October 23, 2025 • 40 mins
The bottleneck isn’t the problem. The problem is building a system where that bottleneck shouldn’t exist in the first place.
In this episode, Ellen Wood sits down with Brent Hagan, Chief Supply Chain Officer at Lob, to unpack how teams can reach Amazon-level speed without locking themselves into Amazon-level infrastructure. They break down why “postage is a pass through” is a costly myth, how zone-based pricing changes the game for direct mail, and why shrinking a partner network can actually raise quality at scale.
In this episode:
In this episode, Ellen Wood sits down with Brent Hagan, Chief Supply Chain Officer at Lob, to unpack how teams can reach Amazon-level speed without locking themselves into Amazon-level infrastructure. They break down why “postage is a pass through” is a costly myth, how zone-based pricing changes the game for direct mail, and why shrinking a partner network can actually raise quality at scale.
In this episode:
- The shift from optimizing tasks to designing for outcomes
- How to deliver faster by routing with software instead of adding fixed assets
- What zone-based pricing and the postage myth mean for budgets and ROI
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Can you create Amazon like delivery speeds without building Amazon
like fixed infrastructure? Which is a very hard problem to solve,
And now lob in a very tenured industry that is
heavily focused on capitalized equipment, and your capacity is defined
by the quantity of machines that you have within the building,
(00:21):
and we mimic that exact same scale. The question is
rarely actually, how do we improve X by ten percent?
The question that you're really asking is should X even
exist in the current form at its end? I think
that what people should take away from that is when
you stop accepting industry norms at face value, that's when
(00:41):
you unlock innovation.
Speaker 2 (00:47):
Hello and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, ellen Wood. Supply chains
today aren't struggling because they lack tools. They're struggling because
those tools aren't always connected by people who see the
whole system. Engineers are often trained to optimize within silos,
(01:09):
but what the industry desperately needs are problem solvers who
can think across functions, constraints, and stakeholders. Today We're going
to explore how shifting the way that engineers have historically
approached problems could be the key to building more agile,
integrated supply chains. Joining me today is Brent Hagen, a
leadership developer and operational excellence veteran, to share some insights
(01:32):
that have led to the launch of lob, a company
that reimagined the logistics of print and mail.
Speaker 1 (01:37):
Welcome Brent, Hi, thanks for having me today.
Speaker 2 (01:40):
Of course great to have you here. I'm excited to
get to our topic today, which I think is going
to be hugely impactful to the conversation. But before we
get started, let's get to know you a little bit better.
Our question for today for icebreaker is what is a
weird food that you have tried and would you eat
it again? Yeah?
Speaker 1 (02:01):
I think when when I give the answer, your your listeners,
which I recognize you know, includes a heavy international audience,
isn't going to think like the food itself is that weird.
I think the context in which I received the food
was was pretty unique, and so my answer is goat.
(02:22):
Which goat is served all all around the world, but
in this in this specific case, I wasn't prepared for
what I was getting ready to walk into So I
was in Monterey, Mexico, actually doing due diligence on a
manufacturing site that that the company at the time I
was working for was looking at. And uh, Monterey, Mexico
(02:46):
in particular is very famous for its grilled goat. There's
a number of those restaurants like all over Monere and
so we we went to one supposed to be one
of the best in the city and we sit down
and I didn't realize like what cuisine we were going
to have, and everything was already set up for like
the table of eight.
Speaker 3 (03:06):
There were large dishes of.
Speaker 1 (03:08):
Tortillas and beans and rice and all these different vegetables
and sauces and stuff. And then I was like, oh, cools,
Like are they going to bring out you know, different meats,
like very ignorant like fajeta trays for each one of
us to pull from, Like what is this gonna what
is this gonna look like? And they're like, no, no,
it would be like one main dish we all pull from.
I was like, oh, okay, And they bring out a goat,
(03:33):
the entire goat with its head and everything on a
large tray, its feet dangling up in the air and
then you just kind of picked off what meat you
wanted and served it to yourself how however you want it.
And I was just I was just not prepared for
it to be served to.
Speaker 3 (03:51):
Me that way, and it was.
Speaker 1 (03:52):
It was great, you know, I really enjoyed it, and
I would I would definitely do it again.
Speaker 2 (03:58):
I've had goat before, and I've had but I've not
had it served roasted whole like that. I have had
both lamb and pig served that way, you know, a
full roast, and it's it's absolutely delicious, and it's a
unique dining experience that you can't replicate it with just
like a chicken. It's not the same thing at all.
Speaker 1 (04:19):
No, it's not even even close, you know. And like
there's certain things that you just expect to have the
head served with, right like you order a branzino or
something like, I'm going to expect to have the entire fish,
you know. I think anybody can think back to a
Christmas story when the duck is sitting there and it
served at the Chinese restaurant.
Speaker 2 (04:40):
And smiling at me.
Speaker 1 (04:42):
He's smiling at me, yeah, and she chops that he
chops the head off right there. And goes away like
everyone has certain expectations, but if you're not prepared for it,
it is just like a Christmas story. It is definitely
off putting.
Speaker 2 (04:55):
You know what mine is is a little similar. So
I've I'm a very adventurous eater. They're very a few
things that I'm not willing to eat, but I'm always
willing to try something. But one thing, and I remember it,
and this is this was a first. It wasn't an only.
When my parents moved to the South when I was
I was already an adult and they moved to southern
(05:15):
central Alabama and we went to a crawfish farm and
bought live crawfish. And if you've ever been to a
crawfish boil or had a crawfish boiled, they're delicious. Obviously,
if you like Cajun or Creole cuisine, you might have
had crawfish in an atufa or a gumbo. But in
(05:36):
order to prepare the crawfish live crawfish for eating is
a very unique process and it's it takes hours to do.
You wouldn't think it would be that much, but it's
it's very involved and so worth it. A crawfish boil
is absolutely delicious. But it's one of those things where
(05:58):
you know, you have to wonder who the first person
that looked at this tiny, little freshwater crustacean and thought,
you know, I want to eat that.
Speaker 1 (06:06):
Yeah, yeah, exactly, Like this definitely feels like it's worth
the effort.
Speaker 2 (06:11):
Exactly. They're so tiny that the reward is so little
for the amount of effort that has to go in.
You would think a fish or or a goat would
be a lot more you know, worthwhile in terms of
cost benefit ratio. But the crawfish has its place in
my heart, it really does. Crawfish or delicious, Yeah, I agree.
(06:32):
So that has absolutely nothing to do with our topic today.
Our topic is engineers or you know what, just in general,
the supply chain and challenging some very staunchly held beliefs
about the way things need to be approached. So you've
spent a good portion of your career in operations, driving
(06:54):
team performance, professional development, and you know, trying to you know,
increase whatever you were trying to do for those companies
through your teams. So what types of challenges do you
see most commonly in how these these engineers Because you
have been working in supply chain and operations. Typically engineering students, graduates,
(07:17):
those type of individuals. How did they approach their problem solving?
Speaker 3 (07:21):
Yeah, I think the most common challenge challenge and again
this is in.
Speaker 1 (07:25):
The framing of like new college graduates, it's the narrow
framing in which they will address a problem. You know,
engineering grads are generally taught to solve the problem that's
put in from front of them right, optimize this line,
reduce this defect, improve this throughput metric and they're very
(07:48):
very good at isolating those variables. What they have to
I think learn over time, and it often involves them
having to get into the business in order to do it,
is they're not as strong at taking a step back
and asking is this even the right problem? And that
can lead to you know, even better technical fixes that
(08:10):
don't actually that that will move the business even even
further forward.
Speaker 2 (08:15):
That's one thing that at me Boch we're consultants and
so that's one of the tenets of what we do
is you know, when when someone thinks they have a problem,
it really often does take a fresh set of eyes
or stepping back away from the problem to really see
that bigger picture. Can you think of an example when
(08:36):
when one of your students or one of your employees
just completely missed that bigger picture.
