June 18, 2025 • 37 mins
For the June 2025 episode, co-hosts Ted Stank and Tom Goldsby spoke with Matt Stites, president of Clayton Supply and SVP of supply chain for Clayton Home Building Group, about dealing with disruptions, addressing the national housing shortage, and building growth-minded teams that pursue excellence in operations and customer service.
Stites, a member of the GSCI Advisory Board, leads the supply chain for the largest builder of manufactured and modular homes in North America. He is responsible for a 1,500-person team producing internally manufactured building products, leads a sourcing organization managing a multibillion-dollar spend, and guides a materials team serving 60 manufacturing facilities.
Listen in for insights on integrating your supply chain organization, driving talent-rich teams to continue innovating, and the importance of resilience, agility, and plasticity during uncertain times.
Plus, Ted and Tom dig into the latest news about tariffs and inflation, trade agreements between competing nations, and more. You don’t want to miss it!
The episode was recorded virtually on June 12, 2025.
Related links:
- Inflation is holding steady as tariffs yet to hit fully
- Trump urges Fed to cut lending interest rates
- Analysts react to US-China trade agreement
- World Bank forecast underscores the cost of the US trade war
- Revenue from duties jumped to $22 billion in May
- UT SCM department head John Bell on securing critical minerals, like lithium, during a global trade war
- Ted Stank and Lance Saunders on mitigating uncertainties in CFO Brew
- 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 to explore advanced concepts in SCM with top industry experts and scholars
- Take one of our virtual SCM courses in Leadership (Aug. 18–Nov. 23),
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro & Outro (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.
Ted Stank (00:28):
Hey everybody, welcome to Tennessee on Supply
Chain Management, episode 9 ofSeason 3.
I am Ted Stank, here with mygreat friend Tom Goldsby and our
guest today, matt Stites,president of Clayton Supply and
SVP of supply chain at ClaytonHomes.
Tom, how you doing.
Tom Goldsby (00:47):
I'm doing well, ted .
You're catching me in an earlymorning.
I'm recording in PhoenixArizona today, so I'm three
hours behind you, but hey,raring to go here.
Ted Stank (00:57):
So I mean, as you said earlier, being three hours
behind gave you a really goodviewing window for your Pacers
to win last night hey, you know,I'm still just over the moon.
Tom Goldsby (01:07):
Pacers took a 2-1 lead over the Oklahoma City
Thunder last night.
Yes, sirs, I was sporting myt-shirt.
I had all my family equippedwith those yes, sirs, t-shirt.
I think that really made thedifference.
Also, it was my dad's 85thbirthday.
Happy birthday, bob.
So I think that certainly hadsomething to do with the Pacers.
I'm sure it did.
Ted Stank (01:27):
Hey, matt, welcome, great to have you with us.
Hey guys, great to be here.
So, tom, you are out at SupplyChain Leaders Conference out in
Phoenix, right?
That's right.
What kinds of things are y'alltalking about in terms of the
absolutely calm and very certainenvironment that we are all
living in in the supply chainworld today?
Tom Goldsby (01:46):
Yeah, no, it's been a real snooze fest out here.
You know nothing of interest totalk about, but I will tell you,
it seems as though supply chainprofessionals are trying to
move beyond tariffs and tariffwars and squabbles, but we just
can't quite get past it.
You know, and they kind of saidsome things that backed up what
we are seeing in some of thehard data with regard to front
(02:09):
end loading.
You know a lot of goosing oforders and there was one
conversation I was having thatsaid you know, we're really not
great at forecasting anyway.
You know, someone wasforthcoming with me but they
said you know, we're given theselittle windows at the fits and
stops to the tariffs and ratherthan kind of looking three to
six months out, you know they'retrying to anticipate even more
(02:32):
than six months.
And so here we are in themiddle of June and we're trying
to think not just the holidayseason but even into 2026 right
now with what they might need toget ahead of it, ahead of it
while there's this little windowof opportunity.
So they said our forecasts aretypically pretty bad.
They're even worse when we'relooking out, trying to think
(02:53):
about what 2026 looks like.
Ted Stank (02:55):
Sure.
So to me that suggests that, ifI look in my crystal ball,
we're going to have overages ofsome things and, out of stocks
of many things.
Tom Goldsby (03:09):
Yeah, it doesn't exactly speak of agility, right?
I mean, if you're trying toanticipate what the world's
going to look like in 2026, itmeans you're putting some pretty
big bets on what you're buying.
And it might be one of thosesituations where, hey, we don't
have what you want, what you'reasking for as a customer, but
over here we've got plenty ofthis.
Yeah, so there could be somemismatches in what we have on
hand and what the market'sasking for.
Ted Stank (03:36):
And yet you know, inflation numbers came out this
week.
Inflation only ticked up 0.1%from last month, so inflation
seems kind of calm.
That comes with a note ofcaution that perhaps the
tariff-based inflation reallyhasn't hit us yet.
The Fed does not seem to be inany rush to lower lending rates,
much to the chagrin of theTrump administration.
We had some news yesterday thatthere is a positive agreement
(03:56):
on a quote-unquote framework fora US-China trade agreement
trade agreement.
I know Canada just announcedthat they expect progress on
US-Canada trade negotiationspotentially as soon as the
upcoming G7 meeting.
Things don't look very good withthe EU.
The EU is digging their feet in.
There's been some progress withJapan, although that seems to
(04:19):
have stalled.
India was making progress, butwith the conflict with Pakistan,
that all seems to be put on aback burner as well.
There's some worries right nowthat Israel is going to bomb
some nuclear sites in Iran, andwhat does that mean for Red Sea
and uncertainty there.
What a mess.
(04:39):
And so I think supply chainmanagers do what they always do,
which is keep on trucking right.
Tom Goldsby (04:44):
Yeah, no, that's generally the sentiment I'm
getting here supply chainleaders in action.
And you know, I will tell you.
I was with this group back inJanuary, you know, before the
inauguration, as we wereplanning for this event, and
there was ebullience.
I mean, there was excitement,there was enthusiasm, there was
the thinking that 2025 was goingto be a big year, with
(05:06):
enthusiasm.
There was the thinking that2025 was going to be a big year.
And then, right at inaugurationday and immediately, the
executive orders around tariffsstarted flying and I think I use
the analogy that sounds likeair being squeezed from the
balloon and that kind of isstill the feeling.
I think there's a lot of pentup enthusiasm out there, but
folks aren't willing to makethose big bets given all the
uncertainty that you just ranthrough.
(05:26):
I asked the question in theexecutive group yesterday about
long-range planning.
I made the assertion it'ssomething of a lost art form to
look out three years or longerand there was the retort that
came back.
It's like Professor Goldsby, wecan't see out three days from
now.
How are we supposed toanticipate what three-year-plus
(05:47):
horizon looks like?
But that's really what you needif you're going to want to make
a big bet on a greenfieldoperation, something from
scratch.
You need that kind of runway ata minimum to make those big
bets.
And there are folks that wantto make bets.
They came into the year wantingto make those investments,
investments, and they just havebeen hamstrung.
Ted Stank (06:06):
Well, I mean, regardless of what you think
about it, we're going throughsome some really foundational
change in the way we look at USrole in the global economy.
Another interesting fact that Ijust read was in the month of
April, we brought in somethinglike I want to say 37.
The month of April, we broughtin something like I want to say
(06:27):
37,.
It might have been more thanthat.
Billion dollars in duties fromtariffs.
That represented 6% ofgovernment revenues in the month
of April, which is a huge jumpfrom any time previously.
Does that replace taxes andwhat happens in terms of the way
we kind of view the whole totalcost model from a tax
standpoint and the price oftariffs?
Really interesting.
I mean, the Trumpadministration has promised from
(06:49):
the start that there was goingto be a period of extreme
turbulence while we reset thetable.
So I don't know some reallyinteresting conversations here
that I'm 65 years old I don'tknow that there's been this
conversation, this kind ofturbulence, in my lifetime
perhaps.
Tom Goldsby (07:06):
Yeah, there was some suggestion and I'll even
say you know, we had some formermilitary folks, retired
generals and admirals.
They used the word war quite abit beyond the context of trade
war, as you kind of look atgeopolitics and then bring that
into the supply chain world.
