October 8, 2024 • 62 mins
Chris Sultemeier recently sat down for an insightful interview on The Matt Waller Podcast. With nearly 30 years of experience leading supply chain and logistics at retail giant Walmart, Chris has a wealth of wisdom to share. A few key themes around leadership and innovation emerged from the conversation.
Humility and Teamwork
Despite his many high-level roles, including EVP of Logistics, Chris maintains a humble, team-focused approach to leadership. He believes strongly in ‘servant leadership’ – empowering others so they can accomplish more than they thought possible. As Chris puts it, “You are only as good as the team you’re leading.” He took the greatest joy in “seeing a team accomplish more than they ever thought they could.”
Chris stresses that building trust is the foundation of any relationship. Team members must know you truly care about them as individuals, not just cogs in a machine. With trust and care in place, Chris found team members would go to incredible lengths for shared success.
Innovation Through Testing
Chris credits Walmart’s continued innovation, even as a huge company, to relentless testing and trying of new concepts. He reminisces about the constant small tests underway during Sam Walton’s leadership. This experimental approach never ceased even as Walmart grew.
Chris provides several examples where Walmart piloted ideas he was originally skeptical of, including order online pickup in store and automation partnerships, which both proved tremendously successful. He learned not to dismiss ideas out of hand just because the approach was counterintuitive. Walmart’s test-and-learn culture kept them innovating.
Investing in the Future
Since retiring from Walmart, Chris serves on the boards of several tech startups aiming to transform retail and supply chain. He looks for companies with a compelling vision to solve real-world problems, such as inefficient ocean shipping contracts. Chris partners with founders who have the drive and humility to see their ideas through.
He is particularly excited about companies leveraging AI, machine learning and generative AI to structurate unstructured data. Chris believes these emerging technologies will unlock major advancements.
Throughout his long career, Chris Sultemeier has exemplified personal humility, commitment to teams, and the power of an experimental mindset. His wisdom provides lessons for leaders in any industry looking to innovate and build trusted teams for the long-term.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:11):
Welcome to the Matt Waller podcast, sponsored by New
Road Capital Partners, where welook at success at the
intersection of technology,logistics, supply chain, retail
and CPG, which we also call theretail value chain.
I want to clarify that thispodcast is distinct from my
responsibilities as a professorin the Sam Walton College of
(00:32):
Business.
Nonetheless, it aligns with myaspiration to provide practical
insights to professionals inbusiness by showcasing companies
and people that can enhanceyour ability to manage, lead,
strategize and marketeffectively in the retail value
chain.
Before we dive into today'sexciting episode, I'd like to
take a moment to express mydeepest gratitude to our
(00:55):
founding sponsor, new RoadCapital Partners.
New Road Capital Partnersinvests in proven and innovative
technologies, products andservices that serve existing and
unmet needs in the marketplace.
New Road partners withgrowth-oriented companies in
supply chain, logistics andinnovative consumer companies as
experienced entrepreneurs andoperators.
(01:17):
The New Road team prides itselfon the high level of
collaboration it brings to eachof its investments.
New Road's team of investmentprofessionals and operating
partners have deep, relevantinvesting and operating
experience, includingsignificant experience leading
large divisions of enterprisecompanies and building
businesses from scale to conceptto realization.
(01:41):
To learn more, visitnewroadcpcom.
I also want to disclose that Iam an advisor to New Road.
I would like to take thismoment to recognize
podcastvideoscom for being ourprovider of podcasts.
Their mission is simple Tostreamline the process of
(02:01):
creating podcast videos.
They're equipped withindustry-leading equipment and
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I'm very pleased with theservices they provide me.
Now, without further ado, let'sget started with today's episode
.
I have with me today ChrisSultemeier, who I'm going to
introduce in a moment.
(02:22):
He was over all of globalsupply chain, logistics and
transportation operations forWalmart.
He was at Walmart for 28 yearsand now he's on the boards of
several high-tech logistics andsupply chain management
companies.
We're going to talk about that,but I'm really excited about
(02:44):
this interview.
You will learn so much fromthis.
We start out talking aboutWalmart, which is quite
remarkable If you look at howmuch Walmart changed over the 28
years that Chris was there.
But we're going to be talkingabout leadership, including
(03:06):
things like team building,integrity.
We're going to be talking abouthow you bring an
entrepreneurial mindset into alarge organization like Walmart,
which is probably one of itscore competencies.
That allows it to pivot quickly.
We're going to be talking aboutpickup order online pickup at
store.
You may or may not know muchabout it, but it's a very
(03:28):
important change in business inthe United States in this
century.
It will be a landmark event.
We also talk about hisselection of symbolic for
automation of distributioncenters.
I can't wait for you to hearabout that.
I asked him a pretty toughquestion about what emerging
(03:49):
technologies he's most excitedabout and he explained it.
We only got through three ofthem, so I think we're going to
do another episode on this,because I'd like to hear more
about that and I think you willtoo.
It's a really exciting podcast,but let me give you his formal
introduction.
Chris has over 30 years ofexperience in logistics and
(04:11):
supply chain.
He worked at Walmart stores for28 years, most recently serving
as executive vice president oflogistics.
In that role, he oversawWalmart's global supply chain,
logistics and transportationoperations.
Chris serves on the board ofdirectors for several companies,
some of which include Nichex,platform, science, lodzewa.
(04:34):
He's also an operating partnerat New Road Capital Partners,
which is a private equity firmthat focuses on the retail value
chain, which includes supplychain, logistics, cpg and retail
technologies.
Chris began his career as a USArmy officer, serving for five
years in roles of increasingresponsibility.
(04:56):
He's a graduate of the UnitedStates Military Academy at West
Point with a bachelor's degreein mechanical engineering.
He has a breadth of experiencein logistics supply chain
corporate leadership and itallows him to give us valuable
guidance and advice based on hisexperience.
He's been involved withcompanies at the intersection of
logistics, technology andretail his whole life.
(05:19):
I think you're really going toenjoy this if you're interested
in business, chris.
You have nearly 30 years ofexperience leading supply chain
logistics at Walmart, one of theworld's largest companies.
Before I get into somequestions, I just want to give
people an idea.
Most people have no idea thesize of Walmart.
It's hard to comprehend alittle bit, but Walmart has 190
(05:42):
distribution centers and that'shard to imagine.
I mean there are very fewretailers with 190 stores and
Walmart has 190 distributioncenters and it serves stores,
clubs and direct delivery tocustomers.
Speaker 2 (06:02):
And Matt, that's just in the US.
Yes, that's not international.
That's a good point, I didn't.
So it's another 130international physical locations
where there's a distributioncenter, a fulfillment center, a
center point, some type ofphysical operation.
So it just compounds when youadd the international footprint.
Speaker 1 (06:22):
That's a good point, and it's hard to believe, too,
that in China.
I've been following WalmartChina since it opened and I
remember that first centerSupercenter in Shenzhen.
When they opened the door,everyone came in and it crushed
the jewelry case, if I remembercorrectly, but that was in the
(06:48):
90s.
Now they've got a lot of storesand clubs and for a long time
some of the biggest clubs in theworld were in China.
I don't know if that's stillthe case.
But the other thing thatsurprised me was that 50% of
Walmart sales in China aree-commerce.
I would have never expectedthat would happen.
(07:08):
It's quite remarkable.
Within Walmart US and I don'tknow the answer.
Internationally, walmart'stransportation fleet has 11,000
tractors, 80,000 trailers andmore than 13,000 drivers, which
would make it an enormoustrucking company in the United
(07:29):
States.
I don't know where it wouldrank, but it would be up there.
Speaker 2 (07:34):
Typically, whenever we would pull out the transport
topics or whatever list oflargest private fleets,
typically Walmart was thelargest Class 8 private fleet.
So you had the two big bottledistributor companies, the
Coca-Cola and the Pepsi.
That would be larger in termsof number of powered units, but
(07:58):
if you get to Class 8 tractors,Walmart was typically the
largest private fleet andnormally somewhere about number
six or seven in terms of largestfleets in the company, public
or private.
Speaker 1 (08:12):
That's amazing and of course I remember early on I
was fortunate enough to when youall started getting into
backhaul I got to work on aproject to figure out how to
optimize the routes and stuffand timing.
But I thought, well, this is agreat idea, it makes sense.
I had no idea it would grow tothe level that it's at today.
Speaker 2 (08:37):
One of the things that amazes people in and I
always was questioned when I wasthere but if you've got 12 or 9
or 10,000 tractors, why do youhave 70 or 80,000 trailers?
So we were always challenged.
But you just mentioned backhauland it's something that's real
(08:58):
interesting.
And what people don't realizeabout how that fleet operates is
it's totally a drop and hookprogram.
So you're dropping at adistribution center and taking a
full load to a store anddropping at a store and picking
up an empty at a store and goingto a vendor and dropping the
(09:18):
empty at a vendor and picking upa full load at the vendor and
then driving that full load tothe Walmart distribution center
and dropping that full load andpicking up another full load and
taking it to the store, and itjust goes constantly like that
and so there ends up being a lotof trailers to feed that
network.
But the exciting thing is atypical Walmart driver drives
(09:42):
over nine hours in their 10, 11hour duty cycle, and so you get
a lot of efficiency when youhave all of those trailers.
Speaker 1 (09:51):
You know there's so many things in logistics and
supply chain that arecounterintuitive to someone
who's not familiar with it.
Yeah, you're right.
I'm glad you pointed this outbecause someone could easily
think, well, that doesn't seemefficient.
It's the exact opposite, and Iremember I've had people say
this to me quite a bit over theyears.
You know why does you know aproduct go from, say, cincinnati
(10:16):
to you know a distributioncenter somewhere and then back
to a store near Cincinnati?
That doesn't make any sense.
But if they thought about theefficiencies you get by having
full truckloads, they'dunderstand that's exact, that's
exactly right.
Speaker 2 (10:34):
I mean, every time you go up from a parcel to an
LTL, ltl to a full truckload ora partial load to a full load,
you get an order of magnitude ofa much more efficient,
cost-effective load.
So the more you can pool thattogether into a full truckload,
the efficiencies are dramaticbut.
Speaker 1 (10:56):
But if you notice, this about logistics and supply
chain is a lot ofcounter-intuitive things like
this that it's always achallenge to explain it to
people.
If you're in the business andyou play with the numbers, it
makes total sense.
It's very intuitive.
But the other thing is you knoweach distribution center is
(11:18):
more than a million square feetin the United States and
typically has over 700 personnelfor unloading, shipping Etc,
etc.
But they ship about 200trailers a day, which is also
remarkable.
It it's hard to be efficientenough to drive that much volume
from a distribution center.
(11:39):
And another thing peoplewouldn't recognize if you hadn't
seen other data 200 a day isincredible.
Speaker 2 (11:48):
It really is, and it's interesting because
typically a Walmart distributioncenter is Aligned to somewhere
around a hundred stores Could bea hundred, could be a hundred
and ten hundred and fifteen, butaround a hundred stores.
Then if you start thinkingabout the math of that's 200
truckloads a day, then you startgoing oh, that means two
(12:12):
truckloads per store per day,which is correct.
And so one of the things that alot of people don't think about
is Walmart delivering to asupercenter is so different than
like a dollar store or aconvenience store, because so
often those situations are atruck multi-stop concept, but in
(12:36):
Walmart, no, it's two or threetrucks.
There were some stores, matt,that were receiving six and
seven trucks per day from adistribution center, and so it's
just a very different businessmodel than the traditional model
of a truck making multiplestops.
It's very different, way moreefficient much more efficient.
Speaker 1 (12:58):
You know people much more people don't realize too
that and you get that kind ofefficiency.
It's very, it's really asustainability advantage that
you know a lot of people don'tthink that.