Speaker 1 (08:42):
Well, again, I think if you go back to that
that throughput issue, right, you tell someone like maybe it's
the number of finished goods that need to get out
the door. Uh, And they say, Okay, what am I
going to do? I'm in I'm going to go to
my Theory of Strengths xtbook and say ooh, like I
(09:03):
need to fix my bottleneck and I need to improve
the cycle time of that bottleneck. And it's like, well,
is that the actual problem? Like do you have an
appropriate buffer in front of your bottleneck to make sure
that your your downtime is minimized?
Speaker 3 (09:20):
Right?
Speaker 1 (09:20):
Do you have the within that bottleneck? Do you have
the right overall capacity in totality if you improve the
cycle time, have you actually fixed the total output? Uh?
And then on top of that, again like just starting
with that fixed mind, that that fixed point and saying
like I need to improve my bottleneck. Well, most traditionally
(09:42):
your bottleneck is somewhere within your middle processes like almost
pretty pretty holistically, and so what have you done downstream
as a result of that? Have you just created the
next bottleneck? You know, do you have your staffing balanced?
As as a result of that, all of these questions,
you know, to have to be asked, how does.
Speaker 2 (10:02):
This mindset of you know, not taking this problem at
face value, and how does that translate into the business
and innovation for startups?
Speaker 1 (10:14):
Yeah, I definitely think that the same concept which we're
talking to about the context of an engineer and how
they should think have a system's approach to it directly
applies to a business as well. You know, it's startups
like deliver where we're solving a very specific and very
hard problem. On our thesis in that space was cold
we create Amazon like delivery speeds without having Amazon like
(10:40):
fixed infrastructure, which, as everyone all the way up to
Target has proven very very hard to mimic. Right, Walmart's
maybe the only use case where they're like, yeah, I
think we've got this figured out, you know, as a
direct competitor, and now at lob answering the same question
in a different industry, which is can we create scale
(11:04):
without fixed cost and leverage in hair and technology?
Speaker 3 (11:07):
So with that, when you look.
Speaker 1 (11:09):
At those two problems, it's rarely like how do we
improve X by ten percent? The true disruptors in the
space are saying should X even exist? Because those are
the things that are going to accelerate an industry forward
and not just accepting some sort of industry norm at
its face value.
Speaker 2 (11:30):
Well, and I see your point that trying to replicate
what these giants do. I mean, we're talking about Amazon
and Walmart and Target, and that's I mean, these are
not startups. These are huge, huge corporations that have the
means to be able to try these different things out
or do something a little bit differently. But when we're
talking about startups like like Loob, you know what other
(11:54):
parallels do you see between this approach, this evolution of
this approach of of looking beyond face value and how
did that influence what you did with LOB and reimagining
that print and mail supply chain.
Speaker 1 (12:10):
Yeah, what's what's interesting is you talk about like finding
the right role at the right time for me personally
and the journey that I've had and how it supports
where LOB is today. You know, I started off working
for the Eat Incorporation, a top tier manufacturing company, in
a development program where they really taught me how to
(12:33):
develop some of the thinking I have today moving into
private equity, building first and third party supply chains, all
of which lean sic Sigma being a foundation of almost
every job that I've ever had, whether I was using
those tools or teaching people how to deploy those tools,
and then moving into Amazon, where scale is absolutely everything,
(12:56):
and how do you automate and standardized processes to the
to the degree to where you're measuring things defect injection
by the one hundred thousandth of a of a decimal place.
So coming into into to LOB, it takes all of
those experiences and says like, what do we really have here?
LOB was the original api UH in the in the industry,
(13:20):
and it's something that that we're very proud of. And
what came as a result of developing that API in
a venture backed environment was saying like how do we
keep fixed costs down? So they a very robust third
party manufacturing network was built. And one of the pieces
(13:40):
that you can often run into when building a network
of its of of that scale, is building it building
too much of it actually.
Speaker 2 (13:51):
So over engineering the problem.
Speaker 1 (13:53):
Yeah, yeah, exactly what what ends that ends up happening?
What what you hear is like very common across any industry.
That operates with third party manufacturers, like, oh, we've got
fifty seven partners in our network. We've got one hundred partners.
And people think that that scale is like a battle card,
you know that that just sounds great and it does
(14:14):
like it reads incredibly well on a pitch deck. What
they often won't recognize is the quality that comes as
a result of that. Your ability to have any sort
of quality conformance standard is almost impossible. You've got contracts
out the law zoo that you have to manage through.
Each partner in that relationship is very different and you
(14:37):
have to manage those those interactions, and so that sheer
scale introduces unnecessary volatility, and so the problem absolutely absolutely
complexity in every different form, Like each one of those
is a new technology integration, each one of those is
a different cadence in which you're interacting with them. But
(14:58):
the problem that when I write that we wanted to
begin to solve is not just how do we have
a robust manufacturing network, how do we have a robust
supply chain that leverages an industry where frankly, most of
the industry was built in a way that solving a
(15:21):
scale problem that was much larger than it is today. Right,
we know within direct mail manufacturing there's been a retraction
in that overall industry and the logistics that supports it.
Speaker 3 (15:33):
Also that's been the same way.
Speaker 1 (15:35):
And you see that that consolidation happening, right, And when
PE often enters into those equations, that's when you see that, right,
and their ability to begin to merge those And so
what I wanted to say is like, there's no doubt
that there's excess capacity sitting across the industry in multiple
different ways, and so we don't need to replicate the
(15:58):
size of a Goali. We can replicate the size of
that goliath. Leveraging technology instead of cash investment and focus
every dollar we spend on technology and not the next
piece of equipment that we need to buy.
Speaker 3 (16:15):
And it was it was my.
Speaker 1 (16:16):
Experience and the development over those years in systems thinking
and understanding constraints and understanding third parties and contract negotiations
and all of it that really led to this moment.
Speaker 2 (16:29):
Those are some of those rigid structures that you identified
in the traditional print and mail supply chains that you
knew you wanted to change. But what were some of
the potential that you saw by doing it differently, because
I know a lot of times these these innovations or
these innovative concepts get shot down at even at the
(16:51):
idea level, because there's there's not enough potential, there's not
enough improvement, there's not enough ROI in order to change
the status quo.
Speaker 1 (17:03):
Yeah, I think often what people will go back to
like the ROI conversation and they'll say like, yeah, is
this justified? What it often comes down to is people
think it's really hard, So do I actually want to
do it?
Speaker 3 (17:19):
You know? And I'll give you a really great example.
Speaker 1 (17:23):
We had a robust manufacturing network when when I was here,
when I first got here, and we were probably like
two percent or a little bit more of total revenue
of any one of our manufacturing partners. And it's enough
where it's like, man, they would prefer you didn't go away,
but if you did, you know, it's kind of like.
Speaker 3 (17:45):
Nah, you know.
Speaker 1 (17:46):
And so what I really wanted to do was have
like table stakes there, like we need you and you
need us, and how do we build a roadmap together?
And so that was that was pretty solvable. You know,
that's not that's not like new world old thinking, but
it did have a meaningful impact to what we were
trying to save for the dollars that we were trying
to save and the reliability that we were trying to create.
(18:09):
But when you look at the greater environment that we
began to see is we were handing all complexity to
those third parties and saying, just tell it how much
it costs, and you go figure out how to get
this in the in the inbox and it in home,
and it doesn't. It just doesn't work like that, and
you're paying margin on every single transaction, every mental effort
(18:31):
that that somebody puts puts into it. So we saw
siloed plants, we saw very opaque logistics where your data
is a black box. It's spending as much time with
your logistics providers as it is with the USPS. It's
it's still itself. And we saw a lack of price
(18:51):
competitiveness within the marketplace for how you negotiate how you
can negotiate those rates. And so I started to ask like, hey,
like why can't we take the patents that we have
on the manufacturing side and build our own logistics network
that solves this problem right, and we'll use third party
logistics providers and connect them through our technology where they're
(19:12):
all interacting and queued in a way that they're not
used to doing, and the industry hasn't happened or hasn't
historically wanted.