So there's some reallyeye-opening discussion around
(07:27):
that.
But we just kept coming backaround the fact that our supply
chains and our businesses aremany fangled things, interwoven
supply chains, and correct me ifI'm wrong, but it seems as
though Trump initiated theconversation with China because
rare earth minerals, turns outwe need those to make auto parts
, weapons systems, aerospace.
Ted Stank (07:48):
Maybe houses, Perhaps perhaps.
Tom Goldsby (07:52):
Yeah, we'll find that out here in a moment.
The bigger thing about that issteel and aluminum.
Ted Stank (07:58):
That becomes a big issue, clearly in Matt's
industry.
Love to get your comments onthat later, matt.
There's also a discussion aboutwhat cutting in half the duties
on steel from Mexico?
So that could, I'm sure, impactyour business, tom, you said
war.
What's the context of war?
Are they talking Taiwan or?
Tom Goldsby (08:17):
It was in the context of Taiwan.
And again, something we try todo here at SCLA is keep our
conversations close to the vest.
You know what's said here inPhoenix is meant to stay here in
Phoenix, but now it's reallyinteresting.
What I'll offer is just to getthese different perspectives and
to really underscore the needfor scenario planning and
(08:37):
sometimes to brainstorm.
It almost feels like you need aHollywood script writer to help
you with those brainstormingefforts, because you know we're
seeing some stuff we didn'treally anticipate, didn't
imagine to scale.
Ted Stank (08:48):
Yeah, I mean it was interesting.
Also, you talk aboutgeopolitics and the Trump
administration.
I think the anticipation wasthat the Trump administration
was going to be a bit soft onTaiwan, and yet the secretary of
defense, Hegseth, early lastweek at a conference in
Asia-Pacific, came up verystaunchly in support of Taiwan.
Crazy world.
(09:09):
I just read a word that I hadnot heard before in reference to
resilience and agility, calledplasticity.
I have no idea what that meansand what consulting firm made it
up.
Tom Goldsby (09:21):
Can I step in here?
Yeah, that came from aneditorial that Walter Zinn and I
wrote in the Journal ofLogistics in 2019.
Ted Stank (09:29):
Is that right?
Tom Goldsby (09:30):
Yeah yeah, we actually coined the term and I
have to give, so you're the guysthat we can blame.
I have to give credit wherecredit is due.
Walter Zinn came up with thatand the notion is it's agility,
but at the supply chainconfiguration level, not so much
the operational area, and socreating options and trying to
rapidly implement them on astructural basis.
Ted Stank (09:51):
So you talk about network design type issues,
right?
Tom Goldsby (09:54):
Yeah, yep, that's the idea, but most of those take
place over months or years, andthe idea of maybe moving into
those on a much shortertimeframe.
Ted Stank (10:03):
So who knew that my own colleagues were coming up
with space age terms likeplasticity?
Tom Goldsby (10:09):
Well, you know, so often I'm going to say it.
You know, consultants takeacademic ideas and they run with
it and they monetize it and doa lot better than we academics
ever did.
But you know, that's, that'snothing new.
Ted Stank (10:20):
So plasticity, matt.
You live in a world where youbuild homes that have amazing
amounts of subcomponents thatare involved in putting those
homes together.
I am feeling pretty certainthat plasticity is something to
(10:42):
you about.
Was resilience in your supplychain.
Reminder to our listeners Mattis president of Clayton Supply
and SVP of supply chain atClayton Homes, a partner here, a
neighbor in Knoxville in theKnoxville Tennessee area, but
one of the largest manufacturersof manufactured homes in the
world.
So, matt, plasticity,resilience what kinds of things
(11:04):
are you all dealing with?
Matt Stites (11:06):
I grew up on a farm and a farmer would do three
things in a day for sure.
They would watch the weatherforecast in the morning, they
would watch the weather forecastat night and then they would
pray before they go to bed.
And this world today kind ofreminds me of my growing up,
because it's a little bit of thesame.
(11:27):
I love that, if you don't mind,I'm going to use that.
Yes, so I think you knowthere's a lot going on and I got
to follow up with Tom to get alittle bit better understanding
of this word and how I could useit around here.
But the whole idea of reallywhat is happening and how to
adjust to it really what ishappening and how to adjust to
it I can remember back earlierin my career and there was a
(11:51):
fantastic presentation thatanother company was providing of
how resilient their supplychain was because they have this
great plan and they wentthrough all these steps and they
were going to have a little bitof business with all of these
different suppliers.
And then two years later thesame individual was back
presenting to a pretty similargroup that all worked until the
typhoon hit and took out ourprimary supplier and then our
(12:13):
small suppliers weren't able topick up the additional capacity
and therefore we were sunk.
No pun intended.
Really the times today are howdo you adjust to it?
Who are your partners, whoyou're working with and really
kind of having those plan ABCand working through those.
I think as much as we want tofocus on technology and there's
(12:33):
a lot of information and you canget overwhelmed by it.
It's a matter of therelationships that you have and
the partners that you have, andyou really find out who you're
working with to kind of helpyour business be successful.
And then the team that you havewithin the company.
How is the team wired?
You know, getting comfortablewith being uncomfortable has
(12:55):
been a thing that we've workedon here for quite a bit of time,
and the more reps we get onthat, the more we kind of get
used to doing that.
And then the organizationthat's behind you how flexible
are they of?
Hey, we got this challenge.
What could we do and help thempivot on different materials?
But it's an interesting time,as you said.
Ted Stank (13:15):
Hey, before we get too deeply into that, can you
help us understand?
What does your inbound productflow look like?
How many different productcategories do you all have to
buy?
What does your global networklook like?
Matt Stites (13:27):
Yeah, so we're somewhat fortunate.
A large majority say two-thirdscomes domestically here, and
then the rest will come fromdifferent areas of the world.
You'll see a heavyconcentration in Asia, but it
will also get some stuff fromthe West as well.
Categ categories, I mean if youthink of everything in a home,
down to a nail or a staple tothe lights and all that in your
(13:50):
house.
I mean it's a pretty complexmodel and a lot of pieces to
keep track of, and the team hasdone a nice job of doing that.
We're working on sometechnology that'll help us do
better on that going forward aswell.
The bill of materials for ahome is more complex than what
you might think at first thought.
Tom Goldsby (14:08):
Yeah, I can only imagine it occurs to me that
again two thirds domestic supply, a third from abroad, and then
your market.
On the outbound side you buildthe homes in the United States
and a significant presence righthere in Tennessee.
Matt Stites (14:24):
Yeah, we've got 41 manufactured sites building
homes off-site today and thenwe've got nine site builders
building on-site todaythroughout the country.
So all of our sales would be inthe US today, but it's from
Oregon down to California,through to Florida and up to
Pennsylvania and over toMinnesota.
(14:44):
So we cover pretty much wherepeople are at and where homes
are being built.
We've got a big focus there.
Ted Stank (14:50):
I was going to say you talked about your teams.
Can you talk about some of theinitiatives you've put in place,
I'm guessing, since COVID, totry to deal with?
You know what does yourstructure look like?
Do you have resilience teams?
Matt Stites (15:03):
if you will, yeah, we do, and if an item becomes
hot then we form a specific teamto work on that specific item.
But you know, just as a normalcourse of business, we've got
our sourcing organization dialedinto our suppliers.
A lot of focus really has comefrom understanding what all the
(15:24):
options are.
And I'll go back to COVID.
As you said, there werescenarios where domestically
there wasn't a whole lot ofsupply of building materials and
it forced us to look moreglobally and, interestingly
enough, import some materialsfrom different regions of the
world.
That really helped us continueto be able to build and use our
(15:47):
supply chain network and ourknowledge.
Those also set up for someinteresting conversations after
COVID with the domesticmanufacturers of saying, hey,
tell me how you did that and Idon't really like it.
And it's like you know, hey,that's interesting, I didn't
really like it either, but youknow, you kind of got us to that
point.
So I think it's really theresiliency of the supply chain
(16:09):
and knowing where you could goget products or where you could
change sourcing has helped usone, be flexible, but two, also
helped us in our conversationsthat we've got a team that's
capable of doing that and that'sbrought some honesty to some
more recent conversations withsuppliers.