They think, oh, this must beinefficient.
No, no, it's way more efficientthan any other kind of
distribution system you know,back in 2005, walmart launched
(13:20):
into a big sustainabilityInitiative.
Speaker 2 (13:23):
I remember, you remember, that one of the
challenges and at that time LeeScott, former logistics leader,
was leading the company at thattime and one of Lee's challenges
of us and at that time I wasrunning Walmart transportation
one of his challenges was I wantyou to double the fleet
(13:44):
efficiency.
And so we're just, from asustainability standpoint, what
does double fleet efficiencymean?
Well, for us, the way wedecided to define it is Cases
shipped, gallons burnt.
So how many cases do you ship,how many gallons?
Because we wanted quote, a worktype metric, we wanted
(14:06):
something that was volume based,and so that's what we launched
on is how do we double thenumber of cases we ship based on
the gallons that were burningfrom an environmental standpoint
?
And it literally took us 10years, from 05 to 15.
But by 2015 we had doubled thenumber of cases we were shipping
(14:30):
per gallon burned.
And the cool thing was we hadthe environmental defense fund,
edf, monitoring us and Checkingthe numbers and being a partner
with us in evaluating all of ourtactics.
But the tactics, matt, were justwhat you talked about how do
you get more on the trailer?
How do you take water out ofproduct.
(14:52):
So if you remember theconcentrated laundry detergent,
remember it.
Well, all of those things we'reall about.
How do you ship more?
How do you reduce the footprintof what goes on the trailer?
How do you fill the trailer?
How do you optimize deliveries?
How do you put all thattogether and how do you you
talked about it earlier how doyou run more efficient backhalls
(15:14):
?
Because all of that was burningGallons.
Anytime you're running empty,you're burning, and so all of
those things went into that.
But the net of it was wedoubled the fleet efficiency and
then in 15, when they weredoing the Sam M Walton Award for
entrepreneurship and everything, that was one of the things
(15:34):
that was recognized because thesustainability team received
that award.
Speaker 1 (15:39):
Wow, and I remember when they did the kickoff of
this sustainable initiative inBeijing in 2006.
That's right, it was a big dealand I I felt very fortunate to
be there and I was gonna say youwere over there at that, I was,
and but just listening to allthe stories and the vision and
(16:00):
to see that Most of it's come tofruition, including the the
cases delivered gallons burnedthat's that's really a
remarkable story.
But it really is aboutlogistics efficiency.
It is.
That's really what logisticsand supply chain is about.
Speaker 2 (16:21):
It is, it is it and really any you said it earlier
any efficient logisticsorganization perfectly aligns
with sustainability, becauseyou're doing more with less and
so it's just a marriage.
And then when you get what youhave at Walmart, where you have
(16:42):
a dramatic, dramatic scale, thenyou can drive so much
efficiency.
Speaker 1 (16:49):
Well, you know, a long time ago, when Walmart came
up with the idea Sam Walton ofyou know Rather than because
Walmart came out and target allstarted in 1962 and Kmart was
rolling out stores in quote,good markets and Walmart was
sticking to the idea of let'sstay close to the distribution
(17:12):
center.
And you know, I remember Istarted following Walmart really
closely, I guess in about 1989when I was in graduate school,
penn State.
I don't know what caught myattention about it, but one of
the things that you know, thisnotion of you know, if your
stores close to the DC, you havea shorter lead time, so you're
less likely to stock out of thestore, but you can have full
(17:33):
truckloads of homogeneousproduct going into the DC and
full truckloads of heterogeneousproducts going out of the DC,
and so you get this amazingefficiency, not in terms not
only in terms of transportation,but also in terms of inventory
management.
Speaker 2 (17:49):
Yes, sirs and.
Speaker 1 (17:53):
But sticking to that discipline I Would think would
be hard, because I remember whenI, when I first got involved in
China, I Remember the suppliershad a hard time buying into
this notion Because most of theworld does direct store delivery
, which is terribly inefficient.
(18:14):
Again, intuitively it seemslike, oh, that would be more
efficient, but no, you know, Iremember going to a car for in
Shanghai One of my neighbors wasan executive in Car 4 and he
gave me a tour.
There must have been 200vendors at the back dock and you
(18:35):
go to the Walmart DC andthere's just a few trucks.
You know and you see, oh, thesufficiency is just dramatic.
But it was very hard to, Ithink, teach people in other
countries what these conceptsmean, and they should implement
them.
Speaker 2 (18:51):
You know it's funny.
I used to have a picture and Idon't think I still have it, but
it was.
You talked about thesupersetters but also the Sam's
Club that was there in Shenzhenand for years that was the
highest volume Sam's Club also.
But I used to have a picturebecause in the early days the
Sam's Office, sam's Club Office,was above the Sam, that first
(19:16):
Sam's Club there and anyway theyhad a picture of one of the
windows and it was the back ofthe Sam's Club early days and it
just showed literally hundredsof vehicles trying to get to the
back dock of that Sam's Club todeliver.
And you just saw that and itwas like a massive funnel with
(19:37):
all of these pickup trucks andyou know three wheelers and
everything else trying to get tothe back of that club to
deliver their stuff.
And you saw that and you justthought you know how
unbelievably inefficient thatwas.
And then over time obviouslythat all changed, but initially
it was a hard slog.
Speaker 1 (19:57):
I can't imagine.
I've heard all kinds of storiesabout back then you had to.
In the early days of Walmartand Sam's Club in China, you had
to work with the government tomove your product.
They made a smart move inderegulating that and allowing
private, the private sector.
A lot of people don't realizethat.
I mean, China made a brilliantmove there, just like we did
(20:20):
when we had the Motor Carry Actof 1980 and deregulated
transportation.
If they wouldn't have done that, they wouldn't be near where
they are today.
Speaker 2 (20:31):
That's exactly right, and I wasn't directly involved.
I was indirectly involved increating a coal chain, a supply
chain, coal chain in China, andthe work in fact, the gentleman
now that's the CEO of the USbusiness, John Furner.
At that time John was the headmerchant for Walmart China and
(20:55):
John was working with a lady wehad named Leslie over there and
John and Leslie were working thewhole supply chain deal to
establish a coal chain supplychain, because that really did
not exist in China and it tookthem about two or three years
but they really stood upperishable distribution centers
(21:15):
and suppliers all shipping intoperishable distribution centers
and then perishable deliveriesto our stores and clubs.
But it was groundbreaking forthat to happen in China.
Speaker 1 (21:29):
So amazing.
It was fun to watch Chinaemerge.
I know China's got a lot ofchallenges right now, but they
seem to be pretty adaptable.
They're very entrepreneurialpeople, even though they're
operating a communist, so-calledsocialist system.
The people that are veryentrepreneurial.
(21:49):
Well, okay, I want to ask you afew questions.
Sure, Again, with yourexperience at Walmart, really
leading the largest rivallogistic supply chain network in
the world and, of course, Idon't know exactly where you
(22:10):
started, but I know early on youwere in replenishment at
Walmart.
You were over replenishment atWalmart when I met you.
What?
Speaker 2 (22:17):
year would that have been?
That would have been probablyaround 93 or 94.
That's when you and theprofessors came to teach us.
Speaker 1 (22:27):
Yes, that was such a fun time.
Speaker 2 (22:30):
Friday afternoons.
Speaker 1 (22:31):
It was summer time, wasn't it?
It was.
You had some dedicatedemployees.
I did so, but, given yourexperience, what are some of the
most important lessons you'velearned in your leadership roles
?
You've had many in your life.
Speaker 2 (22:49):
Yeah, I think, matt, I would go all the way back,
even to college and the military, because the learnings from
there moved right into practicewherever I was Walmart or
whatever jobs at Walmart orSam's Club or wherever I was at.
And really I think number oneis the concept of servant
(23:13):
leadership.
I mean it's and I know it'scliche and I know people talk
about servant leadership all thetime, but you are only as good
as the team you're leading andyour role as a leader is to
serve them, to take away thebarriers and the obstacles and
to empower them so that thatteam can be successful.
There's probably nothing in mycareer that was more enjoyable
(23:37):
than seeing a team accomplishmore than they ever thought they
could, and that, to me, wasprobably the highlights of my
career is having thatopportunity to lead that team
and them do things that theynever thought they could, and to
see that excitement, that senseof accomplishment and just how
uplifting that was to thosepeople.
(23:57):
So I think that would be for me, number one, and then that
whole concept of team and thatwe're all in this together.
I think the only other thing Iwould mention is I would just
challenge everyone to nevercompromise your character.
Stand firm on what your valuesare and never compromise your
(24:21):
character.
I look back over my time in themilitary and my time at Walmart
and everything else, andprobably the two or three times
I can think about that I lookthe other way when I should have
said something.
Those are probably the thingsthat were still probably most
disappointing to me today that Ididn't take a stronger stand,
(24:43):
and so often I did, butsometimes I didn't, and so that
would be the only otherchallenge I would have of folks
is to never compromise yourcharacter.
Speaker 1 (24:52):
Well, so this servant leadership team and the concept
of you're only as good as theteam you're leading.
And then you are pleasure andseeing your team accomplish more
than they thought they could.
I would imagine that not onlyhelped the team succeed, it
(25:17):
probably made people want to beon your team, oh absolutely
Absolutely.
Speaker 2 (25:21):
And that was one of the most exciting things,
because once the team starts,it's just like sports Once the
team starts winning and themorale starts coming and the
excitement starts coming, thenpeople want to jump on that team
.
The other exciting thing isother groups see what's
happening and they start wantingthe team members.
(25:43):
They start wanting to recruityour team members and pull, and
that's wonderful too, becausethen those teammates get to go
do things in other areas andtake on bigger responsibility.
So it's just a multiplying typeof effect.
Others want to join, others aregetting tapped on the shoulders
to do other things, and itcreates a really positive
(26:07):
dynamic.
This is so interesting.
Speaker 1 (26:11):
Anyone who's ever led teams knows this can happen.
They can also go the other way,but I do think people who take
pleasure in seeing otherssucceed I think that some people
can take more pleasure in thatthan others.
For some reason.
I've noticed this there's aterm for it and I can't remember
it now but if you can, itreally helps you lead the team,
(26:38):
because people can tell when youtruly celebrate their success.
Or if you're just saying it,because sometimes team leaders
there are team members in theirteam that are too talented or
too successful, thinking that itmight make them look bad.
I'm sure you've seen thingslike that Absolutely.
Speaker 2 (26:58):
But it kind of goes back If you remember, years ago.
And so obviously Walmart'sknown for the Saturday meetings,
having the Saturday meetingsand bringing speakers in.
And I remember one time DavidGlass brought in Holtz when Lou
Holtz was the coach at theUniversity of Arkansas and David
(27:19):
started asking Lou Holtzbecause at that time Lou Holtz
was building the program at theUniversity of Arkansas and David
Glass asked Lou Holtz, what'sthe secret?
And Lou Holtz said well, thesecret is you got to get great
players.
And David said well, how do youget great players?
And Lou said number one theplayers have to know you care.
(27:40):
Number one.
He said everything else comesfrom that.
If the players know you careabout them not the team but
about them personally and youcare about their success, you
care about them as individuals.
He said then everything springsfrom that.
(28:00):
And it was just really powerfulfor me sitting there because it
just confirmed everything I'dseen in the military, I'd seen
in ranger school, I had seen inall of these different things
that I had done.
If people know that you care,it is amazing what they will do
and the links they will go tofor the team if they know that
(28:22):
the leader cares about thempersonally.
Speaker 1 (28:25):
There's some research in academic journals peer
reviewed research that showsthat there's three key variables
to building trust andorganization for a leader.
One of them is this notion thatpeople believe you have their
best interests in mind.
So that's one of the three.
