Executive Spotlight: Chris McNutt, Vice President, Brand Programs at Centralized Supply Chain Services

Executive Spotlight: Chris McNutt, Vice President, Brand Programs at Centralized Supply Chain Services

Interview conducted by Supply Chain Scene, January, 2021

SCS Tell us about your background – the roles that you've had, and how you got to where you are now.

CM About 20 years ago I started my career in finance and got an opportunity to be a part of a large transportation company in Kansas City. They moved me here in 2000 to be part of their pricing department and I loved it. It was my first exposure to the supply chain and I realized how much of a team environment it was. It's all about building relationships and working with internal - external teams to really get things from A to B. There's no way to do it by yourself. So I was really hooked on that kind of work and had different jobs within that transportation company and moved to the business development side. By happenchance, I had a friend that was in the Applebee’s marketing department and he raved about their culture. I was enjoying the sales development component so I got a chance to get my foot in the door in 2006 as a freight manager. I started out with an entry level position in their in their supply chain group. Pretty quickly after that, Applebee's was acquired by IHOP and they created the parent company now called Dine Brands. Then a little bit after that Centralized Supply Chain Services was spun off as a captive purchasing cooperative in 2009. So I was part of that spin-off from the beginning. I've done a number of things within CSCS, I managed the auditing group and helped start a data analytics team.  Now I'm the head of an inventory management group. That team is responsible for continuity of supply, obsolete mitigation, and promotional management. We've got a couple of what we call Brand Liaison's - think of them as on-site sales representatives in Applebee's and IHOP's corporate headquarters in Glendale, California. The vast majority of our people are here in Kansas City. But essentially what my team does is it listens to the brand, understands each brand, understands what they want to do, and we figure out how to how to give it to them quickly and with as low risk as possible.

SCS You mentioned part of your responsibility is overall continuity of supply and mitigation of obsolete exposure. There can't be a conversation with anyone in supply chain without talking about COVID as a supply chain event. How were you in your role affected by that?

CM Yes, it's a great question. No doubt COVID has fundamentally changed supply chain. It had a huge impact on our restaurants as well as our company managing through it. We essentially saw the supply chain stop as restaurants were getting restrictions. We were trying to figure out how much it was going to stop and for how long. There were a million theories swirling around at that time on how fast the recovery was going to be and what that recovery would look like. We took a very proactive approach. Our CEO talks all the time about playing offense and not playing defense so we restructured our work stream, our entire organization. We're a small shop with less than 50 people. The entire company basically said, hey, all of our previous company goals - throw those out the window. We're going to focus on two things, continuity of supply for the restaurants because sales were limited so we need to make sure that they've got the right product in the right places at the right time so that they can service whatever customers are coming through the door. Then also managing and mitigating that obsolescence, as well as unwinding hedge positions, et cetera, that were existing. So we pulled people out different areas, for example we had accounting type people that were doing inventory management activity. So my team really swelled in size. And it was a little bit interesting because we had people that we were trying to train to do new tasks and at the same time we were working to figure out exactly what demand was going to be. We realized pretty quickly that all of our internal processes were structured around brand processes. We really manage the supply chain on an exception basis and focused on change. Change is what causes most of the risk associated with our supply chain, and most of that change historically is done by marketing initiatives. COVID-19 is external to that. So we had to figure out and change our view of how we were leveraging technology to really start understanding what was happening to us and what those changes in demand were really doing at the SKU levels. So before, it wasn't that big of a deal for us to understand what plates were selling better in-restaurant versus outside of a restaurant which was just one big lump of throughput. Well, that dynamic changed very much overnight. And so we had to understand what those adjustments were because we had SKU's that were literally five percent of what they had been pre-COVID, and we had SKU's that were over two hundred percent higher than what they were pre - COVID. So it was difficult trying to figure that out and our tools were not helpful.  The silver lining was, because we're a small shop, we could get everybody on a call every day to manage change and give clear direction which we did every day. We're transparent with people - these are the things that we know, these are the things that we don't know, and really encourage people to step up and bring ideas to the table and get a chance to tap into that entrepreneurial spirit. So we were able to live through it pretty well. Well, so far (chuckles). 

SCS Well, yes, so far. To be continued, right?

CM Right.

SCS So you were able to pivot quickly and adjust. One thing that was generally noticeable was, companies who went in to COVID with existing technology seemed to be in a better position to adjust rapidly. From your perspective, did you have beneficial technology in place you were grateful for when everything changed, and what were you already doing that really helped you when it mattered most?