Ted Stank (16:27):
Have you built that cost of disruption into your
total cost of ownership modelsin procurement?
Matt Stites (16:33):
Yeah, that's an interesting thing.
We have really worked.
We're attainable housing, to bevery candid here, the on-site
and off-site homes we build.
We built over 62,000 homes lastyear and attainability is a key
part of that.
As we look at what is thedisruption and the impact that
it's having, clearly we takeaccount for that, but when we
(16:56):
also start to take account to,hey, what is a substitute
material that we could use orhow could we change our building
process, we've actually takensome of the things that started
out as challenges in the buildprocess during COVID and found
that they were more effective inour production process and have
kept them as a benefitpost-COVID as an outcome of that
(17:19):
.
Tom Goldsby (17:20):
Interesting.
Hey, matt, I was curious.
62,000 homes, I mean that isamazing and I got to believe
that should be making a dent inwhat we refer to as the housing
shortage that's going onthroughout this country.
And then you know not only arethere enough kind of you know
brick and mortar Greenfieldhouses going up supposedly, but
(17:42):
also you know the higherinterest rates.
I'm just kind of curious abouthow you approach the market as
an alternative maybe to what alot of people might think of as
housing, and then how you makethat dream accessible for folks.
Matt Stites (17:56):
To back up a little bit.
The organization here is a veryintegrated organization.
So within part of theorganization we'll make our own
windows, doors, trusses,cabinets all of those materials
that are going into the home.
We have our own DCs supplyingmaterials into the home building
sites.
We build homes off-site and webuild homes on-site, and then
(18:19):
we're working on versions ofbuilding a combination of an
off-site home and an on-sitehome.
One of those today is a crossmod and it's really how do we
drive the cost down of homes?
When Jim Clayton started thecompany back in the 50s, he
started it as a manufacturedhome company and it was about
(18:41):
attainable homes.
And as we've gone on through theyears, we've acquired site
builders and today we look atourselves as a residential home
builder and we continue to talkabout how do we leverage the
knowledge and the capabilitieswithin the organization.
So if we're building our ownwindows or we're building our
own cabinets or we're buildingour own things, those are passed
(19:03):
through the organization at acost point that allows us to be
more attainable.
The way we build homes is to bemore attainable, and the
materials and the relationshipsthat we have with our suppliers.
It's pretty interesting thisyear the attainable housing
seems to be more interestingfrom a supplier perspective,
(19:23):
because volume is more importantthan it has been in past years,
when you could sell whateveryou produced at any price you
wanted, and we see others kindof moving into that space.
That space has been one thatwe've been true to in times
where market would have acceptedany price, as well as times
where price is a little bit morechallenged.
(19:45):
But the whole objective is hereis for school teachers,
librarians, police officers, theentire population.
We want to really be able tooffer them a home that they can
afford, and we've built a modelthat gives us quite a bit of
advantage in doing that.
Tom Goldsby (20:03):
You're coming across as really more vertically
integrated than I imagined isreally more vertically
integrated than I imagined.
Trekking on I-40 or 75, we seethe double wide load coming
through.
It's like, okay, how am I goingto get around this?
And so I knew that you had thatdelivery aspect on the prefab
piece.
But the amount of onsite thatyou're doing and then also the
(20:25):
building of so much of thecomponentry that's going into
those homes is something Iwasn't frankly aware of.
Yeah, that's going into thosehomes is something I wasn't
frankly aware of.
Matt Stites (20:31):
Yeah, that would be a good case study.
The organization here Jim andKevin and the leadership team
has really leveraged.
That led to, in 2003, theinterest of Warren Buffett to
buy the company.
I don't know if you guys knowit or not, but the University of
Tennessee played a key role inthat.
You guys know it or not, butUniversity of Tennessee played a
key role in that.
(20:51):
University of Tennessee had agroup that would go to Omaha
meet with Warren and the yearthat the controller within our
division was in University ofTennessee and made that trip,
his group offered the book thatKevin Clayton wrote to Warren
Buffett, which then later turnedaround to be Warren acquiring
the organization.
Following it turned out wellfor the students and really well
(21:14):
for the professor.
The professor got an A shareand the students got a B share
Tom.
Ted Stank (21:20):
It was a group of finance club students and the
advisor that's a great story.
Tom Goldsby (21:25):
I was not aware of that.
Ted Stank (21:27):
Wow, a lot of small one-story houses on the water
have sold for like $2 millionand got completely razed and
(21:52):
giant 7,000 square foot homesbuilt on that lot which made it
unaffordable for a lot of people.
One street off the water.
Lots were not going for thatmuch but they were still going
for a lot.
Somebody bought one of theolder homes that was kind of in
disrepair and knocked it downand lo and behold, a couple of
weeks later and so there's thisempty lot.
A couple of weeks later twotrucks show up with components
(22:15):
of a Clayton home and within aweek that home was up.
I mean, they were still workingon the interior.
But the point I wanted to bringout is that in a lot of areas
skilled tradespeople are reallytough to come by.
So if you're building your ownhome and you're not building a
7,000 square foot, $5 millionhome, it's really tough to find
(22:36):
tradespeople.
And these people were able tobuild a really nice looking home
, move into it in a short periodof time.
Matt Stites (22:44):
Yeah, that's a great point, Ted.
The market has been kind ofconstrained on trades and
there's some things that aregoing on today that may be
constraining those trades alittle bit more with some policy
.
But the idea of being able tobuild a home or portions of a
home off-site have a whole lotmore efficiency to them and this
organization has been great atknowing how to do that.
(23:07):
To talk about it a little bitmore, we have a product that's a
hybrid version today.
It's called a cross mod, andthe cross mod is the core part
of the home, is built within afacility, delivered to the job
site, much as you said, and thegarage and the porch is
constructed in a much smallertime than what it would take to
normally construct a home.
(23:27):
And that's really part of beingefficient and that of leading
to attainability.
That's a great new product.
We've got one here in Knoxville300 home community.
That's being done that way at aprice point of, I think, three,
three and a quarter, which ispretty attractive.
As you know, the market and Iwould also say another thing in
(23:48):
those homes is attainability,isn't just the price that it
costs you to get into the home,but it's the cost of living in
that home and the organization,two years ago, right at this
time, made a commitment to buildhomes to a higher standard.
We built 50,000 homes to thehighest energy standard last
year, thousand homes to thehighest energy standard last
(24:12):
year.
Those 50,000 homeowners willsave over $39 million a year in
their energy bills for the homesthat they bought last year,
being another way to bringattainability to the homeowner.
Ted Stank (24:19):
I mean, I love that so many different supply chain
concepts being applied in thiscontext, you know, building the
things that you can buildefficiently in advance and then
postponing the final assembly,if you will, and these are
things that we think about inautomotive and electronics but
not in home building and really,really a fascinating concept.
Matt Stites (24:38):
Yeah, the cool part of that is the innovation
involved in getting from how dowe do it to actually doing it.
And we did it in a six-monthperiod of time of understanding
the energy code, engaging ourteam members and engaging our
suppliers, and saying here's thechallenge.
And everybody rowing togetherand hop, we made it happen.
(24:59):
And six months later, all 40home building facilities at that
point were building homes tothat standard.
Ted Stank (25:05):
Let's talk about that innovation comment that you
made.
How do you drive thatinnovation into your teams?
Matt Stites (25:11):
Yeah, I think we're an organization that really has
a growth mindset.
So the idea is how do weovercome it?
One of our values is drivingchange, and doing good is
another value.
So it's a little bit in our DNAof looking to disrupt and bring
value.
The interesting part of it is,if you go back to how sourcing
(25:34):
may have been done or some maydo it is, you know, an RFP or
what's the lowest cost or, myfavorite, the reverse auction.
You kind of get what you payfor, but when you engage your
partners to help you figure outsolutions, you can really do a
lot of different things, and Ithink that's really key to the
(25:54):
core of this organization.
We're wired internally that wayand got some amazing partners
on the outside that interactwith us that same way.
Tom Goldsby (26:05):
Yeah, no, it really would make for a great case
study and how you bring thatinnovation forward is key.
But I did want to go back.
We've touched on talent,certainly here at the Supply
Chain Leaders in Action, year in, year out, perennially always a
top topic of discussion.