(28:46):
The other two include that theleader is competent, and the
third one is that they haveintegrity, that is, that they'll
do what they say they will do.
And that gets to your thirdpoint never compromise your
integrity.
If you're not compromising yourintegrity, then you're
following through on what you'resaying and that also builds
(29:08):
trust.
So really everything you'resaying.
When you were explaining thisto me, I started thinking trust,
trust, trust.
You're building trust in yourteams, but not just trust, also
excitement.
I mean everyone wants to be ona wedding team.
Speaker 2 (29:26):
Absolutely.
It's fun.
Everybody wants to win.
I think everyone's.
I don't care who it is.
They've got a little bit of acompetitive streak.
People have a biggercompetitive streak, but everyone
wants to be on that winningteam.
You want to win, you know.
You talked about trust.
I'm going to go back to thatfor just a minute.
You talk about trust.
(29:46):
Trust is the foundation of anyrelationship and you have to
have a relationship, and theonly way to have that
relationship with your people isyou have to have trust, and so
all of those things that you cando to build that trust that
you're looking out for theirwell-being is so critical to
(30:08):
have that relationship so thatyou have trust and you can get
things done as an organization.
Speaker 1 (30:15):
Well, I again.
I really love this and it makesme wonder.
You know Walmart through ahistory.
Yeah, I started following rightclosely about 89, when I was at
Penn State and I would.
I would use Walmart sometimesin my classes as examples, and
(30:36):
my professors knew almostnothing At that time.
Kmart was bigger than Walmart,but I was reading about Walmart
sharing sales data with PNG andother teams and other teams were
moving to town.
All this always fascinated meand so when I had the
opportunity to interview here, Iasked if they would set up an
(30:58):
appointment for me to meet forlunch with the EVP of logistics
for Walmart.
And they did.
Who would say that?
At least got it?
Yeah, and Lee.
Immediately he said look, ifyou come here, I'll get you
involved in some projects, I'llintroduce you to people, I'll
hire your students, these kindof things.
And he followed through on it.
(31:19):
And again, this was a long timeago.
But then he, he got me and afriend of mine who was an
industrial engineering professorinvolved in a really cool
optimization project inlogistics, and then he went to
merchandising, I think.
And then they hired Mike Duke.
(31:39):
So I started working with MikeDuke and they had a guy named
Robert Bruce at the time thatwas heading up supply chain.
I got to work on the earlyversion of CPFR with him and
some other people.
But here's my point.
I remember when we were talkingabout CPFR back then we called
(31:59):
it CIFAR continuous landing, no,continuous forecasting and
replenishment of CIFAR.
We eventually put the P inthere, but the idea was that
suppliers have knowledge thatthe retailer doesn't have a vice
versa.
If you combine these, you'll beable to get a better solution.
That's a very theoreticalconcept and I think it takes a
(32:23):
special company to take anabstract, esoteric idea like
that and to try to bring it intoreality, which they did.
But the other thing I've noticedover the years is Walmart can
pivot.
Now, a lot of times people say,oh, walmart doesn't change
easily, they're too huge.
Right, well, they focus ontheir priorities.
(32:43):
So your priority may not betheir focus and that's why
you're not seeing movement, butif it is their focus I can't
remember who was saying it itmay have been John Furner, but
they were saying look, we'regoing to merge our e-commerce
app and our store app into oneapp and we're going to also
merge our merchandising fore-commerce and brick and mortar
(33:06):
into one person for eachcategory and whatever.
I thought this will take years,but didn't they actually
executed it more quickly?
Many suppliers still haven't.
Many suppliers are stilloperating separately.
They're not operating on thechannel.
But I wonder this idea ofservant leadership and I know
(33:30):
it's part of.
If you look at the 10 rules forbuilding a business by Sam
Walton which we have in theCollege of Business at the
University, big islands are allin size.
This is the pool we built lastwinter on the floor that I'm on
has 10 rules for building abusiness.
Servant leadership really comesthrough in those.
I don't think it says servantleadership in it, but that's
(33:51):
what I hear and I wonder if thatis part of the reason they're
able to pivot so quickly.
What do you think?
Speaker 2 (33:59):
Yeah, I think that's part of the reason I think
there's still in a lot of people.
I'll go back I'll digress for alittle bit Go back to the days
when Sam was running the company, because when I first started
Sam was running the company,right, we were doing enormous
numbers of tests.
So there was a dot drug store,there was a farm store, we had
(34:23):
all of these different formatsof stores that were being tested
and tried and everything wasgoing on.
You know, the Supercenterstarted as a hypermarket and
that was too big and then itmorphed into this and morphed
into that and finally theyarrived upon the Supercenter.
Sam's Club was a test.
They tried the Sam's Club testand then they did the
(34:43):
neighborhood market test.
So there's always been thisconstant test and try and test
and try.
I'll give you another exampleBack in 16, which was my last
four year at the company theylet everyone know that we were
gonna try this whole concept ofpick up at the store.
(35:03):
Now, at that time I was the EVPof logistics, so I was in that
room when we talked about doingpick up at the store and this
whole concept of ordering onlineand then a customer coming to
the store and picking up theirstuff, but a separate order
process online and then aphysical come to the store to
pick up.
I thought that was the craziestidea.
(35:25):
I thought there is no way acustomer's gonna take the time
to order and then still drive tothe store and pick up their
stuff.
They're either gonna want itdelivered or, if they're gonna
come to the store, they're gonnacome shop One of the two.
But this order and pick up,that's a failing proposition.
Well, I was about as wrong as Icould have been.
(35:47):
You know, because in 16 itstarted and 17 it picked up.
18 it got going, 19, it becamevery large and then suddenly
COVID hit in 20.
And suddenly that's the way theconsumer wanted to interact and
it was the funniest thing.
I was back in 19,.
I was at a Mother's Day gettogether and I had several
(36:08):
nieces that were young momssitting at the table at a
Mother's Day function and two ofthe nieces looked at me back in
19, and they said the greatestthing that's ever happened to me
other than having my child iswhen Walmart pick up.
And I'm looking at these youngmoms thinking you gotta be
kidding me.
Why is that one of the greatestthings they said you have no
(36:30):
idea.
To get your kid out, to loadyour child in a car and go shop
a store is the most terribleexperience.
But if I can sit there at homeand do my ordering, then, just
while I'm running my errands,stop by the store and pick up.
That for me, is the definitionof convenience.
And oh, by the way, I don'twanna have to be home for a
(36:53):
three hour block of time in casea delivery might happen.
I would rather pick up whileI'm already out running errands.
That's more convenient to methan waiting for it to be
delivered.
But to hear these young momssay that, matt, it was just so
eye-opening for me.
But I think it goes back tothose are examples of test and
(37:15):
try and test and try thatWalmart continues to do today,
and so I think that concept ofit is a huge company.
But there's that stillentrepreneurial side of the
company where they're tweakingand testing and trying things.
The things they've done insupply chain with automation,
(37:37):
the things they're doing in thebacks of stores with automation.
There's all of these thingsthat they have going all the
time and I give a lot of creditto that, to the leadership,
because I think between thepeople like Mike Duke and Lee
Scott you talked about, and DougMcMillan and John Furtner,
there's this let's try it, let'stry it, let's try it.
Speaker 1 (37:59):
That is so interesting.
Entrepreneurship workseverywhere.
Whether you're a big or small,it's the key.
It's an experimental approachto business, really.
But I do love the story ofpickup.
Originally it was calledgrocery pickup and it evolved.
But then I remember when COVIDhappened and really people were
(38:23):
starting to use it a lot and Ithought this is gonna really
give Walmart an advantage,because they're gonna have to
figure out how to do this inhigh volumes, which will make
them more efficient.
To that end, I'd like to shiftgears here, although I love this
topic.
You know, when you were atWalmart, you signed a contract
(38:49):
with Symbodic and it was quite afew years ago, but it was so
important probably moreimportant than you could have
realized at the time, I wouldguess Would you mind talking
about that.
Speaker 2 (39:06):
Absolutely it was interesting.
So I'll give Rollin a lot ofcredit, also because Rollin Ford
was a real partner with me.
I had logistics at the time.
Rollin was kind of in a rolekind of like the chief
administrative officer of thecompany, but he had a logistics
responsibility as well astechnology.
So if you remember, karen andTerrell floored it up to Rollin,
(39:29):
I reported to Rollin, we wereall kind of combined underneath
him.
But we knew from the standpointof lots of things were going on
in automation.
We were looking at things atthat time or even earlier, like
what Amazon had done with Kivaand different things like that,
but trying to look really atwhat's next, what really was
(39:52):
coming next.
And we got connected with someof the work that was going on
with a new company calledSymbodic and we were very
impressed with it from thestandpoint of goods to person, a
shuttle system, a deep matrixfor storage and things like that
, and so it was interesting.
(40:13):
So we got connected with them,evaluated them, evaluated them,
went to their operation up inAlbany, new York, a number of
times where they had to fullydeployed and reviewed it and
reviewed it and reviewed it andthe gentleman at that time that
was running really ran CNSWholesale owned CNS Wholesale
(40:36):
also owned Symbodic Rick Cohen,and so it was Rick's company and
it was Rick's kind ofbrainchild, because he saw what
was needed from a CNS standpointin that business and he knew
that automation was the way togo.
So we decided to quote take theplunge and commit to a very
(40:58):
long-term, very strategicpartnership with Symbodic.
And it took a lot of years fromthe standpoint of being able to
integrate, but it was soexciting.
You know I'm long since retiredfrom the company but it's so
exciting to see Walmart make theannouncement last year, back in
22, that they were rolling outand that they were rolling out
(41:21):
that Symbodic technology.
The first Walmart distributioncenter that we were putting it
in when I was leaving thecompany was Brooksville, florida
, and since then that technologyhas rolled out to other Walmart
distribution centers and it'sjust really exciting to see the
success that they're having withit and Matt, the other thing is
(41:42):
it's also a big benefit to thestores because the exciting
thing is now goods are actuallygoing to the stores and they're
arriving in a fashion, on apallet, that aligns to the
modular layout of that store.
So from the standpoint of putaway and things like that.
(42:02):
It just adds a great level ofefficiency for store operations,
as well as adding those levelsof efficiency to the
distribution center operations.
Speaker 1 (42:11):
When you said modular , you mean shelf layout correct,
and so the automation allowsfor this to be optimized as well
.
So, just like we talked aboutefficiency earlier and supply
chain, you know, especially froma DC supplier, dc store
perspective, this takes it toanother level and it shows how
(42:35):
efficiency and optimization atthe DC can actually affect store
efficiency.
And it's another one of thosethings that isn't necessarily
obvious to people, but if youever work in a retail store you
could figure that out prettyquickly and I'm sure that I
would think that would even makethe quality of the work better.
Speaker 2 (42:59):
Absolutely.
And the other thing that'sinteresting is little things
like heavy on light, you know,putting heavy products on light
products.
All of that is built into theequations on how the automation
stacks the pallet, how thepallets are sequenced.
So you're constantly looking atthe store planagram, the store
(43:20):
layout, the product density andhow to properly stack a load,
but then also how to line it upwith that aisle for the store.
So you talked about thatearlier.
I tell you what it's amazingthe things that can take place
in a distribution center, afulfillment center, to make the
lives easier or harder on storeassociates, and so this is one
(43:46):
of those that really helpsstreamline things all the way
through the supply chain, goingright from the DC float shelf to
the store shelf.
Speaker 1 (43:58):
What a great story.
Now there's a lot of automationproviders out there, and do you
think that Symbodic had acompetitive advantage because of
the owner's experience andunderstanding this grocery and
(44:19):
retail situation?
Speaker 2 (44:22):
I think it did.
I think two things.
I think it was his knowledge ofphysical distribution center
type operations to supply retail.
