest day ofthe year or the coldest day of
the year.
That's when your stuff goes downAbsolutely and they don't want
to wait.
And when you're talking to awarehouse associate out in the
(22:09):
environment that they're workingin, what do they see?
Brown boxes, that's what theysee.
That they're working in, whatdo they see?
Brown boxes, that's what theysee.
So how do you make thatpersonal to them and talk to
them about hey, this brown boxis probably that part that you
needed when your airconditioning was down and it was
95 degrees in your house andmaking that more realistic to
them.
So we've done a lot on kind ofback to basics to drive
(22:32):
performance improvement andreally drive stability from an
availability side.
And now we're working on howwe're going to take our planning
capability and automation tothe next level.
So we just started with you guyson a project in the advanced
supply chain collaborative ondemand and how we need to do
better advanced demandsegmentation, customer
(22:52):
segmentation, because we've gota long skew of part numbers, a
really long tail in that skewset and all of those are
customers that their units aregoing to go down in the field if
we don't have those partsavailable to them and if we
can't get them, they're going togo find a solution somewhere
else.
And the really cool thing aboutTrane is we're in this growth
(23:14):
period From roughly March 2020,we kind of spun out from
Ingersoll Rand and became a pureplay climate control innovator
and we've grown from like $12.5billion to $20 billion in that
time period.
So we still have a long runwayto really take advantage of the
(23:36):
market that's out there for us,but we've got to be able to not
just have the product, but haveit where they need it and when
they need it at the right price.
Speaker 3 (23:46):
Right, I mean, it's that typical supply chain that
you talk about, and especiallywith after parts, I mean after
market.
That's really the businessthere, exactly.
If I'm getting a new unit inand a new build or something,
okay, if you're delayed a coupledays one way or the other,
that's fine.
Speaker 4 (24:00):
Not that big of a deal, right.
And then we also, as a part, wesupport our services business,
which is going into places likethese large chillers in your
buildings here and doing eitherpreventive maintenance or repair
if something's happening to it,doing either preventive
maintenance or repair ifsomething's happening to it.
And those technicians arehighly skilled, highly capable
individuals that we put years oftraining into.
(24:20):
We don't want them thinkingabout parts.
They shouldn't be spending anytime or energy thinking about
how am I going to have the partsto do this job, because that's
your asset utilization.
Play is to get that technicianto be most efficient.
So really those are kind of twobig pieces of what we're trying
to do in aftermarket is how dowe help services be more
effective and efficient andutilize their assets, and then
(24:42):
how do we drive availability toour customers so that they stay
in their comfortable environment.
Speaker 2 (24:47):
Well, and to the extent that you talk about new
build and you talk aboutmaintenance, sustaining
equipment, you know it takes meto some of the conversations
we've had with some previousguests that are talking about
kind of lifecycle management andjust kind of being that ongoing
steward of the technology thatyou're implementing and hey,
when it's time to move out intosomething that's more efficient,
(25:08):
you know we can help younavigate that.
That's what in academia we werecalling the service dominant
logic right Long time ago, asopposed to just pushing product.
But would you say Trane haskind of taken on some of that.
You know being a consultant orsteward of the assets and not
just someone who manufactures,distributes and sells the
hardware.
Speaker 4 (25:27):
Absolutely.
That's again, that's ourservices side of our business.
If you think about thecomplexity of controls right,
you remember we went through allthis chip shortage a few years
ago after COVID hit.
These controls get updatedevery three to five years and
you're kind of on that nextversion of capability and what
that means for the customer ismore energy efficiency, less
(25:48):
emissions, so us being able tohave those service contracts and
stay connected with thosecustomers and talk about, hey,
your unit could get a controlsupdate, for example, and then
you might see a 5%, 6%, 7%improvement on efficiency.
Because if you sort of look atthe built environment right now,
(26:08):
if you take from the meter towhere we're sitting right now,
you tend to lose 30% of theenergy available.
It's really incredible to thinkabout that.
Speaker 2 (26:18):
Yeah, it really is.
Speaker 4 (26:26):
You put another set of controls on that.
That can maybe take that from30 to 27 or 25, and it's
meaningful from the dollars andcents that your facilities
people are looking at every day.
Speaker 3 (26:31):
Yeah, that's huge.
I had no idea how much else dowe lose.