And you know you mentioned kindof the techs earlier.
You know the capabilities youneed to actually build.
(26:27):
What about in the supply chainorganization?
What kind of talent needs doyou all have and how have you
been meeting them?
Matt Stites (26:34):
Yeah, that's a great question and I would say,
as much as we might identifyourself as a home builder or
building products company, itreally comes down to as a team
we see ourself as a team membersand how engaged they are in the
annual cycle of giving usfeedback and then us acting on
(27:04):
it.
As it relates to the supplychain, in addition to the things
that the company is doing tokeep team members engaged, we're
actively engaged in severaldifferent functions and
organizations.
I'd like to genuinely sayreally proud of the relationship
that we have with theUniversity of Tennessee and what
(27:27):
we're doing there together.
You guys have got theseacademies that you've developed.
We've got some folks that we'veput through those academies.
We're having a conversationwith your team as well, dan and
Jada, on the Kerman Academythat's going to launch this fall
and, as we were talking overthe last year about what was
going to be in this academy andseeing what you guys have really
(27:51):
centered that on is the value.
That's one that kind of is coreto the way I look at the supply
chain and how you build outfrom.
That is a key thing.
We've done a lot and we've grownit with internships and we've
done a lot more recently withmanager and training programs.
(28:11):
We've got a success rate with a66% conversion of our interns
to team members and we've gotsome really fantastic team
members that have come into theorganization.
We currently have 15 internshere this summer.
We met with them a couple ofweeks ago as we brought them
into the organization and wetalked about who we are.
(28:33):
We also talked about them andwhat we wanted them to do in
their role and we wanted them togive us feedback and to help us
get better at what we're doing.
And some of the conversationswe've had in the last two weeks
of hey, mr Seitz, could I tellyou about this?
You know it's been fantastic.
It's really kind of thatorganization of continuous
(28:54):
learning and people that come ineven if they're an intern.
You know how do you add to theorganization and being curious,
and if we don't know the answer,let's find people that know it
and go explore.
Ted Stank (29:06):
How do you instill in them not only them, but your
experienced team members as wellthis comfort level of living
with the uncertainty we weretalking about earlier?
With using AI, for example.
You know the innovations, thosekinds of things.
Matt Stites (29:22):
Yeah, no, it's pretty interesting from the
folks that are coming into theorganization.
They're chomping at the bit toget after this AI thing and then
those that have been in theorganization are kind of like,
oh man, what's going to happenwith that?
So it's an interesting dynamic.
By having a diverse culturehere in the organization, I
think the power of thattechnology is just leaning into
(29:46):
it, being curious, how could weadopt it?
How are we talking about it?
We've got a material managerconference here next week and
we'll have 60 folks in andthere's a session that you guys
are helping us with, talkingabout all the changes that are
going on within supply chain.
And we're talking abouttechnology.
And we've got a partner in ShawIndustries is in and they're
(30:06):
talking about how they're usingAI and technology and you know
the the conference is themed, uh, looking up and looking out.
We want our folks to to kind ofsee what's coming at them.
You know we've got busy jobsthat we do every day, kind of
making sure that we've got thehouse in order, and we're going
to use this time to help themlook forward.
(30:27):
Another cool thing that we'redoing, guys, is this supply
chain camp, and I heard about itlast year and I'm like this is
incredible, talking about talentand how to get talent early.
Your program is fantastic.
We're excited to be sponsors ofit and engaged in the success
of that coming up here in July.
Ted Stank (30:48):
So what Matt is talking about for our listeners
is what we call the Supply ChainManagement Summer Camp.
It's run by our director ofcareer placement, called Burns,
where we bring in a number ofhigh school students and run
them through a week long,essentially boot camp on supply
chain management.
Clayton is one of our greatsponsors of that.
(31:09):
We have sponsors, we have folksfrom those organizations come
in and talk to the studentsabout what careers are like in
supply chain.
Talk to the students about whatcareers are like in supply
chain, and we think it's areally good way to reach to
particularly underrepresentedgroups in our university base as
well as in the supply chaincommunity.
So, yeah, it's great.
Thank you so much for supportingthat, Matt.
It's a really cool innovation.
Matt Stites (31:30):
We had a meeting last Friday with our whole team
here and we were talking aboutthings coming up and we had our
interns in that meeting andthey're like, hey, we want to be
part of that.
So we've got our interns thatwill be speaking to these high
school students of what it'slike to come in and go to the
university and the opportunitiesit provides and why supply
(31:51):
chain.
And then we've got early incareer folks that have gone
through that and talking aboutwhat their journey has been,
have gone through that andtalking about what their journey
has been.
And then we've got a partnerfrom Ernst Young and myself
that'll be talking moreholistically about what the
career is like and theopportunities that it provides.
So great opportunity.
Thanks for setting that up forus.
Tom Goldsby (32:10):
Well, you know, matt, I'll just turn it right
back to you as a member of theadvisory board.
You all pressed us to kind ofhelp solve a problem that we
were all experiencing aboutbringing those underrepresented
groups into your supply chainorganizations, also into our
universities, and it was reallygreat.
(32:31):
Thomas Deakins, who was ourformer managing director of the
GSCI, got behind it and partnerslike Clayton Holmes stepped up
to support it, and we're just soexcited about it and we're
solving a key problem out there.
But it occurs to me that we'retalking about bringing new
talent into supply chain.
Something we could have touchedon at the outset was your
(32:54):
journey, matt.
I'm just curious what agraduate of the University of
Toledo and you had an extensivecareer at Dana Corporation, and
I'm just curious about how itbrings you to your current role
as president, svp.
So can you go back a little bitto your upbringing?
We heard the farm referenceearlier.
So did you grow up in a ruralarea?
Matt Stites (33:14):
Yeah, I did.
I grew up in Northwest Ohioarea.
Yeah, I did.
I grew up in Northwest Ohio 161years this year the family's
been on the farm, so that's apretty cool thing.
Wanted to work at DanaCorporation.
It was a premier company.
I like cars and that's whatthey did.
So at age seven, that was whereI wanted to go and had the
fortune of spending 12 and ahalf years there.
(33:37):
Ended up at corporate in theirsupply chain organization.
Centralized the supply chaininto a global supply chain
structure.
Had an opportunity from thereto go to Wisconsin, be part of
an employee-owned company andthe leadership team there of how
do we reinvent that businessand some pretty cool things we
(33:57):
did there with partners.
We reinvent that business andsome pretty cool things we did
there with partners.
One of those was a milestone, Iguess maybe in my journey was
we ended up winning the 2012award for most innovative ideas.
We were a global finalist forthe industry and our recognition
(34:17):
was based off of a supply chaininitiative to work with a third
party and how do we workcollaboratively and
strategically together, and soit was really showing that
supply chain has the ability toreally change a business and a
business model.
And then I got a phone call froma recruiter that said, hey, you
ready for a different industry.
(34:38):
A phone call from a recruiterthat said, hey, you ready for a
different industry?
And would you want to move?
And that was well.
If it was to Minnesota fromWisconsin, no, I wouldn't want
to move.
It was the opportunities inKnoxville, which I had done some
work with University ofTennessee when I was in
Wisconsin.
We had traveled here as afamily before and liked the area
(35:00):
and I said, okay, so what's theindustry?
And they said it's a homebuilder.
And I said, okay, I don't knowabout that.
And it was what are your firstthoughts?
And I'm like my first thoughtsis I read that it's a pretty
turbulent market.
It's good when it's good andit's horrible when it's horrible
.
And there's probably little inbetween from what I read.
(35:21):
And the recruiter said, hey,what if I told you this company
didn't lose money through thehousing crisis?
And I said, okay, I think weshould continue the conversation
.
So that's what brought me hereand it's been a fantastic
journey along the way, learninga lot of different things, but
being in a place today where thevalue of the supply chain
really can contribute to thesuccess of the organization Amen
(35:44):
.
Ted Stank (35:44):
Well, we're really, really delighted to have you as
a friend and neighbor and apartner.
Tom had mentioned our executiveadvisory board.
You're a great contributingmember of that.
We attribute a lot of theprogress that we've made in our
program to the advice we getfrom that group.