That was one.
But it was also his personalpassion and drive and commitment
that this was going to besuccessful.
(44:43):
And so I think him beingpersonally involved as the quote
owner and him being committed,I think the other thing that
also was key for Walmart successin this endeavor was Walmart
made a huge commitment also.
So it was a little bit mad, nota burn the ships, but it was a
(45:05):
little bit of a.
We're all in to making thiswork.
We are committed to making thiswork.
Symbodic is committed to makingthis work.
We know it's going to be hard,it's going to take a number of
years to get it all right and toget all of the technology
working correctly and to gainthe efficiencies before it's
(45:26):
ready to roll out.
But we're both totallycommitted.
And so the interesting thingfrom Symbodic it became such a
large relationship that you hadDoug McMillan personally
involved in the relationshipalong with Rick Cohen personally
involved in the relationship.
And so when you had the twoleaders both committed to the
(45:48):
success of the endeavor, thenthe entire organizations aligned
to that mission and then yougot such an opportunity for
success.
Speaker 1 (46:01):
That is another great story, because you could have
tried to do it internally.
Speaker 2 (46:08):
And there's a lot of things we did try to do
internally and some weresuccessful.
Many weren't successful because, as you know, when an
organization is trying tofunction internally, there's
limited resources, there'sprioritization, there's
different constituents that havea different view of
(46:28):
prioritization, and so lots oftimes it becomes very difficult
for things to really rise to thetop and to get the true lens on
them, the spotlight on them, sothat they can be successful.
Now, when you had thisincubating and working, I think,
on the outside somewhat andworking on the outside, but
(46:50):
resources coming in from theoutside plus resources from
Walmart, I just think that's oneof the reasons.
And then you also had peoplethat were committed in the
organization to be it beingsuccessful.
One example is David Gugina,and David Gugina now is running
the supply chain group atWalmart and David was leading
(47:12):
that automation area at the timeand David and that team just
did a fantastic job ofshepherding that through the
process to success.
I didn't realize that.
Speaker 1 (47:24):
Yeah, you know, I've met with him a couple of times
and I've noticed he's got a.
He's a very good communicator,clearly a strategic thinker.
Well, I want to shift gears abit.
Sure Again, there's just somany great things we could talk
about here, but you now sit onthe boards of several logistics
(47:49):
and transportation techcompanies.
One I would like to know whatare some emerging technologies
that you're most excited about?
And logistics?
Speaker 2 (48:04):
Yeah, let me talk about some of the companies that
we're involved in yeah that'dbe great, and I'll be able to
then relay that to some of thoseemerging technologies that you
asked about.
Perfect.
So let me I'll start withLodziewa, just for example.
So Lodziewa is a WMS system.
A lot of people here.
(48:24):
It's a WMS, it's a warehousemanagement system.
What's interesting about that?
Well, I go back to when we atWalmart opened the two by two
network, and at Walmart we had achallenge back in 13 that we
wanted to establish a two dayground network that could manage
or handle a million SKUs anddeliver two day ground to
(48:49):
anywhere in the United States.
We didn't have a backbone to dothat, and so our challenge was
to stand up 10 million squarefoot buildings, five campuses
with a sortable, non-sortablebuilding throughout the United
States, and the challenge was todo that between 13 and
Christmas of 15.
10 buildings stood up, newautomation, new warehouse
(49:13):
management system, neweverything.
And I remember at the time wewere sitting at a it was
actually a board meeting andGreg Pinner, who's the Walmart
chairman, looked at me and saidis this going to work?
And I just remember looking athim saying trust me, greg, it
will work.
But we launched into theproject.
The most difficult thing for usto do was to get the new WMS
(49:37):
working, the new e-commerce B2CWMS operational, and so we were
working with at this time forone of this projects.
It was a company called SSISchaefer, great company doing
good workforce, but we struggled.
We finally got the buildings upand operational and got the WMS
(49:57):
working.
Everything worked and byChristmas of 15, all the
buildings were up and going.
So we were successful.
Well, but the incredible longpole was that WMS and that WMS
interacting with all theautomation.
Now I'll fast forward toLodziewa.
So one of the things that I wasso enraptured with when we
(50:22):
first started evaluatingLodziewa here you had a B2C
e-commerce WMS system that couldbe started and up and
operational and fully functionalin four weeks.
Or four weeks and they weredoing it successfully, and for
me that was just such a mindunbelievable look at something I
(50:49):
just not mind blowing.
But you know, I just I couldn'timagine.
I just could go back to myexperience about how difficult
it was to get these WMSsoperational and then to see this
company going out and doing infour weeks, standing up a
company in four weeks, standingup another company and standing
up another company, and soanyway, the bottom line was from
(51:10):
a new road standpoint as we endup investing.
It was a company that wasactually born in Turkey and the
Airhan who started the companyis Turkish and came to the
United States and started up thebusiness here in the Chicago
market and everything else, buthe had a rich background in the
space.
But the amazing thing to me iswhat you can do with
(51:32):
technologies these days, but theability, the speed to onboard a
customer in four weeks with theWMS was just amazing to me, and
so those are the type things soI would tell you, that ability
to integrate speed, those aresome of those things when I look
at the logistics world outthere and I see that and I'm
(51:56):
just wow.
Another one that stands out forme is the platform business.
And so for me, I can rememberanother Walmart story, matt, and
I'm going to kill you withWalmart stories, but another
Walmart story I remember we useda company called for our truck
telematics.
We used a company calledOmnitrax and Omnitrax was who
(52:21):
did our operating system ortelematics in our trucks.
And I can remember and this wasI think this is 2012 or 2013.
But the Omnitrax people cominginto my office and saying you
need to upgrade all the hardwarein your trucks.
And I'm thinking okay.
And he said you know, thisdoesn't work and this isn't
gonna work and we're gonna havea new version of software.
(52:43):
There's not enough memory andthere's not enough this and that
, so you need to upgrade themall.
And I'm like, okay, and he saidand the new version of hardware
you're gonna need to have foreach one of your trucks is gonna
be about $8,000 a truck.
And I remember sitting therelooking at him and doing the
math in my head and thinkingwe've got 9,000 trucks, $8,000 a
(53:05):
truck, $72 million.
You're just walking in here,you're wanting me to spend
Unbudgeted, unplanned, and nowit needs to happen, like in the
next six months.
And I just remember looking athim being so frustrated and at
that time I had, I think, aniPhone 2 or I had an iPhone 3.
(53:27):
And I laid the iPhone on mydesk and I said are you kidding
me?
I need something that functionslike this iPhone.
I need something that's gotapps where we can do things with
it, where it's about thesoftware, it's not about the
hardware.
And you know, he just dismissedme.
(53:49):
And then suddenly fast forward2017, I get introduced to this
guy named Jack Kennedy and whathe's done with this company.
That's called Platform Science.
And oh, by the way, it's anoperating system.
The hardware is secondary.
And oh, you can have all theseapplications on it and all these
(54:10):
applications communicatethrough the operating system.
And suddenly it's like myiPhone and instantly I just said
that's it.
That is what the truckingindustry has to have, because I
wanna be able to build appsmyself.
I wanna buy Matt's apps, Iwanna buy John Smith's apps.
(54:33):
I wanna put, because there'sall these incredible developers
out there.
I want them developing new,innovative, creative solutions
and I want them to go on thisplatform and me be able to use
it all.
That's what Platform Science isand that's what Jack Kennedy
and the team developed, and nowit's the base system for all the
many of the OEMs.
(54:54):
It's out there in the biggesttrucking fleets in the country,
including Walmart's truckingfleet and everything else, and
so it's just exploded onto themarket.
But that platform concept andeverything being able to connect
and everything being able totalk, those are the kind of
things the logistics industryneeds because it's so far behind
(55:16):
, and one of the reasons it's sofar behind is it's a capital
intensive industry.
It's a narrow margin capitalintensive business.
There's not a lot of money leftto go do other things, and so
it's fallen behind, and so, aspeople can develop these things
and bring these things on, thenyou've got the opportunity to
(55:39):
use those.
You know that's where anotherone came about.
So in 2017, I know, in 2015, Iwas at a conference in Southern
California and I was sittingthere at the conference and it
was some kind of an innovationconference that I was invited to
, and I remember we had just gotthrough touring flex tronics
(55:59):
and they make all the wearabletechnology and everything else.
We had toured their plant and itwas interesting, amazing, and
you're just wow, all of theseideas are swirling around.
And then we all went into aroom and they had a few people
come up and give some pitches,some new entrepreneurs and what
they were doing.
And this one young guy SouthAfrican guy, tall, good looking
(56:19):
guy gets up and starts talkingabout what he wanted to do in
the ocean shipping industry andhow he wants to have these
secure contracts and takeawaywhere you know you have all this
excess capacity that's unusedin the industry because shippers
overbook to protect service andcarriers oversell to protect
their ships and the two don'tmeet and it's just a mess and
(56:43):
it's just one of the huge areasof inefficiency in the ocean
shipping business.
And this guy, gordon Downs,came out and he said well, this
is what I want to do and I'mgoing to create all this stuff.
So you had these agreed upon,shared two-way contracts with
penalties and everything else.
And I remember sitting therelistening to Matt and thinking
about me from a Walmartperspective and all the TEUs we
(57:07):
ship every year, and thinkingabout the big ocean carriers,
the Maersk and the CMAs and allthose people, and thinking about
trying to get us all to alignand to agree on something.
I just I grabbed Gordonafterwards and I said, gordon,
that's a great idea, but goodluck, there is no way you're
going to get these people to allthe line on this stuff.
(57:29):
You know, and he just kind oflistened to me and nodded his
head and that was the end of theconversation Fast forward, it's
2018, 2019.
And suddenly I'm with New Roadnow and we're looking at
investment opportunities andthis guy shows up and he's got
this company called Nyshax NewYork Shipping Exchange and
(57:51):
they've got in 17,.
They've got, you know, alignedwith the Federal Maritime
Carrier Association and the FMC,you know, aligned with what
Nyshax is doing and issupportive of it and everything.
And I'm just looking at thisthing thinking, oh my gosh, this
guy who had this idea, thisconcept back in 15, he's brought
(58:14):
this to fruition.
He's actually got a company andthey're actually doing this.
They actually have createdthese ocean contracts and
they're actually aligningshippers and carriers to take
inefficiency out of the oceanshipping business.
And so, you know, it's justanother great opportunity to see
something that was a problemand to see a young entrepreneur
(58:39):
get behind it and help solvethat problem.
Speaker 1 (58:44):
Wow, what a great answer.
So sorry that was probably morethan you wanted.
No, that's perfect, because Iasked you about new technologies
and Lug was clearly one inwarehousing, I mean order
fulfillment too, that's right.
Speaker 2 (59:00):
And then platform science and trucking, and then
Nyshax and ocean shipping, soyou're covering new technologies
and a good chunk of all oflogistics, right there it is,
but it's so interesting to seethis thing from end to end and
to see what these differentcompanies are doing all the way
(59:23):
through that space.
And, matt, the more you look atit, the more opportunity you
actually see in the space.
There is more, and then I can'tyet.
You know, I was walking thismorning early.
I like to get out and hit thetrail system and I was listening
to a podcast this morning on AIand so I'm walking listening to
this podcast and it's one ofthe guys.
(59:44):
It's one of the early employeesat ChatGPT and the OpenAI and
everything else.
He actually came from Palantirand now he's at this other
organization.
Now I'm listening to thispodcast and you just start
thinking about how is AI gonnatake a lot of the unstructured
data, bring that data in andsimplify, make a lot of the
(01:00:08):
tasks today so much moreefficient and there's so many
ways.
I think that that's gonnaaffect our industries.
I think you're right.
Speaker 1 (01:00:16):
I'll tell you.