Speaker 3 (19:22):
To do it.
Speaker 1 (19:23):
And the answer I basically got was, well, that's really hard,
and it's like, well that's why we're here, right Like,
we're here to solve like really hard problems. And if
it's that hard of a problem, like, boy, does that
sound really interesting?
Speaker 3 (19:37):
You know?
Speaker 1 (19:38):
And that's that's where we're really beginning to differentiate ourselves, right,
Like we have very transparent pricing. Now, we have visibility
to the full life cycle of the mail piece all
the way to the to the person's mailbox, which is
which is fairly unheard of, and we've broken down all
(19:58):
of those silos in the twin.
Speaker 3 (20:01):
You know.
Speaker 2 (20:01):
It makes me think of this cartoon that I'm sure
people have seen all over the place, and it's this
this speaker standing up in front of a crowd of people,
alleged to be maybe a politician or something, and he
says who wants change? And everyone raiins their hands. He says,
who wants to be the change? And everyone has their
hands down, No one wants to be the one to
(20:21):
have to do the effort and the work in bringing
those innovations to life. And I mean you've talked to
us a little bit about what, you know, one of
those assumptions that you had had. Are there any other
industry assumptions that you challenged with this this idea, this
mindset of not accepting what has historically been done the
(20:43):
way it's been done.
Speaker 3 (20:44):
Yeah, great, great question.
Speaker 1 (20:46):
First of all, I've always wanted to be the change
like it. Just just to comment, I've had a number
of managers, including our CEO now just like who said,
like you're always looking for the next hill to charge,
aren't you? And it's like yeah, like why not, Like
we're here, like let's let's.
Speaker 3 (21:04):
Go and do it. We might as well. But to
answer your question, there's there's been a number of thoughts.
Speaker 1 (21:10):
That that are things that we've executed on that we've
challenged over time. The first one is at the industry level,
it is taught to the customer base that as it
relates to postage cost, that postages postage and it's a
pass through and it just really isn't the case, right,
(21:32):
Like you can very accurately model postage cost and understand
the benefits of saturation not just at the individual customer
campaign level, but actually the macro level, begin to predictively
model what that postage is going to cost and lower
(21:53):
lower that overall postage that that someone pays. And so
that's that's one that we're work looking really hard to
educate the entire industry on is like, don't don't allow
your vendor to tell you that it's that it's a
pass through.
Speaker 3 (22:09):
Like, yes, it's a.
Speaker 1 (22:10):
Pass through in the sense that whatever bill comes out,
like that's what we're gonna need to pay, But let's
not assume that that's like the best and final price, because
there are ways in which we can we can generate
favorabilities for you in the long term through a robust
collaboration between customer, UH and and vendor. And that's been
a challenging assumption. I think the the second one I
(22:35):
touched on this a little bit more UH previously, but
i'll touch on it now. UH was understanding that you
don't have to necessarily inherently tie fixed infrastructure into overall capacity,
you know, and so as as this industry continues to
grow and and morph and change, one of the things
(22:57):
that's that's coming through is is something that's called zone
based pricing. Zone based pricing is an initiative by the
USPS to mimic that of parcel where it begins to
look at the cost from the destination it's going to
to the entry point, so it more accurately reflects the
(23:17):
actual cost structure that the USPS is inherent inheriting that
doesn't exist in direct mail, which might surprise a lot
of people, right, Like a postage stamp is a postage stamp,
and it always kind of it always kind of costs
the same. But that's again like that's something that we're
trying to change, and zone based pricing also begins to
(23:39):
inherently influence that as well. So you think about from
an industry perspective, what does that mean for your small
to medium sized, regionally based manufacturers to operate at a
national campaign level. Just like in the parcel world, they're
going to have to think very specifically about how they
begin to target geographies and what that means to not
(24:02):
have their cost explode. And so that's one where like
our APIs are incredibly well suited to solve those problems
as well as like our nationally built network which focuses
on the ability to route the closest to the receivers
(24:22):
as possible. That's really kind of a fundamental shift within
the industry. Even your businesses that have fifty to seventy
sites around the United States or more, you know, or
maybe they even have ten. Quite often what you see
is even at a national campaign, they're not targeting. They're
not intelligently routing that to say like how can I
(24:44):
get it in home the fastest. They're sending all of
it to a singular site and then worrying about the
logistics problems later. And so what you begin to see
is if I'm a marketer, for example, and I'm measuring attribution,
which attribution from a marketing standpoint, direct mail still has
one of the most favorable rois tied to it, even
(25:06):
at a really great expense. They're saying, man, my channel
is broken, like this is really expensive and it's really slow. Well,
it doesn't need to be either one of those things, right,
Like we've created a supply chain problem where a supply
chain problem doesn't need to exist.
Speaker 2 (25:20):
That's so interesting. What kind of pushback or naysayers resistance
do you get and who is it who is it from?
Is this from the you know, the stakeholders sitting at
the table. Is it from clients who don't believe that
this type of change is possible within the industry? You know,
(25:41):
who are your biggest detractors?
Speaker 1 (25:44):
Yeah, I think when you look at it from like
an enterprise sales perspective, we certainly have competitors that have
been in the industry, some of them.
Speaker 3 (25:52):
For literally over one hundred years, who will.
Speaker 1 (25:56):
Often say, like, you know, they can't build true scale,
and if they can build true scale, you can't have
quality conformance at scale because it's a nationally distributed network,
or they can't be price competitive because they don't control
the supply chain. And I'll admit, you know, we don't
(26:19):
control like the heaviest overhead cost associated with managing fixed infrastructure, right,
which doesn't allow us to have pricing volatility that some
might have. That's actually a benefit, right, Like a customer
knows what they're going to get from us, and they
get that every time. As as it relates to the
quality piece we've created quality at scale, there are very
(26:42):
few quality things that like a traditional manufacturer is doing
that that we're not doing. The differences. We have technology
embedded into ours in a way that that that they
probably don't and that but that's something that we've had
to prove over time, right Like, once that's out there,
once that's out there, you're fighting against that, Like there's
just no doubt about it. And so that's something that
(27:02):
we've had to continue to improve over time. And it's
definitely been a journey, there's no doubt. Like we talked
about it, you know, when I got here, we had
thirty partners across the country. We have like eight now,
you know. And so I would agree that within a
network that large, quality conformances is a huge issue. But
(27:23):
those those are really kind of the main challenges. And
fortunately for us, I think that we've gotten enough street
cred over time. When we build the next thing and
embed technology into it, people ask about it, you know,
And that's that's definitely a reflection of our staying power
(27:43):
within the industry and that we've been able to prove
that we do know what we're doing. We still get
them wrong sometimes, right, not everyone that's a thousand, but
we learn from those things and we iterate from them
to the point where you know, some of those competitors
that we're talking about. They're calling us asking how we're
doing things too, you know, and so so it feel good. Yeah, absolutely,
(28:07):
Well that's when you know when you're doing something right,
you know, and they're like, hey, like have you thought
about working with us on this? And it's like, no,
not really, but apparently you're thinking about us, and that
feels really good, you know. And so.
Speaker 3 (28:19):
You know, that's that's when.
Speaker 1 (28:20):
You know like something's really clicking, like they're thinking about you.
They show up on your webinars on LinkedIn or something
that you're hosting a side it's like, okay, like we
were making noise here and that's good. That's a good
feeling exactly.
Speaker 2 (28:33):
And so we've talked about this. We started out talking
about engineers and recent graduates and you know, as they're
entering the job market and looking at solving some of
their first big problems, and then kind of adjusted the
conversation to talk about LOB. But let's let's bring it
back to them, because you've got all this experience and
(28:54):
you know, challenging status quos, you know, disrupting antiquated system
How can other engineering leaders coach their teams to step
back and see that that broader system the same way
you have in order to encourage and engage that innovation.