So thank you for that.
Listen again.
Thank you so much for beinghere with us To our listeners.
(36:06):
You can reach us at gsci atutkedu.
Matt did a great plug for ourcertification academies.
We have them in general supplychain management foundations.
We have them in supply chainfinance, supply chain planning
and a new one kicking off thisfall in procurement.
So if anyone's interested andwants more information, please
(36:29):
reach out to gsci at utkedu.
Matt, great to be with you.
I know you've got a busy daycoming up.
We'll let you go with that.
Matt Stites (36:40):
All right, thanks guys, I enjoyed it.
Intro & Outro (36:44):
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
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Have any questions, thoughts orfeedback?
We'd love to hear from ourlisteners.
Email us at gsdi at utkedu.
Join us next time as wecontinue pulling back the
(37:07):
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.
Ted Stank (00:28):
Hey everybody, welcome to Tennessee on Supply
Chain Management, episode 9 ofSeason 3.
I am Ted Stank, here with mygreat friend Tom Goldsby and our
guest today, matt Stites,president of Clayton Supply and
SVP of supply chain at ClaytonHomes.
Tom, how you doing.
Tom Goldsby (00:47):
I'm doing well, ted .
You're catching me in an earlymorning.
I'm recording in PhoenixArizona today, so I'm three
hours behind you, but hey,raring to go here.
Ted Stank (00:57):
So I mean, as you said earlier, being three hours
behind gave you a really goodviewing window for your Pacers
to win last night hey, you know,I'm still just over the moon.
Tom Goldsby (01:07):
Pacers took a 2-1 lead over the Oklahoma City
Thunder last night.
Yes, sirs, I was sporting myt-shirt.
I had all my family equippedwith those yes, sirs, t-shirt.
I think that really made thedifference.
Also, it was my dad's 85thbirthday.
Happy birthday, bob.
So I think that certainly hadsomething to do with the Pacers.
I'm sure it did.
Ted Stank (01:27):
Hey, matt, welcome, great to have you with us.
Hey guys, great to be here.
So, tom, you are out at SupplyChain Leaders Conference out in
Phoenix, right?
That's right.
What kinds of things are y'alltalking about in terms of the
absolutely calm and very certainenvironment that we are all
living in in the supply chainworld today?
Tom Goldsby (01:46):
Yeah, no, it's been a real snooze fest out here.
You know nothing of interest totalk about, but I will tell you,
it seems as though supply chainprofessionals are trying to
move beyond tariffs and tariffwars and squabbles, but we just
can't quite get past it.
You know, and they kind of saidsome things that backed up what
we are seeing in some of thehard data with regard to front
(02:09):
end loading.
You know a lot of goosing oforders and there was one
conversation I was having thatsaid you know, we're really not
great at forecasting anyway.
You know, someone wasforthcoming with me but they
said you know, we're given theselittle windows at the fits and
stops to the tariffs and ratherthan kind of looking three to
six months out, you know they'retrying to anticipate even more
(02:32):
than six months.
And so here we are in themiddle of June and we're trying
to think not just the holidayseason but even into 2026 right
now with what they might need toget ahead of it, ahead of it
while there's this little windowof opportunity.
So they said our forecasts aretypically pretty bad.
They're even worse when we'relooking out, trying to think
(02:53):
about what 2026 looks like.
Ted Stank (02:55):
Sure.
So to me that suggests that, ifI look in my crystal ball,
we're going to have overages ofsome things and, out of stocks
of many things.
Tom Goldsby (03:09):
Yeah, it doesn't exactly speak of agility, right?
I mean, if you're trying toanticipate what the world's
going to look like in 2026, itmeans you're putting some pretty
big bets on what you're buying.
And it might be one of thosesituations where, hey, we don't
have what you want, what you'reasking for as a customer, but
over here we've got plenty ofthis.
Yeah, so there could be somemismatches in what we have on
hand and what the market'sasking for.
Ted Stank (03:36):
And yet you know, inflation numbers came out this
week.
Inflation only ticked up 0.1%from last month, so inflation
seems kind of calm.
That comes with a note ofcaution that perhaps the
tariff-based inflation reallyhasn't hit us yet.
The Fed does not seem to be inany rush to lower lending rates,
much to the chagrin of theTrump administration.
We had some news yesterday thatthere is a positive agreement
(03:56):
on a quote-unquote framework fora US-China trade agreement
trade agreement.
I know Canada just announcedthat they expect progress on
US-Canada trade negotiationspotentially as soon as the
upcoming G7 meeting.
Things don't look very good withthe EU.
The EU is digging their feet in.
There's been some progress withJapan, although that seems to
(04:19):
have stalled.
India was making progress, butwith the conflict with Pakistan,
that all seems to be put on aback burner as well.
There's some worries right nowthat Israel is going to bomb
some nuclear sites in Iran, andwhat does that mean for Red Sea
and uncertainty there.
What a mess.
(04:39):
And so I think supply chainmanagers do what they always do,
which is keep on trucking right.
Tom Goldsby (04:44):
Yeah, no, that's generally the sentiment I'm
getting here supply chainleaders in action.
And you know, I will tell you.
I was with this group back inJanuary, you know, before the
inauguration, as we wereplanning for this event, and
there was ebullience.
I mean, there was excitement,there was enthusiasm, there was
the thinking that 2025 was goingto be a big year, with
(05:06):
enthusiasm.
There was the thinking that2025 was going to be a big year.
And then, right at inaugurationday and immediately, the
executive orders around tariffsstarted flying and I think I use
the analogy that sounds likeair being squeezed from the
balloon and that kind of isstill the feeling.
I think there's a lot of pentup enthusiasm out there, but
folks aren't willing to makethose big bets given all the
uncertainty that you just ranthrough.
(05:26):
I asked the question in theexecutive group yesterday about
long-range planning.
I made the assertion it'ssomething of a lost art form to
look out three years or longerand there was the retort that
came back.
It's like Professor Goldsby, wecan't see out three days from
now.
How are we supposed toanticipate what three-year-plus
(05:47):
horizon looks like?
But that's really what you needif you're going to want to make
a big bet on a greenfieldoperation, something from
scratch.
You need that kind of runway ata minimum to make those big
bets.
And there are folks that wantto make bets.
They came into the year wantingto make those investments,
investments, and they just havebeen hamstrung.
Ted Stank (06:06):
Well, I mean, regardless of what you think
about it, we're going throughsome some really foundational
change in the way we look at USrole in the global economy.
Another interesting fact that Ijust read was in the month of
April, we brought in somethinglike I want to say 37.
The month of April, we broughtin something like I want to say
(06:27):
37,.
It might have been more thanthat.
Billion dollars in duties fromtariffs.
That represented 6% ofgovernment revenues in the month
of April, which is a huge jumpfrom any time previously.
Does that replace taxes andwhat happens in terms of the way
we kind of view the whole totalcost model from a tax
standpoint and the price oftariffs?
Really interesting.
I mean, the Trumpadministration has promised from
(06:49):
the start that there was goingto be a period of extreme
turbulence while we reset thetable.
So I don't know some reallyinteresting conversations here
that I'm 65 years old I don'tknow that there's been this
conversation, this kind ofturbulence, in my lifetime
perhaps.
Tom Goldsby (07:06):
Yeah, there was some suggestion and I'll even
say you know, we had some formermilitary folks, retired
generals and admirals.
They used the word war quite abit beyond the context of trade
war, as you kind of look atgeopolitics and then bring that
into the supply chain world.
So there's some reallyeye-opening discussion around
(07:27):
that.
But we just kept coming backaround the fact that our supply
chains and our businesses aremany fangled things, interwoven
supply chains, and correct me ifI'm wrong, but it seems as
though Trump initiated theconversation with China because
rare earth minerals, turns outwe need those to make auto parts
, weapons systems, aerospace.
Ted Stank (07:48):
Maybe houses, Perhaps perhaps.
Tom Goldsby (07:52):
Yeah, we'll find that out here in a moment.
The bigger thing about that issteel and aluminum.
Ted Stank (07:58):
That becomes a big issue, clearly in Matt's
industry.
Love to get your comments onthat later, matt.
There's also a discussion aboutwhat cutting in half the duties
on steel from Mexico?
