Insights on Fulfillment and Operations Management

Host Harry Drajpuch chatted with supply chain veteran, Jim Tompkins, on a range of issues related to fulfillment and operations management. Jim is the author of 31 books and, between them, Jim and Harry have over 70 years of industry experience.

Here are a few of the notable fulfillment and operations insights from the episode, with commentary.

“The most surprising and problematic issue with fulfillment today is the willingness of companies to address structural issues before strategy.”

Certain questions must be answered before talking about facility expansion, technology selection and similar operational initiatives. Questions like “Who's the customer?”…“What do they need?”…“What's our problem as a fulfillment operation?”…“What are we trying to achieve?”

Take the time upfront to really think through the strategic questions using the right data and you'll avoid expensive mistakes.

“Optimization is overrated. Today, optionality is what's needed.”

Optimization implies perfecting a set process using fixed technology. But things change so fast – customer requirements, technology, order volumes – that flexible processes are more important than optimized processes. You want modular, adaptable automation that allows you to handle Cyber Monday volumes and still be efficient on June 12th.

Fixed automation is brittle. You bend it, it breaks. A better approach for today's volatile supply chains is a flexible fulfillment strategy that's not perfectly designed to handle one thing in one way, but instead is well designed to handle multiple operational scenarios.”

“Managing a supply chain is like surfing.”

In Jim's latest book, “Insightful Leadership: Surfing the Waves to Organizational Excellence,” he uses the metaphor of surfing to describe how today's supply chain leaders must manage.

Waves are analogous to the daily disruptions that impact supply chains. “A successful surfer looks out into the ocean at the approaching waves and identifies, well in advance, the one that's going to give him the best ride,” says Jim. “He prepares and paddles in front of that wave and essentially harnesses its power to get to shore. That's what we need to do in business given the pace of change. We can leverage disruption as a performance accelerator if we see it coming and prepare.”

“Deciding when to automate is less often about ROI than about getting orders out the door.”

Investment capital is scarce in companies, therefore you often have ROI formulas that help determine which initiatives get funded. The problem is, if you delay your warehouse automation investment until you hit some magical ROI threshold, you may not be able to ship out orders when your customers need them.

For instance, if you don’t have the labor to handle the order volume levels, you need to act. There are only so many people you can cram within the four walls of a warehouse. At some point, you've got to give them some help. ROI formulas need to be balanced with the practical realities of running a fulfillment operation.

“Businesses used to regard a job candidate with 4 jobs in 20 years as a job hopper and an undesirable hire.”

Today the same person may be seen as a slacker and unambitious. To retain talented fulfillment staff these days, you need to understand what they're about, what their goals are, and then invest in them to help them grow. If you don't, someone else will.

“Successful people want to do what they've always done. These days, that spells disaster.”

Today, success in fulfillment and operations management is about constant innovation. Reinventing. Reengineering. Redesigning.

For people with a past history of success, the tendency is to keep doing what got them there. Why fix what’s not broken? But today, if you're not anticipating and preparing for the next change, you're destined to fall behind or be disrupted.

“When you outsource, you don't lose control. You gain control.”

Harry and Jim equated the choice of outsourcing fulfillment vs doing it yourself with dining out at a nice restaurant vs eating at home. When dining out, you are much more likely to raise issues about food quality or service and have the restaurant make it right. But if your spouse’s specially prepared meal misses the mark, you'll likely swallow it down and say “Great job honey... You've outdone yourself.”

When you outsource fulfillment, you can set an aggressive but fair performance bar, and demand that your partner achieve it.

For help with nationwide fulfillment services, talk to a Staci Americas specialist.