This morning I read a reallyinteresting article.
They studied the Fortune 500companies.
26% of them are doing nothingwith GenR of the AI Nothing.
I think there's an opportunitythere.
Speaker 2 (01:00:32):
Huge opportunity to.
Speaker 1 (01:00:33):
I mean huge opportunity Well you know this
has been so fun, chris.
Again, congratulations on youramazing career and for being
such a great individual and fortaking time to visit with me
there.
Really appreciate it.
Speaker 2 (01:00:51):
Matt, I appreciate you.
You know I go all the way backto whether it was 95 or 96,
whenever it was when I realizedthat the replenishment team I
had at SAMS needed a lot moreformal education.
And connected with you andconnected with a couple of the
professors for the University ofArkansas and the supply chain
(01:01:13):
department, and you guys came toNorthwest Arkansas, came from
Fayetteville up to Bentonvilleand literally every Friday
afternoon taught my team andthat really started the
relationship for you and Itogether.
But I just really appreciatehow that relationship has grown
over the years.
Welcome to the Matt Waller podcast, sponsored by New
Road Capital Partners, where welook at success at the
intersection of technology,logistics, supply chain, retail
and CPG, which we also call theretail value chain.
I want to clarify that thispodcast is distinct from my
responsibilities as a professorin the Sam Walton College of
(00:32):
Business.
Nonetheless, it aligns with myaspiration to provide practical
insights to professionals inbusiness by showcasing companies
and people that can enhanceyour ability to manage, lead,
strategize and marketeffectively in the retail value
chain.
Before we dive into today'sexciting episode, I'd like to
take a moment to express mydeepest gratitude to our
(00:55):
founding sponsor, new RoadCapital Partners.
New Road Capital Partnersinvests in proven and innovative
technologies, products andservices that serve existing and
unmet needs in the marketplace.
New Road partners withgrowth-oriented companies in
supply chain, logistics andinnovative consumer companies as
experienced entrepreneurs andoperators.
(01:17):
The New Road team prides itselfon the high level of
collaboration it brings to eachof its investments.
New Road's team of investmentprofessionals and operating
partners have deep, relevantinvesting and operating
experience, includingsignificant experience leading
large divisions of enterprisecompanies and building
businesses from scale to conceptto realization.
(01:41):
To learn more, visitnewroadcpcom.
I also want to disclose that Iam an advisor to New Road.
I would like to take thismoment to recognize
podcastvideoscom for being ourprovider of podcasts.
Their mission is simple Tostreamline the process of
(02:01):
creating podcast videos.
They're equipped withindustry-leading equipment and
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I'm very pleased with theservices they provide me.
Now, without further ado, let'sget started with today's episode
.
I have with me today ChrisSultemeier, who I'm going to
introduce in a moment.
(02:22):
He was over all of globalsupply chain, logistics and
transportation operations forWalmart.
He was at Walmart for 28 yearsand now he's on the boards of
several high-tech logistics andsupply chain management
companies.
We're going to talk about that,but I'm really excited about
(02:44):
this interview.
You will learn so much fromthis.
We start out talking aboutWalmart, which is quite
remarkable If you look at howmuch Walmart changed over the 28
years that Chris was there.
But we're going to be talkingabout leadership, including
(03:06):
things like team building,integrity.
We're going to be talking abouthow you bring an
entrepreneurial mindset into alarge organization like Walmart,
which is probably one of itscore competencies.
That allows it to pivot quickly.
We're going to be talking aboutpickup order online pickup at
store.
You may or may not know muchabout it, but it's a very
(03:28):
important change in business inthe United States in this
century.
It will be a landmark event.
We also talk about hisselection of symbolic for
automation of distributioncenters.
I can't wait for you to hearabout that.
I asked him a pretty toughquestion about what emerging
(03:49):
technologies he's most excitedabout and he explained it.
We only got through three ofthem, so I think we're going to
do another episode on this,because I'd like to hear more
about that and I think you willtoo.
It's a really exciting podcast,but let me give you his formal
introduction.
Chris has over 30 years ofexperience in logistics and
(04:11):
supply chain.
He worked at Walmart stores for28 years, most recently serving
as executive vice president oflogistics.
In that role, he oversawWalmart's global supply chain,
logistics and transportationoperations.
Chris serves on the board ofdirectors for several companies,
some of which include Nichex,platform, science, lodzewa.
(04:34):
He's also an operating partnerat New Road Capital Partners,
which is a private equity firmthat focuses on the retail value
chain, which includes supplychain, logistics, cpg and retail
technologies.
Chris began his career as a USArmy officer, serving for five
years in roles of increasingresponsibility.
(04:56):
He's a graduate of the UnitedStates Military Academy at West
Point with a bachelor's degreein mechanical engineering.
He has a breadth of experiencein logistics supply chain
corporate leadership and itallows him to give us valuable
guidance and advice based on hisexperience.
He's been involved withcompanies at the intersection of
logistics, technology andretail his whole life.
(05:19):
I think you're really going toenjoy this if you're interested
in business, chris.
You have nearly 30 years ofexperience leading supply chain
logistics at Walmart, one of theworld's largest companies.
Before I get into somequestions, I just want to give
people an idea.
Most people have no idea thesize of Walmart.
It's hard to comprehend alittle bit, but Walmart has 190
(05:42):
distribution centers and that'shard to imagine.
I mean there are very fewretailers with 190 stores and
Walmart has 190 distributioncenters and it serves stores,
clubs and direct delivery tocustomers.
Speaker 2 (06:02):
And Matt, that's just in the US.
Yes, that's not international.
That's a good point, I didn't.
So it's another 130international physical locations
where there's a distributioncenter, a fulfillment center, a
center point, some type ofphysical operation.
So it just compounds when youadd the international footprint.
Speaker 1 (06:22):
That's a good point, and it's hard to believe, too,
that in China.
I've been following WalmartChina since it opened and I
remember that first centerSupercenter in Shenzhen.
When they opened the door,everyone came in and it crushed
the jewelry case, if I remembercorrectly, but that was in the
(06:48):
90s.
Now they've got a lot of storesand clubs and for a long time
some of the biggest clubs in theworld were in China.
I don't know if that's stillthe case.
But the other thing thatsurprised me was that 50% of
Walmart sales in China aree-commerce.
I would have never expectedthat would happen.
(07:08):
It's quite remarkable.
Within Walmart US and I don'tknow the answer.
Internationally, walmart'stransportation fleet has 11,000
tractors, 80,000 trailers andmore than 13,000 drivers, which
would make it an enormoustrucking company in the United
(07:29):
States.
I don't know where it wouldrank, but it would be up there.
Speaker 2 (07:34):
Typically, whenever we would pull out the transport
topics or whatever list oflargest private fleets,
typically Walmart was thelargest Class 8 private fleet.
So you had the two big bottledistributor companies, the
Coca-Cola and the Pepsi.
That would be larger in termsof number of powered units, but
(07:58):
if you get to Class 8 tractors,Walmart was typically the
largest private fleet andnormally somewhere about number
six or seven in terms of largestfleets in the company, public
or private.
Speaker 1 (08:12):
That's amazing and of course I remember early on I
was fortunate enough to when youall started getting into
backhaul I got to work on aproject to figure out how to
optimize the routes and stuffand timing.
But I thought, well, this is agreat idea, it makes sense.
I had no idea it would grow tothe level that it's at today.
Speaker 2 (08:37):
One of the things that amazes people in and I
always was questioned when I wasthere but if you've got 12 or 9
or 10,000 tractors, why do youhave 70 or 80,000 trailers?
So we were always challenged.
But you just mentioned backhauland it's something that's real
(08:58):
interesting.
And what people don't realizeabout how that fleet operates is
it's totally a drop and hookprogram.
So you're dropping at adistribution center and taking a
full load to a store anddropping at a store and picking
up an empty at a store and goingto a vendor and dropping the
(09:18):
empty at a vendor and picking upa full load at the vendor and
then driving that full load tothe Walmart distribution center
and dropping that full load andpicking up another full load and
taking it to the store, and itjust goes constantly like that
and so there ends up being a lotof trailers to feed that
network.
But the exciting thing is atypical Walmart driver drives
(09:42):
over nine hours in their 10, 11hour duty cycle, and so you get
a lot of efficiency when youhave all of those trailers.
Speaker 1 (09:51):
You know there's so many things in logistics and
supply chain that arecounterintuitive to someone
who's not familiar with it.
Yeah, you're right.
I'm glad you pointed this outbecause someone could easily
think, well, that doesn't seemefficient.
It's the exact opposite, and Iremember I've had people say
this to me quite a bit over theyears.
You know why does you know aproduct go from, say, cincinnati
(10:16):
to you know a distributioncenter somewhere and then back
to a store near Cincinnati?
That doesn't make any sense.
But if they thought about theefficiencies you get by having
full truckloads, they'dunderstand that's exact, that's
exactly right.
Speaker 2 (10:34):
I mean, every time you go up from a parcel to an
LTL, ltl to a full truckload ora partial load to a full load,
you get an order of magnitude ofa much more efficient,
cost-effective load.
So the more you can pool thattogether into a full truckload,
the efficiencies are dramaticbut.
Speaker 1 (10:56):
But if you notice, this about logistics and supply
chain is a lot ofcounter-intuitive things like
this that it's always achallenge to explain it to
people.
If you're in the business andyou play with the numbers, it
makes total sense.
It's very intuitive.
But the other thing is you knoweach distribution center is
(11:18):
more than a million square feetin the United States and
typically has over 700 personnelfor unloading, shipping Etc,
etc.
But they ship about 200trailers a day, which is also
remarkable.
It it's hard to be efficientenough to drive that much volume
from a distribution center.
(11:39):
And another thing peoplewouldn't recognize if you hadn't
seen other data 200 a day isincredible.
Speaker 2 (11:48):
It really is, and it's interesting because
typically a Walmart distributioncenter is Aligned to somewhere
around a hundred stores Could bea hundred, could be a hundred
and ten hundred and fifteen, butaround a hundred stores.
Then if you start thinkingabout the math of that's 200
truckloads a day, then you startgoing oh, that means two
(12:12):
truckloads per store per day,which is correct.
And so one of the things that alot of people don't think about
is Walmart delivering to asupercenter is so different than
like a dollar store or aconvenience store, because so
often those situations are atruck multi-stop concept, but in
(12:36):
Walmart, no, it's two or threetrucks.
There were some stores, matt,that were receiving six and
seven trucks per day from adistribution center, and so it's
just a very different businessmodel than the traditional model
of a truck making multiplestops.
It's very different, way moreefficient much more efficient.
Speaker 1 (12:58):
You know people much more people don't realize too
that and you get that kind ofefficiency.
It's very, it's really asustainability advantage that
you know a lot of people don'tthink that.
They think, oh, this must beinefficient.
No, no, it's way more efficientthan any other kind of
distribution system you know,back in 2005, walmart launched
(13:20):
into a big sustainabilityInitiative.
Speaker 2 (13:23):
I remember, you remember, that one of the
challenges and at that time LeeScott, former logistics leader,
was leading the company at thattime and one of Lee's challenges
of us and at that time I wasrunning Walmart transportation
one of his challenges was I wantyou to double the fleet
(13:44):
efficiency.
And so we're just, from asustainability standpoint, what
does double fleet efficiencymean?
Well, for us, the way wedecided to define it is Cases
shipped, gallons burnt.
So how many cases do you ship,how many gallons?
Because we wanted quote, a worktype metric, we wanted
(14:06):
something that was volume based,and so that's what we launched
on is how do we double thenumber of cases we ship based on
the gallons that were burningfrom an environmental standpoint
?
And it literally took us 10years, from 05 to 15.
But by 2015 we had doubled thenumber of cases we were shipping
(14:30):
per gallon burned.