So that could, I'm sure, impactyour business, tom, you said
war.
What's the context of war?
Are they talking Taiwan or?
Tom Goldsby (08:17):
It was in the context of Taiwan.
And again, something we try todo here at SCLA is keep our
conversations close to the vest.
You know what's said here inPhoenix is meant to stay here in
Phoenix, but now it's reallyinteresting.
What I'll offer is just to getthese different perspectives and
to really underscore the needfor scenario planning and
(08:37):
sometimes to brainstorm.
It almost feels like you need aHollywood script writer to help
you with those brainstormingefforts, because you know we're
seeing some stuff we didn'treally anticipate, didn't
imagine to scale.
Ted Stank (08:48):
Yeah, I mean it was interesting.
Also, you talk aboutgeopolitics and the Trump
administration.
I think the anticipation wasthat the Trump administration
was going to be a bit soft onTaiwan, and yet the secretary of
defense, Hegseth, early lastweek at a conference in
Asia-Pacific, came up verystaunchly in support of Taiwan.
Crazy world.
(09:09):
I just read a word that I hadnot heard before in reference to
resilience and agility, calledplasticity.
I have no idea what that meansand what consulting firm made it
up.
Tom Goldsby (09:21):
Can I step in here?
Yeah, that came from aneditorial that Walter Zinn and I
wrote in the Journal ofLogistics in 2019.
Ted Stank (09:29):
Is that right?
Tom Goldsby (09:30):
Yeah yeah, we actually coined the term and I
have to give, so you're the guysthat we can blame.
I have to give credit wherecredit is due.
Walter Zinn came up with thatand the notion is it's agility,
but at the supply chainconfiguration level, not so much
the operational area, and socreating options and trying to
rapidly implement them on astructural basis.
Ted Stank (09:51):
So you talk about network design type issues,
right?
Tom Goldsby (09:54):
Yeah, yep, that's the idea, but most of those take
place over months or years, andthe idea of maybe moving into
those on a much shortertimeframe.
Ted Stank (10:03):
So who knew that my own colleagues were coming up
with space age terms likeplasticity?
Tom Goldsby (10:09):
Well, you know, so often I'm going to say it.
You know, consultants takeacademic ideas and they run with
it and they monetize it and doa lot better than we academics
ever did.
But you know, that's, that'snothing new.
Ted Stank (10:20):
So plasticity, matt.
You live in a world where youbuild homes that have amazing
amounts of subcomponents thatare involved in putting those
homes together.
I am feeling pretty certainthat plasticity is something to
(10:42):
you about.
Was resilience in your supplychain.
Reminder to our listeners Mattis president of Clayton Supply
and SVP of supply chain atClayton Homes, a partner here, a
neighbor in Knoxville in theKnoxville Tennessee area, but
one of the largest manufacturersof manufactured homes in the
world.
So, matt, plasticity,resilience what kinds of things
(11:04):
are you all dealing with?
Matt Stites (11:06):
I grew up on a farm and a farmer would do three
things in a day for sure.
They would watch the weatherforecast in the morning, they
would watch the weather forecastat night and then they would
pray before they go to bed.
And this world today kind ofreminds me of my growing up,
because it's a little bit of thesame.
(11:27):
I love that, if you don't mind,I'm going to use that.
Yes, so I think you knowthere's a lot going on and I got
to follow up with Tom to get alittle bit better understanding
of this word and how I could useit around here.
But the whole idea of reallywhat is happening and how to
adjust to it really what ishappening and how to adjust to
it I can remember back earlierin my career and there was a
(11:51):
fantastic presentation thatanother company was providing of
how resilient their supplychain was because they have this
great plan and they wentthrough all these steps and they
were going to have a little bitof business with all of these
different suppliers.
And then two years later thesame individual was back
presenting to a pretty similargroup that all worked until the
typhoon hit and took out ourprimary supplier and then our
(12:13):
small suppliers weren't able topick up the additional capacity
and therefore we were sunk.
No pun intended.
Really the times today are howdo you adjust to it?
Who are your partners, whoyou're working with and really
kind of having those plan ABCand working through those.
I think as much as we want tofocus on technology and there's
(12:33):
a lot of information and you canget overwhelmed by it.
It's a matter of therelationships that you have and
the partners that you have, andyou really find out who you're
working with to kind of helpyour business be successful.
And then the team that you havewithin the company.
How is the team wired?
You know, getting comfortablewith being uncomfortable has
(12:55):
been a thing that we've workedon here for quite a bit of time,
and the more reps we get onthat, the more we kind of get
used to doing that.
And then the organizationthat's behind you how flexible
are they of?
Hey, we got this challenge.
What could we do and help thempivot on different materials?
But it's an interesting time,as you said.
Ted Stank (13:15):
Hey, before we get too deeply into that, can you
help us understand?
What does your inbound productflow look like?
How many different productcategories do you all have to
buy?
What does your global networklook like?
Matt Stites (13:27):
Yeah, so we're somewhat fortunate.
A large majority say two-thirdscomes domestically here, and
then the rest will come fromdifferent areas of the world.
You'll see a heavyconcentration in Asia, but it
will also get some stuff fromthe West as well.
Categ categories, I mean if youthink of everything in a home,
down to a nail or a staple tothe lights and all that in your
(13:50):
house.
I mean it's a pretty complexmodel and a lot of pieces to
keep track of, and the team hasdone a nice job of doing that.
We're working on sometechnology that'll help us do
better on that going forward aswell.
The bill of materials for ahome is more complex than what
you might think at first thought.
Tom Goldsby (14:08):
Yeah, I can only imagine it occurs to me that
again two thirds domestic supply, a third from abroad, and then
your market.
On the outbound side you buildthe homes in the United States
and a significant presence righthere in Tennessee.
Matt Stites (14:24):
Yeah, we've got 41 manufactured sites building
homes off-site today and thenwe've got nine site builders
building on-site todaythroughout the country.
So all of our sales would be inthe US today, but it's from
Oregon down to California,through to Florida and up to
Pennsylvania and over toMinnesota.
(14:44):
So we cover pretty much wherepeople are at and where homes
are being built.
We've got a big focus there.
Ted Stank (14:50):
I was going to say you talked about your teams.
Can you talk about some of theinitiatives you've put in place,
I'm guessing, since COVID, totry to deal with?
You know what does yourstructure look like?
Do you have resilience teams?
Matt Stites (15:03):
if you will, yeah, we do, and if an item becomes
hot then we form a specific teamto work on that specific item.
But you know, just as a normalcourse of business, we've got
our sourcing organization dialedinto our suppliers.
A lot of focus really has comefrom understanding what all the
(15:24):
options are.
And I'll go back to COVID.
As you said, there werescenarios where domestically
there wasn't a whole lot ofsupply of building materials and
it forced us to look moreglobally and, interestingly
enough, import some materialsfrom different regions of the
world.
That really helped us continueto be able to build and use our
(15:47):
supply chain network and ourknowledge.
Those also set up for someinteresting conversations after
COVID with the domesticmanufacturers of saying, hey,
tell me how you did that and Idon't really like it.
And it's like you know, hey,that's interesting, I didn't
really like it either, but youknow, you kind of got us to that
point.
So I think it's really theresiliency of the supply chain
(16:09):
and knowing where you could goget products or where you could
change sourcing has helped usone, be flexible, but two, also
helped us in our conversationsthat we've got a team that's
capable of doing that and that'sbrought some honesty to some
more recent conversations withsuppliers.
Ted Stank (16:27):
Have you built that cost of disruption into your
total cost of ownership modelsin procurement?
Matt Stites (16:33):
Yeah, that's an interesting thing.
We have really worked.
We're attainable housing, to bevery candid here, the on-site
and off-site homes we build.
We built over 62,000 homes lastyear and attainability is a key
part of that.
As we look at what is thedisruption and the impact that
it's having, clearly we takeaccount for that, but when we
(16:56):
also start to take account to,hey, what is a substitute
material that we could use orhow could we change our building
process, we've actually takensome of the things that started
out as challenges in the buildprocess during COVID and found
that they were more effective inour production process and have
kept them as a benefitpost-COVID as an outcome of that
(17:19):
.
Tom Goldsby (17:20):
Interesting.