Speaker 3 (29:14):
Yeah, a lot of.
Speaker 1 (29:15):
It goes goes down to the way in which you're
talking to your team about the problem that they're trying
to solve. You know, if you tell this this can
be true at any level, but especially new college graduates
and especially like lower line level engineers. If you say, like,
(29:36):
go fix problem, they're going to repeat like, I go
fix problem, right, and then they're going to go to
that like and then they're going to go fix that problem,
you know, And that's what they do and they're incredibly
good at it. What's really important is to coach to
outcomes like we need to fix this problem, we believe
because it's going to result in this outcome, right, more
(29:58):
product through the building, or more efficient just overall value
stream or a fixed a variable cost reduction of why
as a result of applying X. And so you start
to coach to that outcome that begins to have them
have a system's approach to that and say like, oh, okay,
(30:22):
well let's go back to the original example that we
talked about. If you fix your bottleneck within like a
traditional fixed manufacturing structure. What's going to happen is if
I have fixed that, I'm now consuming more product upstream,
and so have I created Have I created downtime upstream
(30:45):
that I didn't intend? And so you've now turned your
indirect variable cost the person that's sitting in front of
that machine. You now have an indirect cost that was
set that's now are a direct cost that's now an
indirect cost because you have to have them go do
something else else that isn't driving value back to the
part that they just created, because now they have downtime. Right, Like,
you don't need them producing as fast or you need
(31:07):
them producing faster. So it's going to be it's going
to be one or the other. Yeah, And if they're
producing faster, can you consume it faster? Within that that
bottle neck? Now maybe I have another bottle neck. I
create it, and if I can't get it out the
door fast enough, I e I'm not selling it fast enough.
Speaker 3 (31:26):
What have I done.
Speaker 1 (31:27):
I've put the cash that I had in my bank
account and I've now put it on a shelf and
it's going to sit in the form of inventory. And
now I've created a whole new issue, right so like,
what actual thing are you trying to fix? Because it's
never just like I go fix problem like it you
have to look at the entire you have to look
at the entire system. And that can be very challenging
(31:51):
in very, very large companies because it often can be
opaque of like what actual problem, like are we solving
and who's it for? And what's the deliver you know
when you think about it, like going all the way
back to basic principles. Uh, in college, we we should
be teaching them these these things like they should understand
(32:11):
when I build a system, understand the financial cost associated
with doing that sort of thing. They should understand operational
use cases and that sort of thing, not just let's
design the next the next neat thing. And that's not
for every engineer, Like I'll be the I'll be the
first one to admit and so I'll stop right there.
Speaker 2 (32:35):
No, No, that's great. Well, and you you mentioned you
know obviously, uh, we're talking about college grads and and
you know, newer engineers into the workforce, we call them
analysts at our organization. You know, that's that's the entry
level position. And you know, I also struggle with this,
and it's because I'm the marketing person. It's mainly in
(32:57):
in the regard of, you know, trying to showcase what
we're doing, where if I ask them to tell me
what they did on a project, they are very formulaic
and they will list every single step that they took
and I'm like, no, how did we solve the customer's problem?
Speaker 1 (33:11):
Well, that's where it starts, right, Like, every every problem
that you're solving with in there goes back to solving
a customer problem, like it's.
Speaker 3 (33:19):
Why, it's why we all exist.
Speaker 1 (33:22):
You know, And that sort of framing can really start
to contextualize things for people. I love having my team
on customer calls because it is way harder to say
no to that customer to their face than it is
for an account executive to be like, our customers sure
(33:43):
would like it if you did this, No, right, Like, no,
that's okay, And it's like, well, why don't we get
on the call and let's understand their pain point and
you tell them why you don't think this could work,
And they're almost never going to do that, right, They're
gonna be like, oh, like that's really hard, and I
I same for an engineer, you know, and what that
(34:04):
delivers in the long term is just so valuable.
Speaker 2 (34:09):
Well, and I think we need to at least point
out briefly that you have a very solid background in engineering,
being an engineering graduate of Purdue University, which is well
known for its engineering program.
Speaker 3 (34:25):
Go boiler Makers.
Speaker 2 (34:27):
So I guess my last question to you would be,
you know, having been through that experience yourself, having seen
what you have seen throughout your career, if you could
redesign a portion of an engineering curriculum, what would you
change or add?
Speaker 1 (34:44):
I would love to add, and I did this actually,
and I can explain this about what I did in school.
But first of all, boiler up for sure, very excited
for this year's coming basketball season. Schedule ca out yesterday
and I've already got dates circled for where I'm going
to see them.
Speaker 3 (35:04):
But I think.
Speaker 1 (35:07):
One of the issues within the university system itself can
often be the lack of cross collaboration between schools schools
within the university itself. Right, So, like you take Purdue
for example, which obviously, like I feel, especially like you
can already see you know, the jersey up there, but
is near and dear to my heart, and I operate
with the Daniel School of Business pretty frequently. I operate
(35:30):
with the College of Technology really frequently, which is where
I actually graduated from. Some of my best friends were
in Ease. Those schools almost never interact really only outside
of collaborative clubs and that sort of thing, And I
think finding ways in which to make those groups come
(35:52):
together and build cases together could be really really interesting.
Speaker 3 (35:57):
And so one of this.
Speaker 1 (36:00):
That I did when I was in school, I was
the head of two different associations. One was the Produe
Consulting Club, and then the other one was called APEX,
which is the Association for Operations Management, which has changed
its name a couple of different times now, but as
a global professional organization, and all the members of those
(36:21):
organizations were never just from one discipline, and so we
would end up going in case studies where you had
to fix like a supply chain problem, you had to
understand the financial impact of what you were doing. In
some cases you had to be able to market that.
Speaker 3 (36:38):
But then it.
Speaker 1 (36:38):
Always came back to like operationally, like what problem were
you solving? Like those sort of of cross functional things,
one begin to have different thinkers begin to interact with
each other far more often than they're probably going to
either in college or right out of school. And it
also begins to apply like contextual understanding of you know,
(37:03):
long term, this is this is what business impact you're
going to going to have. I'll give you an example.
So when when I was in the Eaton Development program,
at the end of that journey, you present on why
they've invested so much in you over your last two
and a half years, and you do it in front
(37:25):
of your peers that you spent the last two and
a half years moving around the country with and talking
about the cool projects that that you've solved, and but
this is a very expensive thing for eating at the time,
and you present this to kind of the board of
trustees for that that program, and what they're really doing
(37:45):
is they're starting to place you on where does this
person fit in at like what problems should we have
them now go solve? What are problems within the business?
What are they the future leader of? And I heard
one of them say, and the executive's pretty well known,
so I'm definitely not going to say is his name
and he's an easy LinkedIn search away, but he said
(38:07):
this is the type of guy and he wasn't pointing
to me, I was actually sitting like awkwardly behind him.
He was like, this is the type of guy that
you put in a basement and you tell him to
go invent something. There's nothing wrong, there's nothing wrong with
being that type of engineer. It's just it's unlikely that
everyone in that class is that brilliant mind, right. It's
(38:30):
way more likely that they're going to be put in
a situation where they have to solve cross functional business
problems with people they don't that don't directly work for them.
And we should start that as early in their career
and as early in their educational journey as possible.
Speaker 2 (38:45):
Absolutely, and we're seeing that in all sorts of organizations
as we support them. I'm sure you've seen it as well,
when we start talking about the different stakeholders and those
silos that they're working in, those different business units, and
the difficulty of getting them to come together and align
on a solution that rising tides raise all ships. I've
(39:07):
used that a lot recently. I don't know why that
phrase seems to have been applying to so many different
aspects of my life right now, but I mean, truly,
when they're able to come to the table and talk
to each other and see things from different perspectives. The
solutions come that much more easily.
Speaker 3 (39:27):
Yeah, absolutely so.