And the cool thing was we hadthe environmental defense fund,
edf, monitoring us and Checkingthe numbers and being a partner
with us in evaluating all of ourtactics.
But the tactics, matt, were justwhat you talked about how do
you get more on the trailer?
How do you take water out ofproduct.
(14:52):
So if you remember theconcentrated laundry detergent,
remember it.
Well, all of those things we'reall about.
How do you ship more?
How do you reduce the footprintof what goes on the trailer?
How do you fill the trailer?
How do you optimize deliveries?
How do you put all thattogether and how do you you
talked about it earlier how doyou run more efficient backhalls
(15:14):
?
Because all of that was burningGallons.
Anytime you're running empty,you're burning, and so all of
those things went into that.
But the net of it was wedoubled the fleet efficiency and
then in 15, when they weredoing the Sam M Walton Award for
entrepreneurship and everything, that was one of the things
(15:34):
that was recognized because thesustainability team received
that award.
Speaker 1 (15:39):
Wow, and I remember when they did the kickoff of
this sustainable initiative inBeijing in 2006.
That's right, it was a big dealand I I felt very fortunate to
be there and I was gonna say youwere over there at that, I was,
and but just listening to allthe stories and the vision and
(16:00):
to see that Most of it's come tofruition, including the the
cases delivered gallons burnedthat's that's really a
remarkable story.
But it really is aboutlogistics efficiency.
It is.
That's really what logisticsand supply chain is about.
Speaker 2 (16:21):
It is, it is it and really any you said it earlier
any efficient logisticsorganization perfectly aligns
with sustainability, becauseyou're doing more with less and
so it's just a marriage.
And then when you get what youhave at Walmart, where you have
(16:42):
a dramatic, dramatic scale, thenyou can drive so much
efficiency.
Speaker 1 (16:49):
Well, you know, a long time ago, when Walmart came
up with the idea Sam Walton ofyou know Rather than because
Walmart came out and target allstarted in 1962 and Kmart was
rolling out stores in quote,good markets and Walmart was
sticking to the idea of let'sstay close to the distribution
(17:12):
center.
And you know, I remember Istarted following Walmart really
closely, I guess in about 1989when I was in graduate school,
penn State.
I don't know what caught myattention about it, but one of
the things that you know, thisnotion of you know, if your
stores close to the DC, you havea shorter lead time, so you're
less likely to stock out of thestore, but you can have full
(17:33):
truckloads of homogeneousproduct going into the DC and
full truckloads of heterogeneousproducts going out of the DC,
and so you get this amazingefficiency, not in terms not
only in terms of transportation,but also in terms of inventory
management.
Speaker 2 (17:49):
Yes, sirs and.
Speaker 1 (17:53):
But sticking to that discipline I Would think would
be hard, because I remember whenI, when I first got involved in
China, I Remember the suppliershad a hard time buying into
this notion Because most of theworld does direct store delivery
, which is terribly inefficient.
(18:14):
Again, intuitively it seemslike, oh, that would be more
efficient, but no, you know, Iremember going to a car for in
Shanghai One of my neighbors wasan executive in Car 4 and he
gave me a tour.
There must have been 200vendors at the back dock and you
(18:35):
go to the Walmart DC andthere's just a few trucks.
You know and you see, oh, thesufficiency is just dramatic.
But it was very hard to, Ithink, teach people in other
countries what these conceptsmean, and they should implement
them.
Speaker 2 (18:51):
You know it's funny.
I used to have a picture and Idon't think I still have it, but
it was.
You talked about thesupersetters but also the Sam's
Club that was there in Shenzhenand for years that was the
highest volume Sam's Club also.
But I used to have a picturebecause in the early days the
Sam's Office, sam's Club Office,was above the Sam, that first
(19:16):
Sam's Club there and anyway theyhad a picture of one of the
windows and it was the back ofthe Sam's Club early days and it
just showed literally hundredsof vehicles trying to get to the
back dock of that Sam's Club todeliver.
And you just saw that and itwas like a massive funnel with
(19:37):
all of these pickup trucks andyou know three wheelers and
everything else trying to get tothe back of that club to
deliver their stuff.
And you saw that and you justthought you know how
unbelievably inefficient thatwas.
And then over time obviouslythat all changed, but initially
it was a hard slog.
Speaker 1 (19:57):
I can't imagine.
I've heard all kinds of storiesabout back then you had to.
In the early days of Walmartand Sam's Club in China, you had
to work with the government tomove your product.
They made a smart move inderegulating that and allowing
private, the private sector.
A lot of people don't realizethat.
I mean, China made a brilliantmove there, just like we did
(20:20):
when we had the Motor Carry Actof 1980 and deregulated
transportation.
If they wouldn't have done that, they wouldn't be near where
they are today.
Speaker 2 (20:31):
That's exactly right, and I wasn't directly involved.
I was indirectly involved increating a coal chain, a supply
chain, coal chain in China, andthe work in fact, the gentleman
now that's the CEO of the USbusiness, John Furner.
At that time John was the headmerchant for Walmart China and
(20:55):
John was working with a lady wehad named Leslie over there and
John and Leslie were working thewhole supply chain deal to
establish a coal chain supplychain, because that really did
not exist in China and it tookthem about two or three years
but they really stood upperishable distribution centers
(21:15):
and suppliers all shipping intoperishable distribution centers
and then perishable deliveriesto our stores and clubs.
But it was groundbreaking forthat to happen in China.
Speaker 1 (21:29):
So amazing.
It was fun to watch Chinaemerge.
I know China's got a lot ofchallenges right now, but they
seem to be pretty adaptable.
They're very entrepreneurialpeople, even though they're
operating a communist, so-calledsocialist system.
The people that are veryentrepreneurial.
(21:49):
Well, okay, I want to ask you afew questions.
Sure, Again, with yourexperience at Walmart, really
leading the largest rivallogistic supply chain network in
the world and, of course, Idon't know exactly where you
(22:10):
started, but I know early on youwere in replenishment at
Walmart.
You were over replenishment atWalmart when I met you.
What?
Speaker 2 (22:17):
year would that have been?
That would have been probablyaround 93 or 94.
That's when you and theprofessors came to teach us.
Speaker 1 (22:27):
Yes, that was such a fun time.
Speaker 2 (22:30):
Friday afternoons.
Speaker 1 (22:31):
It was summer time, wasn't it?
It was.
You had some dedicatedemployees.
I did so, but, given yourexperience, what are some of the
most important lessons you'velearned in your leadership roles
?
You've had many in your life.
Speaker 2 (22:49):
Yeah, I think, matt, I would go all the way back,
even to college and the military, because the learnings from
there moved right into practicewherever I was Walmart or
whatever jobs at Walmart orSam's Club or wherever I was at.
And really I think number oneis the concept of servant
(23:13):
leadership.
I mean it's and I know it'scliche and I know people talk
about servant leadership all thetime, but you are only as good
as the team you're leading andyour role as a leader is to
serve them, to take away thebarriers and the obstacles and
to empower them so that thatteam can be successful.
There's probably nothing in mycareer that was more enjoyable
(23:37):
than seeing a team accomplishmore than they ever thought they
could, and that, to me, wasprobably the highlights of my
career is having thatopportunity to lead that team
and them do things that theynever thought they could, and to
see that excitement, that senseof accomplishment and just how
uplifting that was to thosepeople.
(23:57):
So I think that would be for me, number one, and then that
whole concept of team and thatwe're all in this together.
I think the only other thing Iwould mention is I would just
challenge everyone to nevercompromise your character.
Stand firm on what your valuesare and never compromise your
(24:21):
character.
I look back over my time in themilitary and my time at Walmart
and everything else, andprobably the two or three times
I can think about that I lookthe other way when I should have
said something.
Those are probably the thingsthat were still probably most
disappointing to me today that Ididn't take a stronger stand,
(24:43):
and so often I did, butsometimes I didn't, and so that
would be the only otherchallenge I would have of folks
is to never compromise yourcharacter.
Speaker 1 (24:52):
Well, so this servant leadership team and the concept
of you're only as good as theteam you're leading.
And then you are pleasure andseeing your team accomplish more
than they thought they could.
I would imagine that not onlyhelped the team succeed, it
(25:17):
probably made people want to beon your team, oh absolutely
Absolutely.
Speaker 2 (25:21):
And that was one of the most exciting things,
because once the team starts,it's just like sports Once the
team starts winning and themorale starts coming and the
excitement starts coming, thenpeople want to jump on that team
.
The other exciting thing isother groups see what's
happening and they start wantingthe team members.
(25:43):
They start wanting to recruityour team members and pull, and
that's wonderful too, becausethen those teammates get to go
do things in other areas andtake on bigger responsibility.
So it's just a multiplying typeof effect.
Others want to join, others aregetting tapped on the shoulders
to do other things, and itcreates a really positive
(26:07):
dynamic.
This is so interesting.
Speaker 1 (26:11):
Anyone who's ever led teams knows this can happen.
They can also go the other way,but I do think people who take
pleasure in seeing otherssucceed I think that some people
can take more pleasure in thatthan others.
For some reason.
I've noticed this there's aterm for it and I can't remember
it now but if you can, itreally helps you lead the team,
(26:38):
because people can tell when youtruly celebrate their success.
Or if you're just saying it,because sometimes team leaders
there are team members in theirteam that are too talented or
too successful, thinking that itmight make them look bad.
I'm sure you've seen thingslike that Absolutely.
Speaker 2 (26:58):
But it kind of goes back If you remember, years ago.
And so obviously Walmart'sknown for the Saturday meetings,
having the Saturday meetingsand bringing speakers in.
And I remember one time DavidGlass brought in Holtz when Lou
Holtz was the coach at theUniversity of Arkansas and David
(27:19):
started asking Lou Holtzbecause at that time Lou Holtz
was building the program at theUniversity of Arkansas and David
Glass asked Lou Holtz, what'sthe secret?
And Lou Holtz said well, thesecret is you got to get great
players.
And David said well, how do youget great players?
And Lou said number one theplayers have to know you care.
(27:40):
Number one.
He said everything else comesfrom that.
If the players know you careabout them not the team but
about them personally and youcare about their success, you
care about them as individuals.
He said then everything springsfrom that.
(28:00):
And it was just really powerfulfor me sitting there because it
just confirmed everything I'dseen in the military, I'd seen
in ranger school, I had seen inall of these different things
that I had done.
If people know that you care,it is amazing what they will do
and the links they will go tofor the team if they know that
(28:22):
the leader cares about thempersonally.
Speaker 1 (28:25):
There's some research in academic journals peer
reviewed research that showsthat there's three key variables
to building trust andorganization for a leader.
One of them is this notion thatpeople believe you have their
best interests in mind.
So that's one of the three.
(28:46):
The other two include that theleader is competent, and the
third one is that they haveintegrity, that is, that they'll
do what they say they will do.
And that gets to your thirdpoint never compromise your
integrity.
If you're not compromising yourintegrity, then you're
following through on what you'resaying and that also builds
(29:08):
trust.
So really everything you'resaying.
When you were explaining thisto me, I started thinking trust,
trust, trust.
You're building trust in yourteams, but not just trust, also
excitement.
I mean everyone wants to be ona wedding team.
Speaker 2 (29:26):
Absolutely.
It's fun.
Everybody wants to win.
I think everyone's.
I don't care who it is.
They've got a little bit of acompetitive streak.
People have a biggercompetitive streak, but everyone
wants to be on that winningteam.
You want to win, you know.
You talked about trust.
I'm going to go back to thatfor just a minute.
You talk about trust.
(29:46):
Trust is the foundation of anyrelationship and you have to
have a relationship, and theonly way to have that
relationship with your people isyou have to have trust, and so
all of those things that you cando to build that trust that
you're looking out for theirwell-being is so critical to
(30:08):
have that relationship so thatyou have trust and you can get
things done as an organization.