CM Technology was critical, if we hadn't of had some of the technology suites in place, we would have been sunk, a couple of them in particular. One of the things that changed was we actually shut our office down pretty quickly in mid-March and luckily early in 2019 we had really started leveraging the Microsoft Teams platform. We were used to dealing in Teams internally with each other. We had to figure out how to leverage that technology to our external partners pretty quickly so there was some learning curve and getting people set up and teaching distribution center contacts how to navigate through that as well as Brand partners. That was really critical. We're still remote. We found that we can work as efficiently remote as we were in the office, in some cases more efficiently, because, you know, you’ve got people on demand all the time, which was good. The other component is we use HAVI, it's really pretty much an end-to-end supply chain visibility suite. So most of our key suppliers are connected into that platform. All of our distribution centers are. So we can see production, inventory, inbound PO's, DC inventory and their outbound sales, et cetera. We don't see restaurant inventory, so it's not total end-to-end visibility. Here's the piece that was a little bit challenging for us. Like I mentioned, most of our activity was around marketing initiatives so we had all these processes that were built to take those marketing plans and forecasts and blow it out and communicate it out to our external business partners, suppliers, and DC's. In this situation we were trying to create a surrogate for that and our HAVI system wasn't built for that at all. So we ended up leveraging the information out of HAVI by dumping information out of that into Power BI so that we could cut and slice that data differently to see what SKU's were changing week over week. We really become fast followers of that information so that we could start learning what was selling better based on changes and trying to leverage the adjustments that we were seeing in one region and predict it into the other regions as restrictions were being put in place.

CM The government response was not very contiguous and not well coordinated in a lot areas. So it was lumpy in regions which created a whole other set of complexity for us. But with Power BI able to build those views on demand, we do have an internal data analytics team that was critical for us to leverage their strengths in being able to slice and dice that information and present it in a manner that people could easily understand what was happening to them and start reacting to it quickly. And one other thing that I didn't mention, this is kind of a byproduct of the COVID world, one of our distribution partners went bankrupt in the middle of everything. They represented our single largest distribution facility of a few hundred restaurants. So in the midst of trying to figure out what COVID was doing to us nationally, we had to deal with an immediate transition for a distribution center and that was challenging. The good thing was we had already done some disaster planning around that. So we were prepared for it but it still created some gnashing of teeth because we were executing that plan so quickly. In some cases, the volume decreases that happened during COVID actually helped us manage that transition in a fast manner.

SCS Do you feel like your job has changed permanently and what do you think is next for 2021 as we enter another phase?

CM I think it has to change permanently and in a couple of pretty dramatic ways, one is we had a mature supply chain. All of our levers that we pull to create value are all around Just-In-Time supply chain and COVID taught us that you can't do that in all areas, as there is not enough slack to handle unexpected supply chain disruptions. We've taken a bit more of a protectionist approach in the fact we're holding more inventory, and that is certainly going to be the case as we continue to deal with COVID where labor's a challenge and we have manufacturers that have lines go down unexpectedly without real warning.

So we're holding more inventory with our supply partners. We're partnering with our distribution centers to carry more inventory than they have historically just to try to protect against those labor shortages. Trucking, obviously the challenge of so many more dropped loads or delayed pick-ups, deliveries. We just need more slack in the supply chain than we've ever had to be able to deal with that uncertainty and compensate for it so that we're not impacting in-restaurant operations so much. The other component is, everyone realizes how important supply chain is now. It's already starting but there's going to be a fight for talent in the supply chain world, we fundamentally changed how people are working. A lot of people are now used to working from home and working regionally. We've actually hired some people who live in different regions of the country. That'll create more fight for talent because, they don't have to live in Kansas City anymore so we can tap in to that talent anywhere. It's going to make people way more in-demand so we're going to have to figure out ways that we can make ourselves more attractive to those people and meet them in the ways they want to be treated and managed and the environment they want to have with us virtually or otherwise. So it really has changed our environment, I think permanently.

SCS The fight for talent is interesting because it should really open up your ability to get talented people that don't live in your geographic area.

CM It shows and we're seeing it now. We had an opportunity to hire somebody that lives in New York and we would not have gotten that person to relocate to Kansas City. So in some ways, it's been a good thing. But it's also one of those things where the marketplace has changed where people can now can go after those jobs that historically pay higher in New York or L.A. They get the benefit of cost of living here and then the positive side of the higher wages. I think that'll be something that we're going to have to deal with and it's going to be a reality for us and put pressure on wages. Having the right people on your team is paramount to success.

SCS What advice or wisdom do you have for those who want to follow in your footsteps in the supply chain field?

CM I think the first is, approach. If you can be enthusiastically inquisitive and show genuine interest in people in a non-threatening way where you are absorbing their knowledge and learn from them. It really creates an environment where you build lasting relationships and create a network of support, where you're intertwined with a lot of different people and it gives you a view of the world that is much bigger than just your desk, if you will.

And I think the second component that's tied to that is, see the world around you. I feel like so many people focus on the business that is right in front of their desk and they never lift their heads up. They work really hard, but they are not focused on the bigger picture and those are the same people who wonder why they're doing the same job after 20 years.

To get ahead and to really grow, you have to understand the macro environment and start to try to predict what you think is going to happen to your organization and plan for that and be thinking ahead. Being mindful and planning. Spend time planning - block that off your calendar, make it part of your weekly routine. It will obviously make your boss look better and It also creates an environment where your organization will start looking to you for that strategic thinking. It's not rocket science. If most people will just stop and take the time to think about the world around them, they can think it through. It's not the smartest people that get to the top. It’s the people that are focusing and thinking about the right things. It's not just about your job that you're doing today, but what should you be doing.

Most people are doing activity that doesn't matter three months from now much less five years from now. So put focus on it, do a personal SWOT analysis and your team SWOT analysis and really work that over time developing it. Develop strategies to compensate for your weaknesses and leverage your strengths for the world as you see it in the future, not just today’s world.