So that's just that one little.
I had no idea how much else dowe lose.
So that's just that one littlepart of the distribution grid.
How much do we lose upstreamfrom that?
Speaker 2 (26:39):
But it talks about raising the level of the
conversation from a justpurchase price right to the life
of the unit and total cost ofownership something we talk
about quite often.
But train becomes that partnerin helping to navigate those
conversations.
Speaker 4 (26:55):
And we'll go in for, say, a large chiller
installation, we'll go in andpropose to do a complete
refurbishment of that chiller.
So roughly between 15 and 20years we will tear that down,
rebuild it.
It is a like-new product.
We warranty it as if it's newand you get another 20 of life
cycle out of it, which is partof our sustainability.
Speaker 3 (27:18):
I was just going to bring that up.
I said that sounds like asustainability.
Speaker 4 (27:21):
If you look at our sustainability report, this is
something I knew to me as I waslearning more about HVAC.
It doesn't say we have astrategy around sustainability.
It says sustainability is ourstrategy and it's how we
differentiate for the customers.
You know we've got a by 2030,we have a pledge to help our
customers reduce one gigaton ofemissions.
(27:43):
I had to look up what a gigatonwas.
Speaker 1 (27:46):
Sounds like a lot, it's a lot.
Speaker 4 (27:47):
Sounds really heavy One billion tons of emissions
and we started that in 2020.
And we're about 25% of the waythere right now and it's a
flywheel effect, so you canimagine it's going to pick up as
we progress along.
That's the product innovationside electrification of heat,
reduction of emissions based onefficiencies, and then we've got
(28:10):
the whole piece of what are wedoing in our own operations.
And I was talking a little bitabout how we've seen that
revenue growth from 2020 to 2025.
In that time period we'vereduced our energy consumption
at our facilities by 3.2% andyou would say, well, 3.2% is not
that much, but think about 60%growth, at the same time
(28:33):
reducing your overall energyoutput by 3.2%.
And now in 2024, we kind ofstarted this whole effort on
what we call embodied carbon.
So it's how do we help improvethe overall supply chain for
emissions?
So we kind of move from helpour customers then go focus on
(28:54):
our own facilities and driveimprovement in energy
consumption, water consumptionand emissions.
And now we're focused on how dowe work on that upstream value
chain and we're taking the bigkey components of emission
creators.
You can imagine what they areLike.
We have now 20% of our steel islow carbon steel, Like we have
(29:15):
now.
20% of our steel is low carbonsteel and we've been the leader
in that space, trying to getother both peer groups and
people in the industry to go outand use low carbon steel as
part of their products, Becausethat's one of the ways that we
could try to take embodiedcarbon out.
So it's really interesting,coming new into the HVAC
industry and seeing Trane reallybe a leader as a climate
(29:36):
innovator and what we're doingto really kind of put that into
action across customers, our ownoperations and our inbound
supply chain.
Speaker 3 (29:46):
That's fascinating.
It really is.
Let's pivot.
Our producer, brian, has givenus the high sign that we're
getting close to time.
Let's pivot.
Briefly, then, to talent.
We'd given Doug a bunch oftopics I think we gave him about
35 questions and we've gottento three of them so far.
So, listeners out there, if youhave another five hours we'll be
(30:06):
with you.
Let's pivot really quickly totalent.
Every supply chain leader thatwe have in here talking to us as
a guest has a lot ofcontent-oriented
responsibilities, but at the endof the day, talent is a big
part of what you do.
Can you talk to us a little bitabout the kind of things that
are challenging you from atalent development standpoint,
(30:28):
both for new hires as well asyour existing teams?
Speaker 4 (30:30):
Yeah, absolutely so.
Right when I was joining theteam at Train was talking about
coming and starting recruitingat Tennessee and I'm like, well,
hey, I know that process, Iknow we can get engaged really
easy and kind of got the collegerecruiting process started for
us because I knew from myCaterpillar time how much value
we could get from thatconnection and the kind of
(30:52):
students you guys are puttingout connection and the kind of
students you guys are puttingout.
So we're really focused on that.
From an early talentdevelopment perspective, I think
we're going to now start to tryand engage more in some
classroom interactions to getour name out there a little bit
more, because a lot of peoplewill say I don't know train, you
know, what do you guys do.