Speaker 1 (30:15):
Well, I again.
I really love this and it makesme wonder.
You know Walmart through ahistory.
Yeah, I started following rightclosely about 89, when I was at
Penn State and I would.
I would use Walmart sometimesin my classes as examples, and
(30:36):
my professors knew almostnothing At that time.
Kmart was bigger than Walmart,but I was reading about Walmart
sharing sales data with PNG andother teams and other teams were
moving to town.
All this always fascinated meand so when I had the
opportunity to interview here, Iasked if they would set up an
(30:58):
appointment for me to meet forlunch with the EVP of logistics
for Walmart.
And they did.
Who would say that?
At least got it?
Yeah, and Lee.
Immediately he said look, ifyou come here, I'll get you
involved in some projects, I'llintroduce you to people, I'll
hire your students, these kindof things.
And he followed through on it.
(31:19):
And again, this was a long timeago.
But then he, he got me and afriend of mine who was an
industrial engineering professorinvolved in a really cool
optimization project inlogistics, and then he went to
merchandising, I think.
And then they hired Mike Duke.
(31:39):
So I started working with MikeDuke and they had a guy named
Robert Bruce at the time thatwas heading up supply chain.
I got to work on the earlyversion of CPFR with him and
some other people.
But here's my point.
I remember when we were talkingabout CPFR back then we called
(31:59):
it CIFAR continuous landing, no,continuous forecasting and
replenishment of CIFAR.
We eventually put the P inthere, but the idea was that
suppliers have knowledge thatthe retailer doesn't have a vice
versa.
If you combine these, you'll beable to get a better solution.
That's a very theoreticalconcept and I think it takes a
(32:23):
special company to take anabstract, esoteric idea like
that and to try to bring it intoreality, which they did.
But the other thing I've noticedover the years is Walmart can
pivot.
Now, a lot of times people say,oh, walmart doesn't change
easily, they're too huge.
Right, well, they focus ontheir priorities.
(32:43):
So your priority may not betheir focus and that's why
you're not seeing movement, butif it is their focus I can't
remember who was saying it itmay have been John Furner, but
they were saying look, we'regoing to merge our e-commerce
app and our store app into oneapp and we're going to also
merge our merchandising fore-commerce and brick and mortar
(33:06):
into one person for eachcategory and whatever.
I thought this will take years,but didn't they actually
executed it more quickly?
Many suppliers still haven't.
Many suppliers are stilloperating separately.
They're not operating on thechannel.
But I wonder this idea ofservant leadership and I know
(33:30):
it's part of.
If you look at the 10 rules forbuilding a business by Sam
Walton which we have in theCollege of Business at the
University, big islands are allin size.
This is the pool we built lastwinter on the floor that I'm on
has 10 rules for building abusiness.
Servant leadership really comesthrough in those.
I don't think it says servantleadership in it, but that's
(33:51):
what I hear and I wonder if thatis part of the reason they're
able to pivot so quickly.
What do you think?
Speaker 2 (33:59):
Yeah, I think that's part of the reason I think
there's still in a lot of people.
I'll go back I'll digress for alittle bit Go back to the days
when Sam was running the company, because when I first started
Sam was running the company,right, we were doing enormous
numbers of tests.
So there was a dot drug store,there was a farm store, we had
(34:23):
all of these different formatsof stores that were being tested
and tried and everything wasgoing on.
You know, the Supercenterstarted as a hypermarket and
that was too big and then itmorphed into this and morphed
into that and finally theyarrived upon the Supercenter.
Sam's Club was a test.
They tried the Sam's Club testand then they did the
(34:43):
neighborhood market test.
So there's always been thisconstant test and try and test
and try.
I'll give you another exampleBack in 16, which was my last
four year at the company theylet everyone know that we were
gonna try this whole concept ofpick up at the store.
(35:03):
Now, at that time I was the EVPof logistics, so I was in that
room when we talked about doingpick up at the store and this
whole concept of ordering onlineand then a customer coming to
the store and picking up theirstuff, but a separate order
process online and then aphysical come to the store to
pick up.
I thought that was the craziestidea.
(35:25):
I thought there is no way acustomer's gonna take the time
to order and then still drive tothe store and pick up their
stuff.
They're either gonna want itdelivered or, if they're gonna
come to the store, they're gonnacome shop One of the two.
But this order and pick up,that's a failing proposition.
Well, I was about as wrong as Icould have been.
(35:47):
You know, because in 16 itstarted and 17 it picked up.
18 it got going, 19, it becamevery large and then suddenly
COVID hit in 20.
And suddenly that's the way theconsumer wanted to interact and
it was the funniest thing.
I was back in 19,.
I was at a Mother's Day gettogether and I had several
(36:08):
nieces that were young momssitting at the table at a
Mother's Day function and two ofthe nieces looked at me back in
19, and they said the greatestthing that's ever happened to me
other than having my child iswhen Walmart pick up.
And I'm looking at these youngmoms thinking you gotta be
kidding me.
Why is that one of the greatestthings they said you have no
(36:30):
idea.
To get your kid out, to loadyour child in a car and go shop
a store is the most terribleexperience.
But if I can sit there at homeand do my ordering, then, just
while I'm running my errands,stop by the store and pick up.
That for me, is the definitionof convenience.
And oh, by the way, I don'twanna have to be home for a
(36:53):
three hour block of time in casea delivery might happen.
I would rather pick up whileI'm already out running errands.
That's more convenient to methan waiting for it to be
delivered.
But to hear these young momssay that, matt, it was just so
eye-opening for me.
But I think it goes back tothose are examples of test and
(37:15):
try and test and try thatWalmart continues to do today,
and so I think that concept ofit is a huge company.
But there's that stillentrepreneurial side of the
company where they're tweakingand testing and trying things.
The things they've done insupply chain with automation,
(37:37):
the things they're doing in thebacks of stores with automation.
There's all of these thingsthat they have going all the
time and I give a lot of creditto that, to the leadership,
because I think between thepeople like Mike Duke and Lee
Scott you talked about, and DougMcMillan and John Furtner,
there's this let's try it, let'stry it, let's try it.
Speaker 1 (37:59):
That is so interesting.
Entrepreneurship workseverywhere.
Whether you're a big or small,it's the key.
It's an experimental approachto business, really.
But I do love the story ofpickup.
Originally it was calledgrocery pickup and it evolved.
But then I remember when COVIDhappened and really people were
(38:23):
starting to use it a lot and Ithought this is gonna really
give Walmart an advantage,because they're gonna have to
figure out how to do this inhigh volumes, which will make
them more efficient.
To that end, I'd like to shiftgears here, although I love this
topic.
You know, when you were atWalmart, you signed a contract
(38:49):
with Symbodic and it was quite afew years ago, but it was so
important probably moreimportant than you could have
realized at the time, I wouldguess Would you mind talking
about that.
Speaker 2 (39:06):
Absolutely it was interesting.
So I'll give Rollin a lot ofcredit, also because Rollin Ford
was a real partner with me.
I had logistics at the time.
Rollin was kind of in a rolekind of like the chief
administrative officer of thecompany, but he had a logistics
responsibility as well astechnology.
So if you remember, karen andTerrell floored it up to Rollin,
(39:29):
I reported to Rollin, we wereall kind of combined underneath
him.
But we knew from the standpointof lots of things were going on
in automation.
We were looking at things atthat time or even earlier, like
what Amazon had done with Kivaand different things like that,
but trying to look really atwhat's next, what really was
(39:52):
coming next.
And we got connected with someof the work that was going on
with a new company calledSymbodic and we were very
impressed with it from thestandpoint of goods to person, a
shuttle system, a deep matrixfor storage and things like that
, and so it was interesting.
(40:13):
So we got connected with them,evaluated them, evaluated them,
went to their operation up inAlbany, new York, a number of
times where they had to fullydeployed and reviewed it and
reviewed it and reviewed it andthe gentleman at that time that
was running really ran CNSWholesale owned CNS Wholesale
(40:36):
also owned Symbodic Rick Cohen,and so it was Rick's company and
it was Rick's kind ofbrainchild, because he saw what
was needed from a CNS standpointin that business and he knew
that automation was the way togo.
So we decided to quote take theplunge and commit to a very
(40:58):
long-term, very strategicpartnership with Symbodic.
And it took a lot of years fromthe standpoint of being able to
integrate, but it was soexciting.
You know I'm long since retiredfrom the company but it's so
exciting to see Walmart make theannouncement last year, back in
22, that they were rolling outand that they were rolling out
(41:21):
that Symbodic technology.
The first Walmart distributioncenter that we were putting it
in when I was leaving thecompany was Brooksville, florida
, and since then that technologyhas rolled out to other Walmart
distribution centers and it'sjust really exciting to see the
success that they're having withit and Matt, the other thing is
(41:42):
it's also a big benefit to thestores because the exciting
thing is now goods are actuallygoing to the stores and they're
arriving in a fashion, on apallet, that aligns to the
modular layout of that store.
So from the standpoint of putaway and things like that.
(42:02):
It just adds a great level ofefficiency for store operations,
as well as adding those levelsof efficiency to the
distribution center operations.
Speaker 1 (42:11):
When you said modular , you mean shelf layout correct,
and so the automation allowsfor this to be optimized as well
.
So, just like we talked aboutefficiency earlier and supply
chain, you know, especially froma DC supplier, dc store
perspective, this takes it toanother level and it shows how
(42:35):
efficiency and optimization atthe DC can actually affect store
efficiency.
And it's another one of thosethings that isn't necessarily
obvious to people, but if youever work in a retail store you
could figure that out prettyquickly and I'm sure that I
would think that would even makethe quality of the work better.
Speaker 2 (42:59):
Absolutely.
And the other thing that'sinteresting is little things
like heavy on light, you know,putting heavy products on light
products.
All of that is built into theequations on how the automation
stacks the pallet, how thepallets are sequenced.
So you're constantly looking atthe store planagram, the store
(43:20):
layout, the product density andhow to properly stack a load,
but then also how to line it upwith that aisle for the store.
So you talked about thatearlier.
I tell you what it's amazingthe things that can take place
in a distribution center, afulfillment center, to make the
lives easier or harder on storeassociates, and so this is one
(43:46):
of those that really helpsstreamline things all the way
through the supply chain, goingright from the DC float shelf to
the store shelf.
Speaker 1 (43:58):
What a great story.
Now there's a lot of automationproviders out there, and do you
think that Symbodic had acompetitive advantage because of
the owner's experience andunderstanding this grocery and
(44:19):
retail situation?
Speaker 2 (44:22):
I think it did.
I think two things.
I think it was his knowledge ofphysical distribution center
type operations to supply retail.
That was one.
But it was also his personalpassion and drive and commitment
that this was going to besuccessful.
(44:43):
And so I think him beingpersonally involved as the quote
owner and him being committed,I think the other thing that
also was key for Walmart successin this endeavor was Walmart
made a huge commitment also.
So it was a little bit mad, nota burn the ships, but it was a
(45:05):
little bit of a.
We're all in to making thiswork.
We are committed to making thiswork.
Symbodic is committed to makingthis work.
We know it's going to be hard,it's going to take a number of
years to get it all right and toget all of the technology
working correctly and to gainthe efficiencies before it's
(45:26):
ready to roll out.
But we're both totallycommitted.
And so the interesting thingfrom Symbodic it became such a
large relationship that you hadDoug McMillan personally
involved in the relationshipalong with Rick Cohen personally
involved in the relationship.
And so when you had the twoleaders both committed to the
(45:48):
success of the endeavor, thenthe entire organizations aligned
to that mission and then yougot such an opportunity for
success.