Hey, matt, I was curious.
62,000 homes, I mean that isamazing and I got to believe
that should be making a dent inwhat we refer to as the housing
shortage that's going onthroughout this country.
And then you know not only arethere enough kind of you know
brick and mortar Greenfieldhouses going up supposedly, but
(17:42):
also you know the higherinterest rates.
I'm just kind of curious abouthow you approach the market as
an alternative maybe to what alot of people might think of as
housing, and then how you makethat dream accessible for folks.
Matt Stites (17:56):
To back up a little bit.
The organization here is a veryintegrated organization.
So within part of theorganization we'll make our own
windows, doors, trusses,cabinets all of those materials
that are going into the home.
We have our own DCs supplyingmaterials into the home building
sites.
We build homes off-site and webuild homes on-site, and then
(18:19):
we're working on versions ofbuilding a combination of an
off-site home and an on-sitehome.
One of those today is a crossmod and it's really how do we
drive the cost down of homes?
When Jim Clayton started thecompany back in the 50s, he
started it as a manufacturedhome company and it was about
(18:41):
attainable homes.
And as we've gone on through theyears, we've acquired site
builders and today we look atourselves as a residential home
builder and we continue to talkabout how do we leverage the
knowledge and the capabilitieswithin the organization.
So if we're building our ownwindows or we're building our
own cabinets or we're buildingour own things, those are passed
(19:03):
through the organization at acost point that allows us to be
more attainable.
The way we build homes is to bemore attainable, and the
materials and the relationshipsthat we have with our suppliers.
It's pretty interesting thisyear the attainable housing
seems to be more interestingfrom a supplier perspective,
(19:23):
because volume is more importantthan it has been in past years,
when you could sell whateveryou produced at any price you
wanted, and we see others kindof moving into that space.
That space has been one thatwe've been true to in times
where market would have acceptedany price, as well as times
where price is a little bit morechallenged.
(19:45):
But the whole objective is hereis for school teachers,
librarians, police officers, theentire population.
We want to really be able tooffer them a home that they can
afford, and we've built a modelthat gives us quite a bit of
advantage in doing that.
Tom Goldsby (20:03):
You're coming across as really more vertically
integrated than I imagined isreally more vertically
integrated than I imagined.
Trekking on I-40 or 75, we seethe double wide load coming
through.
It's like, okay, how am I goingto get around this?
And so I knew that you had thatdelivery aspect on the prefab
piece.
But the amount of onsite thatyou're doing and then also the
(20:25):
building of so much of thecomponentry that's going into
those homes is something Iwasn't frankly aware of.
Yeah, that's going into thosehomes is something I wasn't
frankly aware of.
Matt Stites (20:31):
Yeah, that would be a good case study.
The organization here Jim andKevin and the leadership team
has really leveraged.
That led to, in 2003, theinterest of Warren Buffett to
buy the company.
I don't know if you guys knowit or not, but the University of
Tennessee played a key role inthat.
You guys know it or not, butUniversity of Tennessee played a
key role in that.
(20:51):
University of Tennessee had agroup that would go to Omaha
meet with Warren and the yearthat the controller within our
division was in University ofTennessee and made that trip,
his group offered the book thatKevin Clayton wrote to Warren
Buffett, which then later turnedaround to be Warren acquiring
the organization.
Following it turned out wellfor the students and really well
(21:14):
for the professor.
The professor got an A shareand the students got a B share
Tom.
Ted Stank (21:20):
It was a group of finance club students and the
advisor that's a great story.
Tom Goldsby (21:25):
I was not aware of that.
Ted Stank (21:27):
Wow, a lot of small one-story houses on the water
have sold for like $2 millionand got completely razed and
(21:52):
giant 7,000 square foot homesbuilt on that lot which made it
unaffordable for a lot of people.
One street off the water.
Lots were not going for thatmuch but they were still going
for a lot.
Somebody bought one of theolder homes that was kind of in
disrepair and knocked it downand lo and behold, a couple of
weeks later and so there's thisempty lot.
A couple of weeks later twotrucks show up with components
(22:15):
of a Clayton home and within aweek that home was up.
I mean, they were still workingon the interior.
But the point I wanted to bringout is that in a lot of areas
skilled tradespeople are reallytough to come by.
So if you're building your ownhome and you're not building a
7,000 square foot, $5 millionhome, it's really tough to find
(22:36):
tradespeople.
And these people were able tobuild a really nice looking home
, move into it in a short periodof time.
Matt Stites (22:44):
Yeah, that's a great point, Ted.
The market has been kind ofconstrained on trades and
there's some things that aregoing on today that may be
constraining those trades alittle bit more with some policy
.
But the idea of being able tobuild a home or portions of a
home off-site have a whole lotmore efficiency to them and this
organization has been great atknowing how to do that.
(23:07):
To talk about it a little bitmore, we have a product that's a
hybrid version today.
It's called a cross mod, andthe cross mod is the core part
of the home, is built within afacility, delivered to the job
site, much as you said, and thegarage and the porch is
constructed in a much smallertime than what it would take to
normally construct a home.
(23:27):
And that's really part of beingefficient and that of leading
to attainability.
That's a great new product.
We've got one here in Knoxville300 home community.
That's being done that way at aprice point of, I think, three,
three and a quarter, which ispretty attractive.
As you know, the market and Iwould also say another thing in
(23:48):
those homes is attainability,isn't just the price that it
costs you to get into the home,but it's the cost of living in
that home and the organization,two years ago, right at this
time, made a commitment to buildhomes to a higher standard.
We built 50,000 homes to thehighest energy standard last
year, thousand homes to thehighest energy standard last
(24:12):
year.
Those 50,000 homeowners willsave over $39 million a year in
their energy bills for the homesthat they bought last year,
being another way to bringattainability to the homeowner.
Ted Stank (24:19):
I mean, I love that so many different supply chain
concepts being applied in thiscontext, you know, building the
things that you can buildefficiently in advance and then
postponing the final assembly,if you will, and these are
things that we think about inautomotive and electronics but
not in home building and really,really a fascinating concept.
Matt Stites (24:38):
Yeah, the cool part of that is the innovation
involved in getting from how dowe do it to actually doing it.
And we did it in a six-monthperiod of time of understanding
the energy code, engaging ourteam members and engaging our
suppliers, and saying here's thechallenge.
And everybody rowing togetherand hop, we made it happen.
(24:59):
And six months later, all 40home building facilities at that
point were building homes tothat standard.
Ted Stank (25:05):
Let's talk about that innovation comment that you
made.
How do you drive thatinnovation into your teams?
Matt Stites (25:11):
Yeah, I think we're an organization that really has
a growth mindset.
So the idea is how do weovercome it?
One of our values is drivingchange, and doing good is
another value.
So it's a little bit in our DNAof looking to disrupt and bring
value.
The interesting part of it is,if you go back to how sourcing
(25:34):
may have been done or some maydo it is, you know, an RFP or
what's the lowest cost or, myfavorite, the reverse auction.
You kind of get what you payfor, but when you engage your
partners to help you figure outsolutions, you can really do a
lot of different things, and Ithink that's really key to the
(25:54):
core of this organization.
We're wired internally that wayand got some amazing partners
on the outside that interactwith us that same way.
Tom Goldsby (26:05):
Yeah, no, it really would make for a great case
study and how you bring thatinnovation forward is key.
But I did want to go back.
We've touched on talent,certainly here at the Supply
Chain Leaders in Action, year in, year out, perennially always a
top topic of discussion.
And you know you mentioned kindof the techs earlier.
You know the capabilities youneed to actually build.
(26:27):
What about in the supply chainorganization?
What kind of talent needs doyou all have and how have you
been meeting them?
Matt Stites (26:34):
Yeah, that's a great question and I would say,
as much as we might identifyourself as a home builder or
building products company, itreally comes down to as a team
we see ourself as a team membersand how engaged they are in the
annual cycle of giving usfeedback and then us acting on
(27:04):
it.
As it relates to the supplychain, in addition to the things
that the company is doing tokeep team members engaged, we're
actively engaged in severaldifferent functions and
organizations.
I'd like to genuinely sayreally proud of the relationship
that we have with theUniversity of Tennessee and what
(27:27):
we're doing there together.