Speaker 2 (39:29):
As supply chains evolve from fragmented operations to integrated ecosystems,
the ability to zoom out and rethink the system is
no longer optional. It's strategic. Thank you so much Brent
for joining us today and sharing some of your insights
on both the way that engineers approach problems but also
(39:50):
the way that supply chains can use that thinking to
reimagine solutions.
Speaker 3 (39:55):
Thank you for having me. I really appreciate the time.
This is great.
Speaker 2 (39:59):
To our listeners out there, thank you so much for
listening until next time. Thank you for tuning in to
speaking of supply chain
Can you create Amazon like delivery speeds without building Amazon
like fixed infrastructure? Which is a very hard problem to solve,
And now lob in a very tenured industry that is
heavily focused on capitalized equipment, and your capacity is defined
by the quantity of machines that you have within the building,
(00:21):
and we mimic that exact same scale. The question is
rarely actually, how do we improve X by ten percent?
The question that you're really asking is should X even
exist in the current form at its end? I think
that what people should take away from that is when
you stop accepting industry norms at face value, that's when
(00:41):
you unlock innovation.
Speaker 2 (00:47):
Hello and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, ellen Wood. Supply chains
today aren't struggling because they lack tools. They're struggling because
those tools aren't always connected by people who see the
whole system. Engineers are often trained to optimize within silos,
(01:09):
but what the industry desperately needs are problem solvers who
can think across functions, constraints, and stakeholders. Today We're going
to explore how shifting the way that engineers have historically
approached problems could be the key to building more agile,
integrated supply chains. Joining me today is Brent Hagen, a
leadership developer and operational excellence veteran, to share some insights
(01:32):
that have led to the launch of lob, a company
that reimagined the logistics of print and mail.
Speaker 1 (01:37):
Welcome Brent, Hi, thanks for having me today.
Speaker 2 (01:40):
Of course great to have you here. I'm excited to
get to our topic today, which I think is going
to be hugely impactful to the conversation. But before we
get started, let's get to know you a little bit better.
Our question for today for icebreaker is what is a
weird food that you have tried and would you eat
it again? Yeah?
Speaker 1 (02:01):
I think when when I give the answer, your your listeners,
which I recognize you know, includes a heavy international audience,
isn't going to think like the food itself is that weird.
I think the context in which I received the food
was was pretty unique, and so my answer is goat.
(02:22):
Which goat is served all all around the world, but
in this in this specific case, I wasn't prepared for
what I was getting ready to walk into So I
was in Monterey, Mexico, actually doing due diligence on a
manufacturing site that that the company at the time I
was working for was looking at. And uh, Monterey, Mexico
(02:46):
in particular is very famous for its grilled goat. There's
a number of those restaurants like all over Monere and
so we we went to one supposed to be one
of the best in the city and we sit down
and I didn't realize like what cuisine we were going
to have, and everything was already set up for like
the table of eight.
Speaker 3 (03:06):
There were large dishes of.
Speaker 1 (03:08):
Tortillas and beans and rice and all these different vegetables
and sauces and stuff. And then I was like, oh, cools,
Like are they going to bring out you know, different meats,
like very ignorant like fajeta trays for each one of
us to pull from, Like what is this gonna what
is this gonna look like? And they're like, no, no,
it would be like one main dish we all pull from.
I was like, oh, okay, And they bring out a goat,
(03:33):
the entire goat with its head and everything on a
large tray, its feet dangling up in the air and
then you just kind of picked off what meat you
wanted and served it to yourself how however you want it.
And I was just I was just not prepared for
it to be served to.
Speaker 3 (03:51):
Me that way, and it was.
Speaker 1 (03:52):
It was great, you know, I really enjoyed it, and
I would I would definitely do it again.
Speaker 2 (03:58):
I've had goat before, and I've had but I've not
had it served roasted whole like that. I have had
both lamb and pig served that way, you know, a
full roast, and it's it's absolutely delicious, and it's a
unique dining experience that you can't replicate it with just
like a chicken. It's not the same thing at all.
Speaker 1 (04:19):
No, it's not even even close, you know. And like
there's certain things that you just expect to have the
head served with, right like you order a branzino or
something like, I'm going to expect to have the entire fish,
you know. I think anybody can think back to a
Christmas story when the duck is sitting there and it
served at the Chinese restaurant.
Speaker 2 (04:40):
And smiling at me.
Speaker 1 (04:42):
He's smiling at me, yeah, and she chops that he
chops the head off right there. And goes away like
everyone has certain expectations, but if you're not prepared for it,
it is just like a Christmas story. It is definitely
off putting.
Speaker 2 (04:55):
You know what mine is is a little similar. So
I've I'm a very adventurous eater. They're very a few
things that I'm not willing to eat, but I'm always
willing to try something. But one thing, and I remember it,
and this is this was a first. It wasn't an only.
When my parents moved to the South when I was
I was already an adult and they moved to southern
(05:15):
central Alabama and we went to a crawfish farm and
bought live crawfish. And if you've ever been to a
crawfish boil or had a crawfish boiled, they're delicious. Obviously,
if you like Cajun or Creole cuisine, you might have
had crawfish in an atufa or a gumbo. But in
(05:36):
order to prepare the crawfish live crawfish for eating is
a very unique process and it's it takes hours to do.
You wouldn't think it would be that much, but it's
it's very involved and so worth it. A crawfish boil
is absolutely delicious. But it's one of those things where
(05:58):
you know, you have to wonder who the first person
that looked at this tiny, little freshwater crustacean and thought,
you know, I want to eat that.
Speaker 1 (06:06):
Yeah, yeah, exactly, Like this definitely feels like it's worth
the effort.
Speaker 2 (06:11):
Exactly. They're so tiny that the reward is so little
for the amount of effort that has to go in.
You would think a fish or or a goat would
be a lot more you know, worthwhile in terms of
cost benefit ratio. But the crawfish has its place in
my heart, it really does. Crawfish or delicious, Yeah, I agree.
(06:32):
So that has absolutely nothing to do with our topic today.
Our topic is engineers or you know what, just in general,
the supply chain and challenging some very staunchly held beliefs
about the way things need to be approached. So you've
spent a good portion of your career in operations, driving
(06:54):
team performance, professional development, and you know, trying to you know,
increase whatever you were trying to do for those companies
through your teams. So what types of challenges do you
see most commonly in how these these engineers Because you
have been working in supply chain and operations. Typically engineering students, graduates,
(07:17):
those type of individuals. How did they approach their problem solving?
Speaker 3 (07:21):
Yeah, I think the most common challenge challenge and again
this is in.
Speaker 1 (07:25):
The framing of like new college graduates, it's the narrow
framing in which they will address a problem. You know,
engineering grads are generally taught to solve the problem that's
put in from front of them right, optimize this line,
reduce this defect, improve this throughput metric and they're very
(07:48):
very good at isolating those variables. What they have to
I think learn over time, and it often involves them
having to get into the business in order to do it,
is they're not as strong at taking a step back
and asking is this even the right problem? And that
can lead to you know, even better technical fixes that
(08:10):
don't actually that that will move the business even even
further forward.
Speaker 2 (08:15):
That's one thing that at me Boch we're consultants and
so that's one of the tenets of what we do
is you know, when when someone thinks they have a problem,
it really often does take a fresh set of eyes
or stepping back away from the problem to really see
that bigger picture. Can you think of an example when
(08:36):
when one of your students or one of your employees
just completely missed that bigger picture.
Speaker 1 (08:42):
Well, again, I think if you go back to that
that throughput issue, right, you tell someone like maybe it's
the number of finished goods that need to get out
the door. Uh, And they say, Okay, what am I
going to do? I'm in I'm going to go to
my Theory of Strengths xtbook and say ooh, like I
(09:03):
need to fix my bottleneck and I need to improve
the cycle time of that bottleneck. And it's like, well,
is that the actual problem? Like do you have an
appropriate buffer in front of your bottleneck to make sure
that your your downtime is minimized?