Speaker 1 (46:01):
That is another great story, because you could have
tried to do it internally.
Speaker 2 (46:08):
And there's a lot of things we did try to do
internally and some weresuccessful.
Many weren't successful because, as you know, when an
organization is trying tofunction internally, there's
limited resources, there'sprioritization, there's
different constituents that havea different view of
(46:28):
prioritization, and so lots oftimes it becomes very difficult
for things to really rise to thetop and to get the true lens on
them, the spotlight on them, sothat they can be successful.
Now, when you had thisincubating and working, I think,
on the outside somewhat andworking on the outside, but
(46:50):
resources coming in from theoutside plus resources from
Walmart, I just think that's oneof the reasons.
And then you also had peoplethat were committed in the
organization to be it beingsuccessful.
One example is David Gugina,and David Gugina now is running
the supply chain group atWalmart and David was leading
(47:12):
that automation area at the timeand David and that team just
did a fantastic job ofshepherding that through the
process to success.
I didn't realize that.
Speaker 1 (47:24):
Yeah, you know, I've met with him a couple of times
and I've noticed he's got a.
He's a very good communicator,clearly a strategic thinker.
Well, I want to shift gears abit.
Sure Again, there's just somany great things we could talk
about here, but you now sit onthe boards of several logistics
(47:49):
and transportation techcompanies.
One I would like to know whatare some emerging technologies
that you're most excited about?
And logistics?
Speaker 2 (48:04):
Yeah, let me talk about some of the companies that
we're involved in yeah that'dbe great, and I'll be able to
then relay that to some of thoseemerging technologies that you
asked about.
Perfect.
So let me I'll start withLodziewa, just for example.
So Lodziewa is a WMS system.
A lot of people here.
(48:24):
It's a WMS, it's a warehousemanagement system.
What's interesting about that?
Well, I go back to when we atWalmart opened the two by two
network, and at Walmart we had achallenge back in 13 that we
wanted to establish a two dayground network that could manage
or handle a million SKUs anddeliver two day ground to
(48:49):
anywhere in the United States.
We didn't have a backbone to dothat, and so our challenge was
to stand up 10 million squarefoot buildings, five campuses
with a sortable, non-sortablebuilding throughout the United
States, and the challenge was todo that between 13 and
Christmas of 15.
10 buildings stood up, newautomation, new warehouse
(49:13):
management system, neweverything.
And I remember at the time wewere sitting at a it was
actually a board meeting andGreg Pinner, who's the Walmart
chairman, looked at me and saidis this going to work?
And I just remember looking athim saying trust me, greg, it
will work.
But we launched into theproject.
The most difficult thing for usto do was to get the new WMS
(49:37):
working, the new e-commerce B2CWMS operational, and so we were
working with at this time forone of this projects.
It was a company called SSISchaefer, great company doing
good workforce, but we struggled.
We finally got the buildings upand operational and got the WMS
(49:57):
working.
Everything worked and byChristmas of 15, all the
buildings were up and going.
So we were successful.
Well, but the incredible longpole was that WMS and that WMS
interacting with all theautomation.
Now I'll fast forward toLodziewa.
So one of the things that I wasso enraptured with when we
(50:22):
first started evaluatingLodziewa here you had a B2C
e-commerce WMS system that couldbe started and up and
operational and fully functionalin four weeks.
Or four weeks and they weredoing it successfully, and for
me that was just such a mindunbelievable look at something I
(50:49):
just not mind blowing.
But you know, I just I couldn'timagine.
I just could go back to myexperience about how difficult
it was to get these WMSsoperational and then to see this
company going out and doing infour weeks, standing up a
company in four weeks, standingup another company and standing
up another company, and soanyway, the bottom line was from
(51:10):
a new road standpoint as we endup investing.
It was a company that wasactually born in Turkey and the
Airhan who started the companyis Turkish and came to the
United States and started up thebusiness here in the Chicago
market and everything else, buthe had a rich background in the
space.
But the amazing thing to me iswhat you can do with
(51:32):
technologies these days, but theability, the speed to onboard a
customer in four weeks with theWMS was just amazing to me, and
so those are the type things soI would tell you, that ability
to integrate speed, those aresome of those things when I look
at the logistics world outthere and I see that and I'm
(51:56):
just wow.
Another one that stands out forme is the platform business.
And so for me, I can rememberanother Walmart story, matt, and
I'm going to kill you withWalmart stories, but another
Walmart story I remember we useda company called for our truck
telematics.
We used a company calledOmnitrax and Omnitrax was who
(52:21):
did our operating system ortelematics in our trucks.
And I can remember and this wasI think this is 2012 or 2013.
But the Omnitrax people cominginto my office and saying you
need to upgrade all the hardwarein your trucks.
And I'm thinking okay.
And he said you know, thisdoesn't work and this isn't
gonna work and we're gonna havea new version of software.
(52:43):
There's not enough memory andthere's not enough this and that
, so you need to upgrade themall.
And I'm like, okay, and he saidand the new version of hardware
you're gonna need to have foreach one of your trucks is gonna
be about $8,000 a truck.
And I remember sitting therelooking at him and doing the
math in my head and thinkingwe've got 9,000 trucks, $8,000 a
(53:05):
truck, $72 million.
You're just walking in here,you're wanting me to spend
Unbudgeted, unplanned, and nowit needs to happen, like in the
next six months.
And I just remember looking athim being so frustrated and at
that time I had, I think, aniPhone 2 or I had an iPhone 3.
(53:27):
And I laid the iPhone on mydesk and I said are you kidding
me?
I need something that functionslike this iPhone.
I need something that's gotapps where we can do things with
it, where it's about thesoftware, it's not about the
hardware.
And you know, he just dismissedme.
(53:49):
And then suddenly fast forward2017, I get introduced to this
guy named Jack Kennedy and whathe's done with this company.
That's called Platform Science.
And oh, by the way, it's anoperating system.
The hardware is secondary.
And oh, you can have all theseapplications on it and all these
(54:10):
applications communicatethrough the operating system.
And suddenly it's like myiPhone and instantly I just said
that's it.
That is what the truckingindustry has to have, because I
wanna be able to build appsmyself.
I wanna buy Matt's apps, Iwanna buy John Smith's apps.
(54:33):
I wanna put, because there'sall these incredible developers
out there.
I want them developing new,innovative, creative solutions
and I want them to go on thisplatform and me be able to use
it all.
That's what Platform Science isand that's what Jack Kennedy
and the team developed, and nowit's the base system for all the
many of the OEMs.
(54:54):
It's out there in the biggesttrucking fleets in the country,
including Walmart's truckingfleet and everything else, and
so it's just exploded onto themarket.
But that platform concept andeverything being able to connect
and everything being able totalk, those are the kind of
things the logistics industryneeds because it's so far behind
(55:16):
, and one of the reasons it's sofar behind is it's a capital
intensive industry.
It's a narrow margin capitalintensive business.
There's not a lot of money leftto go do other things, and so
it's fallen behind, and so, aspeople can develop these things
and bring these things on, thenyou've got the opportunity to
(55:39):
use those.
You know that's where anotherone came about.
So in 2017, I know, in 2015, Iwas at a conference in Southern
California and I was sittingthere at the conference and it
was some kind of an innovationconference that I was invited to
, and I remember we had just gotthrough touring flex tronics
(55:59):
and they make all the wearabletechnology and everything else.
We had toured their plant and itwas interesting, amazing, and
you're just wow, all of theseideas are swirling around.
And then we all went into aroom and they had a few people
come up and give some pitches,some new entrepreneurs and what
they were doing.
And this one young guy SouthAfrican guy, tall, good looking
(56:19):
guy gets up and starts talkingabout what he wanted to do in
the ocean shipping industry andhow he wants to have these
secure contracts and takeawaywhere you know you have all this
excess capacity that's unusedin the industry because shippers
overbook to protect service andcarriers oversell to protect
their ships and the two don'tmeet and it's just a mess and
(56:43):
it's just one of the huge areasof inefficiency in the ocean
shipping business.
And this guy, gordon Downs,came out and he said well, this
is what I want to do and I'mgoing to create all this stuff.
So you had these agreed upon,shared two-way contracts with
penalties and everything else.
And I remember sitting therelistening to Matt and thinking
about me from a Walmartperspective and all the TEUs we
(57:07):
ship every year, and thinkingabout the big ocean carriers,
the Maersk and the CMAs and allthose people, and thinking about
trying to get us all to alignand to agree on something.
I just I grabbed Gordonafterwards and I said, gordon,
that's a great idea, but goodluck, there is no way you're
going to get these people to allthe line on this stuff.
(57:29):
You know, and he just kind oflistened to me and nodded his
head and that was the end of theconversation Fast forward, it's
2018, 2019.
And suddenly I'm with New Roadnow and we're looking at
investment opportunities andthis guy shows up and he's got
this company called Nyshax NewYork Shipping Exchange and
(57:51):
they've got in 17,.
They've got, you know, alignedwith the Federal Maritime
Carrier Association and the FMC,you know, aligned with what
Nyshax is doing and issupportive of it and everything.
And I'm just looking at thisthing thinking, oh my gosh, this
guy who had this idea, thisconcept back in 15, he's brought
(58:14):
this to fruition.
He's actually got a company andthey're actually doing this.
They actually have createdthese ocean contracts and
they're actually aligningshippers and carriers to take
inefficiency out of the oceanshipping business.
And so, you know, it's justanother great opportunity to see
something that was a problemand to see a young entrepreneur
(58:39):
get behind it and help solvethat problem.
Speaker 1 (58:44):
Wow, what a great answer.
So sorry that was probably morethan you wanted.
No, that's perfect, because Iasked you about new technologies
and Lug was clearly one inwarehousing, I mean order
fulfillment too, that's right.
Speaker 2 (59:00):
And then platform science and trucking, and then
Nyshax and ocean shipping, soyou're covering new technologies
and a good chunk of all oflogistics, right there it is,
but it's so interesting to seethis thing from end to end and
to see what these differentcompanies are doing all the way
(59:23):
through that space.
And, matt, the more you look atit, the more opportunity you
actually see in the space.
There is more, and then I can'tyet.
You know, I was walking thismorning early.
I like to get out and hit thetrail system and I was listening
to a podcast this morning on AIand so I'm walking listening to
this podcast and it's one ofthe guys.
(59:44):
It's one of the early employeesat ChatGPT and the OpenAI and
everything else.
He actually came from Palantirand now he's at this other
organization.
Now I'm listening to thispodcast and you just start
thinking about how is AI gonnatake a lot of the unstructured
data, bring that data in andsimplify, make a lot of the
(01:00:08):
tasks today so much moreefficient and there's so many
ways.
I think that that's gonnaaffect our industries.
I think you're right.
Speaker 1 (01:00:16):
I'll tell you.
This morning I read a reallyinteresting article.
They studied the Fortune 500companies.
26% of them are doing nothingwith GenR of the AI Nothing.
I think there's an opportunitythere.
Speaker 2 (01:00:32):
Huge opportunity to.
Speaker 1 (01:00:33):
I mean huge opportunity Well you know this
has been so fun, chris.
Again, congratulations on youramazing career and for being
such a great individual and fortaking time to visit with me
there.
Really appreciate it.
Speaker 2 (01:00:51):
Matt, I appreciate you.
You know I go all the way backto whether it was 95 or 96,
whenever it was when I realizedthat the replenishment team I
had at SAMS needed a lot moreformal education.
And connected with you andconnected with a couple of the
professors for the University ofArkansas and the supply chain
(01:01:13):
department, and you guys came toNorthwest Arkansas, came from
Fayetteville up to Bentonvilleand literally every Friday
afternoon taught my team andthat really started the
relationship for you and Itogether.
But I just really appreciatehow that relationship has grown
over the years.
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