So that's kind of the.
On the early talent side I'mstarting now with my team.
(31:13):
We've sent a couple peoplethrough the Leadership Academy,
we've sent one person throughthe Planning Academy, so I'm
getting us into those executiveeducation type programs.
So the benefit we have at Trainis we have a lot of long
tenured employees.
The challenge with that is theydon't necessarily know all of
the things that everyone else isdoing right.
(31:34):
So getting people to come tothe forum and getting exposed to
what's happening, like I'vedone that already.
We've gotten people come to theforum, starting last fall now
putting them through these execed programs, really just trying
to expose them to how we canhelp build their skills and
develop them.
Because I think my overallmaterial strategy is let's find
(31:58):
the redundant manual work andlet's automate that, not for a
headcount reduction, but I needto redeploy to the higher value
add Because right now thattransactional work is pulling us
away from that higher value add.
So, as we've kind ofestablished that, back to basics
, get everything going in theright direction.
Now it's like how are we goingto start to do upskilling?
(32:20):
How are we going to start toreally drive the conversation
about where can we add value inthe integrated supply chain?
Speaker 3 (32:28):
Fascinating.
Well, Doug, you've always beena great partner of ours.
As I mentioned earlier, we'vehad a relationship from several
years ago when you were in theexecutive MBA program.
It's been a real joy for me tokind of watch your career as you
moved up in Caterpillar and nowmoved over to Trane and really
have a huge responsibility formanaging the end-to-end supply
(32:48):
chain for your business.
Speaker 2 (32:50):
And brought Trane into our fold as well.
We always have a little bit ofa hang when we lose someone at
one of our corporate partners,but oh, he's going to train and
you've really helped toreinforce that relationship, so
we're very appreciative of that.
Speaker 3 (33:02):
Yeah, you mentioned that.
You know you're working on oneof our advanced supply chain
collaborative projects too.
Lance Saunders is working thatproject.
He's talked to me a little bitabout what you guys are looking
at.
Exciting stuff.
Speaker 2 (33:12):
Yeah, plugging in in a lot of different ways.
And, hey, thank you very muchfor allowing us to be in
climate-controlled comfort on avery hot and steamy day here in
Rocky Top.
And again, we appreciate thebusiness at a lot of different
levels.
But what do you think, ted,have we kind of closed out?
We didn't have anyundergraduates barge in on us in
the middle of this recording inthe house of business.
Speaker 3 (33:34):
It's too early in the semester.
They're not working on theirprojects yet.
Yeah right, fair enough.
Doug, thanks again for spendingtime with us.
Great to have you with us, andwe'll continue this conversation
over the years, I'm sure.
Speaker 4 (33:45):
Thank you for having me both.
It's an honor and a privilegeto be here with you guys.
You're two legends in theindustry and it's great to call
you friends.
Thanks so much, doug.
Speaker 2 (33:55):
All right, folks.
With that, we'll close out.
Be well, go, vols, and staytuned for a lot of great
podcasts coming to you theBalance of the Fall.
Oh, and one more thing beforewe go, we need to remind folks
to sign up now for the FallSupply Chain Forum, november 4th
through 6th.
Registration is open.
(34:18):
Go to gsciutkedu and all thedetails you need to get
registered will be right therewaiting for you.
Hope to see you here on RockyTop in November.
Speaker 1 (34:23):
Thanks for tuning in to Tennessee on Supply Chain
Management.
If you enjoyed the episode,subscribe today on your favorite
listening platform to get allof our episodes as soon as they
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
(34:45):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
New Heights with Jason & Travis Kelce
Football’s funniest family duo — Jason Kelce of the Philadelphia Eagles and Travis Kelce of the Kansas City Chiefs — team up to provide next-level access to life in the league as it unfolds. The two brothers and Super Bowl champions drop weekly insights about the weekly slate of games and share their INSIDE perspectives on trending NFL news and sports headlines. They also endlessly rag on each other as brothers do, chat the latest in pop culture and welcome some very popular and well-known friends to chat with them. Check out new episodes every Wednesday. Follow New Heights on the Wondery App, YouTube or wherever you get your podcasts. You can listen to new episodes early and ad-free, and get exclusive content on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. And join our new membership for a unique fan experience by going to the New Heights YouTube channel now!
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.