Speaker 3 (09:20):
Right?
Speaker 1 (09:20):
Do you have the within that bottleneck? Do you have
the right overall capacity in totality if you improve the
cycle time, have you actually fixed the total output? Uh?
And then on top of that, again like just starting
with that fixed mind, that that fixed point and saying
like I need to improve my bottleneck. Well, most traditionally
(09:42):
your bottleneck is somewhere within your middle processes like almost
pretty pretty holistically, and so what have you done downstream
as a result of that? Have you just created the
next bottleneck? You know, do you have your staffing balanced?
As as a result of that, all of these questions,
you know, to have to be asked, how does.
Speaker 2 (10:02):
This mindset of you know, not taking this problem at
face value, and how does that translate into the business
and innovation for startups?
Speaker 1 (10:14):
Yeah, I definitely think that the same concept which we're
talking to about the context of an engineer and how
they should think have a system's approach to it directly
applies to a business as well. You know, it's startups
like deliver where we're solving a very specific and very
hard problem. On our thesis in that space was cold
we create Amazon like delivery speeds without having Amazon like
(10:40):
fixed infrastructure, which, as everyone all the way up to
Target has proven very very hard to mimic. Right, Walmart's
maybe the only use case where they're like, yeah, I
think we've got this figured out, you know, as a
direct competitor, and now at lob answering the same question
in a different industry, which is can we create scale
(11:04):
without fixed cost and leverage in hair and technology?
Speaker 3 (11:07):
So with that, when you look.
Speaker 1 (11:09):
At those two problems, it's rarely like how do we
improve X by ten percent? The true disruptors in the
space are saying should X even exist? Because those are
the things that are going to accelerate an industry forward
and not just accepting some sort of industry norm at
its face value.
Speaker 2 (11:30):
Well, and I see your point that trying to replicate
what these giants do. I mean, we're talking about Amazon
and Walmart and Target, and that's I mean, these are
not startups. These are huge, huge corporations that have the
means to be able to try these different things out
or do something a little bit differently. But when we're
talking about startups like like Loob, you know what other
(11:54):
parallels do you see between this approach, this evolution of
this approach of of looking beyond face value and how
did that influence what you did with LOB and reimagining
that print and mail supply chain.
Speaker 1 (12:10):
Yeah, what's what's interesting is you talk about like finding
the right role at the right time for me personally
and the journey that I've had and how it supports
where LOB is today. You know, I started off working
for the Eat Incorporation, a top tier manufacturing company, in
a development program where they really taught me how to
(12:33):
develop some of the thinking I have today moving into
private equity, building first and third party supply chains, all
of which lean sic Sigma being a foundation of almost
every job that I've ever had, whether I was using
those tools or teaching people how to deploy those tools,
and then moving into Amazon, where scale is absolutely everything,
(12:56):
and how do you automate and standardized processes to the
to the degree to where you're measuring things defect injection
by the one hundred thousandth of a of a decimal place.
So coming into into to LOB, it takes all of
those experiences and says like, what do we really have here?
LOB was the original api UH in the in the industry,
(13:20):
and it's something that that we're very proud of. And
what came as a result of developing that API in
a venture backed environment was saying like how do we
keep fixed costs down? So they a very robust third
party manufacturing network was built. And one of the pieces
(13:40):
that you can often run into when building a network
of its of of that scale, is building it building
too much of it actually.
Speaker 2 (13:51):
So over engineering the problem.
Speaker 1 (13:53):
Yeah, yeah, exactly what what ends that ends up happening?
What what you hear is like very common across any industry.
That operates with third party manufacturers, like, oh, we've got
fifty seven partners in our network. We've got one hundred partners.
And people think that that scale is like a battle card,
you know that that just sounds great and it does
(14:14):
like it reads incredibly well on a pitch deck. What
they often won't recognize is the quality that comes as
a result of that. Your ability to have any sort
of quality conformance standard is almost impossible. You've got contracts
out the law zoo that you have to manage through.
Each partner in that relationship is very different and you
(14:37):
have to manage those those interactions, and so that sheer
scale introduces unnecessary volatility, and so the problem absolutely absolutely
complexity in every different form, Like each one of those
is a new technology integration, each one of those is
a different cadence in which you're interacting with them. But
(14:58):
the problem that when I write that we wanted to
begin to solve is not just how do we have
a robust manufacturing network, how do we have a robust
supply chain that leverages an industry where frankly, most of
the industry was built in a way that solving a
(15:21):
scale problem that was much larger than it is today. Right,
we know within direct mail manufacturing there's been a retraction
in that overall industry and the logistics that supports it.
Speaker 3 (15:33):
Also that's been the same way.
Speaker 1 (15:35):
And you see that that consolidation happening, right, And when
PE often enters into those equations, that's when you see that, right,
and their ability to begin to merge those And so
what I wanted to say is like, there's no doubt
that there's excess capacity sitting across the industry in multiple
different ways, and so we don't need to replicate the
(15:58):
size of a Goali. We can replicate the size of
that goliath. Leveraging technology instead of cash investment and focus
every dollar we spend on technology and not the next
piece of equipment that we need to buy.
Speaker 3 (16:15):
And it was it was my.
Speaker 1 (16:16):
Experience and the development over those years in systems thinking
and understanding constraints and understanding third parties and contract negotiations
and all of it that really led to this moment.
Speaker 2 (16:29):
Those are some of those rigid structures that you identified
in the traditional print and mail supply chains that you
knew you wanted to change. But what were some of
the potential that you saw by doing it differently, because
I know a lot of times these these innovations or
these innovative concepts get shot down at even at the
(16:51):
idea level, because there's there's not enough potential, there's not
enough improvement, there's not enough ROI in order to change
the status quo.
Speaker 1 (17:03):
Yeah, I think often what people will go back to
like the ROI conversation and they'll say like, yeah, is
this justified? What it often comes down to is people
think it's really hard, So do I actually want to
do it?
Speaker 3 (17:19):
You know? And I'll give you a really great example.
Speaker 1 (17:23):
We had a robust manufacturing network when when I was here,
when I first got here, and we were probably like
two percent or a little bit more of total revenue
of any one of our manufacturing partners. And it's enough
where it's like, man, they would prefer you didn't go away,
but if you did, you know, it's kind of like.
Speaker 3 (17:45):
Nah, you know.
Speaker 1 (17:46):
And so what I really wanted to do was have
like table stakes there, like we need you and you
need us, and how do we build a roadmap together?
And so that was that was pretty solvable. You know,
that's not that's not like new world old thinking, but
it did have a meaningful impact to what we were
trying to save for the dollars that we were trying
to save and the reliability that we were trying to create.
(18:09):
But when you look at the greater environment that we
began to see is we were handing all complexity to
those third parties and saying, just tell it how much
it costs, and you go figure out how to get
this in the in the inbox and it in home,
and it doesn't. It just doesn't work like that, and
you're paying margin on every single transaction, every mental effort
(18:31):
that that somebody puts puts into it. So we saw
siloed plants, we saw very opaque logistics where your data
is a black box. It's spending as much time with
your logistics providers as it is with the USPS. It's
it's still itself. And we saw a lack of price
(18:51):
competitiveness within the marketplace for how you negotiate how you
can negotiate those rates. And so I started to ask like, hey,
like why can't we take the patents that we have
on the manufacturing side and build our own logistics network
that solves this problem right, and we'll use third party
logistics providers and connect them through our technology where they're
(19:12):
all interacting and queued in a way that they're not
used to doing, and the industry hasn't happened or hasn't
historically wanted.
Speaker 3 (19:22):
To do it.
Speaker 1 (19:23):
And the answer I basically got was, well, that's really hard,
and it's like, well that's why we're here, right Like,
we're here to solve like really hard problems. And if
it's that hard of a problem, like, boy, does that
sound really interesting?
Speaker 3 (19:37):
You know?