You guys have got theseacademies that you've developed.
We've got some folks that we'veput through those academies.
We're having a conversationwith your team as well, dan and
Jada, on the Kerman Academythat's going to launch this fall
and, as we were talking overthe last year about what was
going to be in this academy andseeing what you guys have really
(27:51):
centered that on is the value.
That's one that kind of is coreto the way I look at the supply
chain and how you build outfrom.
That is a key thing.
We've done a lot and we've grownit with internships and we've
done a lot more recently withmanager and training programs.
(28:11):
We've got a success rate with a66% conversion of our interns
to team members and we've gotsome really fantastic team
members that have come into theorganization.
We currently have 15 internshere this summer.
We met with them a couple ofweeks ago as we brought them
into the organization and wetalked about who we are.
(28:33):
We also talked about them andwhat we wanted them to do in
their role and we wanted them togive us feedback and to help us
get better at what we're doing.
And some of the conversationswe've had in the last two weeks
of hey, mr Seitz, could I tellyou about this?
You know it's been fantastic.
It's really kind of thatorganization of continuous
(28:54):
learning and people that come ineven if they're an intern.
You know how do you add to theorganization and being curious,
and if we don't know the answer,let's find people that know it
and go explore.
Ted Stank (29:06):
How do you instill in them not only them, but your
experienced team members as wellthis comfort level of living
with the uncertainty we weretalking about earlier?
With using AI, for example.
You know the innovations, thosekinds of things.
Matt Stites (29:22):
Yeah, no, it's pretty interesting from the
folks that are coming into theorganization.
They're chomping at the bit toget after this AI thing and then
those that have been in theorganization are kind of like,
oh man, what's going to happenwith that?
So it's an interesting dynamic.
By having a diverse culturehere in the organization, I
think the power of thattechnology is just leaning into
(29:46):
it, being curious, how could weadopt it?
How are we talking about it?
We've got a material managerconference here next week and
we'll have 60 folks in andthere's a session that you guys
are helping us with, talkingabout all the changes that are
going on within supply chain.
And we're talking abouttechnology.
And we've got a partner in ShawIndustries is in and they're
(30:06):
talking about how they're usingAI and technology and you know
the the conference is themed, uh, looking up and looking out.
We want our folks to to kind ofsee what's coming at them.
You know we've got busy jobsthat we do every day, kind of
making sure that we've got thehouse in order, and we're going
to use this time to help themlook forward.
(30:27):
Another cool thing that we'redoing, guys, is this supply
chain camp, and I heard about itlast year and I'm like this is
incredible, talking about talentand how to get talent early.
Your program is fantastic.
We're excited to be sponsors ofit and engaged in the success
of that coming up here in July.
Ted Stank (30:48):
So what Matt is talking about for our listeners
is what we call the Supply ChainManagement Summer Camp.
It's run by our director ofcareer placement, called Burns,
where we bring in a number ofhigh school students and run
them through a week long,essentially boot camp on supply
chain management.
Clayton is one of our greatsponsors of that.
(31:09):
We have sponsors, we have folksfrom those organizations come
in and talk to the studentsabout what careers are like in
supply chain.
Talk to the students about whatcareers are like in supply
chain, and we think it's areally good way to reach to
particularly underrepresentedgroups in our university base as
well as in the supply chaincommunity.
So, yeah, it's great.
Thank you so much for supportingthat, Matt.
It's a really cool innovation.
Matt Stites (31:30):
We had a meeting last Friday with our whole team
here and we were talking aboutthings coming up and we had our
interns in that meeting andthey're like, hey, we want to be
part of that.
So we've got our interns thatwill be speaking to these high
school students of what it'slike to come in and go to the
university and the opportunitiesit provides and why supply
(31:51):
chain.
And then we've got early incareer folks that have gone
through that and talking aboutwhat their journey has been,
have gone through that andtalking about what their journey
has been.
And then we've got a partnerfrom Ernst Young and myself
that'll be talking moreholistically about what the
career is like and theopportunities that it provides.
So great opportunity.
Thanks for setting that up forus.
Tom Goldsby (32:10):
Well, you know, matt, I'll just turn it right
back to you as a member of theadvisory board.
You all pressed us to kind ofhelp solve a problem that we
were all experiencing aboutbringing those underrepresented
groups into your supply chainorganizations, also into our
universities, and it was reallygreat.
(32:31):
Thomas Deakins, who was ourformer managing director of the
GSCI, got behind it and partnerslike Clayton Holmes stepped up
to support it, and we're just soexcited about it and we're
solving a key problem out there.
But it occurs to me that we'retalking about bringing new
talent into supply chain.
Something we could have touchedon at the outset was your
(32:54):
journey, matt.
I'm just curious what agraduate of the University of
Toledo and you had an extensivecareer at Dana Corporation, and
I'm just curious about how itbrings you to your current role
as president, svp.
So can you go back a little bitto your upbringing?
We heard the farm referenceearlier.
So did you grow up in a ruralarea?
Matt Stites (33:14):
Yeah, I did.
I grew up in Northwest Ohioarea.
Yeah, I did.
I grew up in Northwest Ohio 161years this year the family's
been on the farm, so that's apretty cool thing.
Wanted to work at DanaCorporation.
It was a premier company.
I like cars and that's whatthey did.
So at age seven, that was whereI wanted to go and had the
fortune of spending 12 and ahalf years there.
(33:37):
Ended up at corporate in theirsupply chain organization.
Centralized the supply chaininto a global supply chain
structure.
Had an opportunity from thereto go to Wisconsin, be part of
an employee-owned company andthe leadership team there of how
do we reinvent that businessand some pretty cool things we
(33:57):
did there with partners.
We reinvent that business andsome pretty cool things we did
there with partners.
One of those was a milestone, Iguess maybe in my journey was
we ended up winning the 2012award for most innovative ideas.
We were a global finalist forthe industry and our recognition
(34:17):
was based off of a supply chaininitiative to work with a third
party and how do we workcollaboratively and
strategically together, and soit was really showing that
supply chain has the ability toreally change a business and a
business model.
And then I got a phone call froma recruiter that said, hey, you
ready for a different industry.
(34:38):
A phone call from a recruiterthat said, hey, you ready for a
different industry?
And would you want to move?
And that was well.
If it was to Minnesota fromWisconsin, no, I wouldn't want
to move.
It was the opportunities inKnoxville, which I had done some
work with University ofTennessee when I was in
Wisconsin.
We had traveled here as afamily before and liked the area
(35:00):
and I said, okay, so what's theindustry?
And they said it's a homebuilder.
And I said, okay, I don't knowabout that.
And it was what are your firstthoughts?
And I'm like my first thoughtsis I read that it's a pretty
turbulent market.
It's good when it's good andit's horrible when it's horrible
.
And there's probably little inbetween from what I read.
(35:21):
And the recruiter said, hey,what if I told you this company
didn't lose money through thehousing crisis?
And I said, okay, I think weshould continue the conversation
.
So that's what brought me hereand it's been a fantastic
journey along the way, learninga lot of different things, but
being in a place today where thevalue of the supply chain
really can contribute to thesuccess of the organization Amen
(35:44):
.
Ted Stank (35:44):
Well, we're really, really delighted to have you as
a friend and neighbor and apartner.
Tom had mentioned our executiveadvisory board.
You're a great contributingmember of that.
We attribute a lot of theprogress that we've made in our
program to the advice we getfrom that group.
So thank you for that.
Listen again.
Thank you so much for beinghere with us To our listeners.
(36:06):
You can reach us at gsci atutkedu.
Matt did a great plug for ourcertification academies.
We have them in general supplychain management foundations.
We have them in supply chainfinance, supply chain planning
and a new one kicking off thisfall in procurement.
So if anyone's interested andwants more information, please
(36:29):
reach out to gsci at utkedu.
Matt, great to be with you.
I know you've got a busy daycoming up.
We'll let you go with that.
Matt Stites (36:40):
All right, thanks guys, I enjoyed it.
Intro & Outro (36:44):
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 gsdi at utkedu.
Join us next time as wecontinue pulling back the
(37:07):
curtain on the world of supplychain, educating and
entertaining you along the way.
Until then, listeners.
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