Speaker 1 (19:38):
And that's that's where we're really beginning to differentiate ourselves, right,
Like we have very transparent pricing. Now, we have visibility
to the full life cycle of the mail piece all
the way to the to the person's mailbox, which is
which is fairly unheard of, and we've broken down all
(19:58):
of those silos in the twin.
Speaker 3 (20:01):
You know.
Speaker 2 (20:01):
It makes me think of this cartoon that I'm sure
people have seen all over the place, and it's this
this speaker standing up in front of a crowd of people,
alleged to be maybe a politician or something, and he
says who wants change? And everyone raiins their hands. He says,
who wants to be the change? And everyone has their
hands down, No one wants to be the one to
(20:21):
have to do the effort and the work in bringing
those innovations to life. And I mean you've talked to
us a little bit about what, you know, one of
those assumptions that you had had. Are there any other
industry assumptions that you challenged with this this idea, this
mindset of not accepting what has historically been done the
(20:43):
way it's been done.
Speaker 3 (20:44):
Yeah, great, great question.
Speaker 1 (20:46):
First of all, I've always wanted to be the change
like it. Just just to comment, I've had a number
of managers, including our CEO now just like who said,
like you're always looking for the next hill to charge,
aren't you? And it's like yeah, like why not, Like
we're here, like let's let's.
Speaker 3 (21:04):
Go and do it. We might as well. But to
answer your question, there's there's been a number of thoughts.
Speaker 1 (21:10):
That that are things that we've executed on that we've
challenged over time. The first one is at the industry level,
it is taught to the customer base that as it
relates to postage cost, that postages postage and it's a
pass through and it just really isn't the case, right,
(21:32):
Like you can very accurately model postage cost and understand
the benefits of saturation not just at the individual customer
campaign level, but actually the macro level, begin to predictively
model what that postage is going to cost and lower
(21:53):
lower that overall postage that that someone pays. And so
that's that's one that we're work looking really hard to
educate the entire industry on is like, don't don't allow
your vendor to tell you that it's that it's a
pass through.
Speaker 3 (22:09):
Like, yes, it's a.
Speaker 1 (22:10):
Pass through in the sense that whatever bill comes out,
like that's what we're gonna need to pay, But let's
not assume that that's like the best and final price, because
there are ways in which we can we can generate
favorabilities for you in the long term through a robust
collaboration between customer, UH and and vendor. And that's been
a challenging assumption. I think the the second one I
(22:35):
touched on this a little bit more UH previously, but
i'll touch on it now. UH was understanding that you
don't have to necessarily inherently tie fixed infrastructure into overall capacity,
you know, and so as as this industry continues to
grow and and morph and change, one of the things
(22:57):
that's that's coming through is is something that's called zone
based pricing. Zone based pricing is an initiative by the
USPS to mimic that of parcel where it begins to
look at the cost from the destination it's going to
to the entry point, so it more accurately reflects the
(23:17):
actual cost structure that the USPS is inherent inheriting that
doesn't exist in direct mail, which might surprise a lot
of people, right, Like a postage stamp is a postage stamp,
and it always kind of it always kind of costs
the same. But that's again like that's something that we're
trying to change, and zone based pricing also begins to
(23:39):
inherently influence that as well. So you think about from
an industry perspective, what does that mean for your small
to medium sized, regionally based manufacturers to operate at a
national campaign level. Just like in the parcel world, they're
going to have to think very specifically about how they
begin to target geographies and what that means to not
(24:02):
have their cost explode. And so that's one where like
our APIs are incredibly well suited to solve those problems
as well as like our nationally built network which focuses
on the ability to route the closest to the receivers
(24:22):
as possible. That's really kind of a fundamental shift within
the industry. Even your businesses that have fifty to seventy
sites around the United States or more, you know, or
maybe they even have ten. Quite often what you see
is even at a national campaign, they're not targeting. They're
not intelligently routing that to say like how can I
(24:44):
get it in home the fastest. They're sending all of
it to a singular site and then worrying about the
logistics problems later. And so what you begin to see
is if I'm a marketer, for example, and I'm measuring attribution,
which attribution from a marketing standpoint, direct mail still has
one of the most favorable rois tied to it, even
(25:06):
at a really great expense. They're saying, man, my channel
is broken, like this is really expensive and it's really slow. Well,
it doesn't need to be either one of those things, right,
Like we've created a supply chain problem where a supply
chain problem doesn't need to exist.
Speaker 2 (25:20):
That's so interesting. What kind of pushback or naysayers resistance
do you get and who is it who is it from?
Is this from the you know, the stakeholders sitting at
the table. Is it from clients who don't believe that
this type of change is possible within the industry? You know,
(25:41):
who are your biggest detractors?
Speaker 1 (25:44):
Yeah, I think when you look at it from like
an enterprise sales perspective, we certainly have competitors that have
been in the industry, some of them.
Speaker 3 (25:52):
For literally over one hundred years, who will.
Speaker 1 (25:56):
Often say, like, you know, they can't build true scale,
and if they can build true scale, you can't have
quality conformance at scale because it's a nationally distributed network,
or they can't be price competitive because they don't control
the supply chain. And I'll admit, you know, we don't
(26:19):
control like the heaviest overhead cost associated with managing fixed infrastructure, right,
which doesn't allow us to have pricing volatility that some
might have. That's actually a benefit, right, Like a customer
knows what they're going to get from us, and they
get that every time. As as it relates to the
quality piece we've created quality at scale, there are very
(26:42):
few quality things that like a traditional manufacturer is doing
that that we're not doing. The differences. We have technology
embedded into ours in a way that that that they
probably don't and that but that's something that we've had
to prove over time, right Like, once that's out there,
once that's out there, you're fighting against that, Like there's
just no doubt about it. And so that's something that
(27:02):
we've had to continue to improve over time. And it's
definitely been a journey, there's no doubt. Like we talked
about it, you know, when I got here, we had
thirty partners across the country. We have like eight now,
you know. And so I would agree that within a
network that large, quality conformances is a huge issue. But
(27:23):
those those are really kind of the main challenges. And
fortunately for us, I think that we've gotten enough street
cred over time. When we build the next thing and
embed technology into it, people ask about it, you know,
And that's that's definitely a reflection of our staying power
(27:43):
within the industry and that we've been able to prove
that we do know what we're doing. We still get
them wrong sometimes, right, not everyone that's a thousand, but
we learn from those things and we iterate from them
to the point where you know, some of those competitors
that we're talking about. They're calling us asking how we're
doing things too, you know, and so so it feel good. Yeah, absolutely,
(28:07):
Well that's when you know when you're doing something right,
you know, and they're like, hey, like have you thought
about working with us on this? And it's like, no,
not really, but apparently you're thinking about us, and that
feels really good, you know. And so.
Speaker 3 (28:19):
You know, that's that's when.
Speaker 1 (28:20):
You know like something's really clicking, like they're thinking about you.
They show up on your webinars on LinkedIn or something
that you're hosting a side it's like, okay, like we
were making noise here and that's good. That's a good
feeling exactly.
Speaker 2 (28:33):
And so we've talked about this. We started out talking
about engineers and recent graduates and you know, as they're
entering the job market and looking at solving some of
their first big problems, and then kind of adjusted the
conversation to talk about LOB. But let's let's bring it
back to them, because you've got all this experience and
(28:54):
you know, challenging status quos, you know, disrupting antiquated system
How can other engineering leaders coach their teams to step
back and see that that broader system the same way
you have in order to encourage and engage that innovation.
Speaker 3 (29:14):
Yeah, a lot of.
Speaker 1 (29:15):
It goes goes down to the way in which you're
talking to your team about the problem that they're trying
to solve. You know, if you tell this this can
be true at any level, but especially new college graduates
and especially like lower line level engineers. If you say, like,
(29:36):
go fix problem, they're going to repeat like, I go
fix problem, right, and then they're going to go to
that like and then they're going to go fix that problem,
you know, And that's what they do and they're incredibly
good at it. What's really important is to coach to
outcomes like we need to fix this problem, we believe
because it's going to result in this outcome, right, more
(29:58):
product through the building, or more efficient just overall value
stream or a fixed a variable cost reduction of why
as a result of applying X. And so you start
to coach to that outcome that begins to have them
have a system's approach to that and say like, oh, okay,
(30:22):
well let's go back to the original example that we
talked about. If you fix your bottleneck within like a
traditional fixed manufacturing structure. What's going to happen is if
I have fixed that, I'm now consuming more product upstream,
and so have I created Have I created downtime upstream
(30:45):
that I didn't intend? And so you've now turned your
indirect variable cost the person that's sitting in front of
that machine. You now have an indirect cost that was
set that's now are a direct cost that's now an
indirect cost because you have to have them go do
something else else that isn't driving value back to the
part that they just created, because now they have downtime. Right, Like,
you don't need them producing as fast or you need
(31:07):
them producing faster. So it's going to be it's going
to be one or the other. Yeah, And if they're
producing faster, can you consume it faster? Within that that
bottle neck? Now maybe I have another bottle neck. I
create it, and if I can't get it out the
door fast enough, I e I'm not selling it fast enough.
Speaker 3 (31:26):
What have I done.
Speaker 1 (31:27):
I've put the cash that I had in my bank
account and I've now put it on a shelf and
it's going to sit in the form of inventory. And
now I've created a whole new issue, right so like,
what actual thing are you trying to fix? Because it's
never just like I go fix problem like it you
have to look at the entire you have to look
at the entire system. And that can be very challenging
(31:51):
in very, very large companies because it often can be
opaque of like what actual problem, like are we solving
and who's it for? And what's the deliver you know
when you think about it, like going all the way
back to basic principles. Uh, in college, we we should
be teaching them these these things like they should understand
(32:11):
when I build a system, understand the financial cost associated
with doing that sort of thing. They should understand operational
use cases and that sort of thing, not just let's
design the next the next neat thing. And that's not
for every engineer, Like I'll be the I'll be the
first one to admit and so I'll stop right there.
Speaker 2 (32:35):
No, No, that's great. Well, and you you mentioned you
know obviously, uh, we're talking about college grads and and
you know, newer engineers into the workforce, we call them
analysts at our organization. You know, that's that's the entry
level position. And you know, I also struggle with this,
and it's because I'm the marketing person. It's mainly in
(32:57):
in the regard of, you know, trying to showcase what
we're doing, where if I ask them to tell me
what they did on a project, they are very formulaic
and they will list every single step that they took
and I'm like, no, how did we solve the customer's problem?
Speaker 1 (33:11):
Well, that's where it starts, right, Like, every every problem
that you're solving with in there goes back to solving
a customer problem, like it's.
Speaker 3 (33:19):
Why, it's why we all exist.
Speaker 1 (33:22):
You know, And that sort of framing can really start
to contextualize things for people. I love having my team
on customer calls because it is way harder to say
no to that customer to their face than it is
for an account executive to be like, our customers sure
(33:43):
would like it if you did this, No, right, Like, no,
that's okay, And it's like, well, why don't we get
on the call and let's understand their pain point and
you tell them why you don't think this could work,
And they're almost never going to do that, right, They're
gonna be like, oh, like that's really hard, and I
I same for an engineer, you know, and what that
(34:04):
delivers in the long term is just so valuable.
Speaker 2 (34:09):
Well, and I think we need to at least point
out briefly that you have a very solid background in engineering,
being an engineering graduate of Purdue University, which is well
known for its engineering program.
Speaker 3 (34:25):
Go boiler Makers.
Speaker 2 (34:27):
So I guess my last question to you would be,
you know, having been through that experience yourself, having seen
what you have seen throughout your career, if you could
redesign a portion of an engineering curriculum, what would you
change or add?
Speaker 1 (34:44):
I would love to add, and I did this actually,
and I can explain this about what I did in school.
But first of all, boiler up for sure, very excited
for this year's coming basketball season. Schedule ca out yesterday
and I've already got dates circled for where I'm going
to see them.
Speaker 3 (35:04):
But I think.
Speaker 1 (35:07):
One of the issues within the university system itself can
often be the lack of cross collaboration between schools schools
within the university itself. Right, So, like you take Purdue
for example, which obviously, like I feel, especially like you
can already see you know, the jersey up there, but
is near and dear to my heart, and I operate
with the Daniel School of Business pretty frequently. I operate
(35:30):
with the College of Technology really frequently, which is where
I actually graduated from. Some of my best friends were
in Ease. Those schools almost never interact really only outside
of collaborative clubs and that sort of thing, And I
think finding ways in which to make those groups come
(35:52):
together and build cases together could be really really interesting.
Speaker 3 (35:57):
And so one of this.
Speaker 1 (36:00):
That I did when I was in school, I was
the head of two different associations. One was the Produe
Consulting Club, and then the other one was called APEX,
which is the Association for Operations Management, which has changed
its name a couple of different times now, but as
a global professional organization, and all the members of those
(36:21):
organizations were never just from one discipline, and so we
would end up going in case studies where you had
to fix like a supply chain problem, you had to
understand the financial impact of what you were doing. In
some cases you had to be able to market that.
Speaker 3 (36:38):
But then it.
Speaker 1 (36:38):
Always came back to like operationally, like what problem were
you solving? Like those sort of of cross functional things,
one begin to have different thinkers begin to interact with
each other far more often than they're probably going to
either in college or right out of school. And it
also begins to apply like contextual understanding of you know,
(37:03):
long term, this is this is what business impact you're
going to going to have. I'll give you an example.
So when when I was in the Eaton Development program,
at the end of that journey, you present on why
they've invested so much in you over your last two
and a half years, and you do it in front
(37:25):
of your peers that you spent the last two and
a half years moving around the country with and talking
about the cool projects that that you've solved, and but
this is a very expensive thing for eating at the time,
and you present this to kind of the board of
trustees for that that program, and what they're really doing
(37:45):
is they're starting to place you on where does this
person fit in at like what problems should we have
them now go solve? What are problems within the business?
What are they the future leader of? And I heard
one of them say, and the executive's pretty well known,
so I'm definitely not going to say is his name
and he's an easy LinkedIn search away, but he said
(38:07):
this is the type of guy and he wasn't pointing
to me, I was actually sitting like awkwardly behind him.
He was like, this is the type of guy that
you put in a basement and you tell him to
go invent something. There's nothing wrong, there's nothing wrong with
being that type of engineer. It's just it's unlikely that
everyone in that class is that brilliant mind, right. It's
(38:30):
way more likely that they're going to be put in
a situation where they have to solve cross functional business
problems with people they don't that don't directly work for them.
And we should start that as early in their career
and as early in their educational journey as possible.
Speaker 2 (38:45):
Absolutely, and we're seeing that in all sorts of organizations
as we support them. I'm sure you've seen it as well,
when we start talking about the different stakeholders and those
silos that they're working in, those different business units, and
the difficulty of getting them to come together and align
on a solution that rising tides raise all ships. I've
(39:07):
used that a lot recently. I don't know why that
phrase seems to have been applying to so many different
aspects of my life right now, but I mean, truly,
when they're able to come to the table and talk
to each other and see things from different perspectives. The
solutions come that much more easily.
Speaker 3 (39:27):
Yeah, absolutely so.
Speaker 2 (39:29):
As supply chains evolve from fragmented operations to integrated ecosystems,
the ability to zoom out and rethink the system is
no longer optional. It's strategic. Thank you so much Brent
for joining us today and sharing some of your insights
on both the way that engineers approach problems but also
(39:50):
the way that supply chains can use that thinking to
reimagine solutions.
Speaker 3 (39:55):
Thank you for having me. I really appreciate the time.
This is great.
Speaker 2 (39:59):
To our listeners out there, thank you so much for
listening until next time. Thank you for tuning in to
speaking of supply chain
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