Executive Spotlight: Keith Anderkin, Chief Supply Chain Officer, Zaxby's
SCS: Tell us about your background, the roles you've had, and how you got to where you are now.
KA: I've been in the restaurant industry since before college. My first job was busing tables at a restaurant. I went to the University of Kentucky and got an accounting degree and ended up working in the finance department for a restaurant chain. I was in various finance roles for about six years when I was asked to move into supply chain at the same company, and my response was why would I ever want to be in supply chain? I'm a finance guy. They convinced me to make the move, and the person I ended up working for also had a finance background. I've worked in supply chain since that move and have never looked back. It's been quite a few years ago and I just love all aspects of the business. When we come to work every day in this area, we know we're impacting the business, whether it's good or bad, we know we're impacting it and there's not a lot of functions within an organization that can truly say that, and see the results directly, so that's pretty exciting.
SCS: Did you start at a time when it was uncommon for people to jump from an accounting background in to supply chain?
KA: Back then there were no supply chain degrees, so everybody in supply chain had another type of degree. Actually, I think there were quite a few finance-type backgrounds that transitioned into supply chain, and to me, it's the right background to have. You've got to have an analytics side of the brain that works very well. The hard part is finding those finance people that have a personality that can interact with people because that's a big part of the business. But honestly, I've hired people with fashion degrees to marketing degrees to everything back in the day and still do today. Although now there are supply chain degrees, you want somebody who's got a great business head on their shoulders and knows how to think that way, and then they'll do very well at our function.
SCS: We currently seem to be in a place of constant disruption from COVID to Conflict to Climate Change. What's been the progression of change in your job over the last two years and what have you learned?
KA: I've learned a lot, and I'm still learning every day with all the changes. When the pandemic hit I was at another brand and I came to Zaxby's in June of 2020. So 3 months into the pandemic, I made a job change, which in addition to all the issues, made it much more challenging. But one of the reasons I didn't make a move earlier was because I wanted to stay where I was and make sure we were on our feet as the pandemic hit before pivoting. Initially, there was a lot of uncertainty and quickly trying to understand where things were going. For a lot of concepts early on sales were down and the initial reactions were, we're going to have a bunch of product sitting around that's going to go bad, what do we do?
Fortunately for concepts that had drive-thru windows or a good carry out and take out set up, that quickly changed. Within three weeks or so sales totally flipped, and then came the challenge of, how do we keep up with demand? Initially, it was a lot of focus on the PPE stuff. You know, we never had to worry about gloves and masks and hand sanitizer before, and all of a sudden supply chain people were starting to have to think about more and more secondary type products. So definitely a lot of focus and shift initially in new areas, and over time that's when the labor challenges started to hit, which presented a whole other element of supply chain concerns.
Production in a lot of areas just was not keeping up with demand. Supply partners were still trying to figure out what the product mix was going to look like because retail was doing extremely well in the pandemic. Foodservice initially, maybe not so well, except for fast food type concepts. So they were trying to pivot to how much retail can we do versus food service and just this whole influx of questions on how to manage the business. There was a lot of uncertainty that was not immediately understood.
Some of that is still working itself out today, two years later. I think we still don't know as an industry where this thing is going and will it ever go back to "normal". Even with our food service, how much of it will go back to casual dining versus still going out a window or through a window in a restaurant? There's still a lot of uncertainty. Where does that level out?
Conversely, on the supplier side, the same challenge is there with supply and their customer mix. How does that look? And then the retail side continues to be pretty elevated, is that going to wane over time as well? The reality is there are three meals a day that we're trying to feed as an overall food concept, right? And there for a while, it felt like we were feeding six meals a day because of the demand surge. We're still working through that but at some point, it's going to level out. The question is, where is it going to be?
SCS: So how do you plan for the un-plannable? When you look to the future in your role where do you place your bets?
KA: Well, that's a question we ask ourselves every day. Now with a war in Ukraine, the implications could be more dramatic than the pandemic in a lot of ways from a food perspective. Particularly that region of the world because it's the breadbasket for Europe and parts of Africa, for sure. For grain, that will have implications here if crops don't get planted and harvested in that part of the world. Russia is one of the biggest exporters of fertilizer, which was already at record-high prices, but now just the availability is an issue unless that pipeline gets filled somewhere else domestically or in other areas of the world.
Fertilizers or lack of fertilizer is going to impact the crops and our yields over here. So those are some of the things we're already starting to think through and try to model out potential concerns and impacts. Farmers are already debating about what crops they are going to plant this spring with their input costs and other concerns. That's going to influence supply.
Then you've got the whole element of Nickle, a big component out of that area of the world as well, that goes into stainless steel. Restaurants are big users of stainless steel, and it's hard to get your hands on it now to make equipment and do other things. If you want to grow restaurants or even replace equipment there are numerous challenges. Serious challenges that weren't present weeks ago that we're all still trying to figure out.
The bottom line? Diversity is key. Diversity of suppliers and diversity of product mix. We're in hyperinflation mode now and we're all trying to manage the pressures that we're seeing, and that's not just us but also our partners. We have to figure this out together.
SCS: So how are you balancing that day-to-day, and next month, next year?
KA: We still have daily fires that we're fighting but for us, fortunately, right now, they're not core strategic items. I mean, we have been fortunate in that regard, and we've managed through this pretty well from a product standpoint.
It seems like production is coming back pretty well, suppliers, and the labor situation has gotten a little better. The Omicron variant definitely set us back a bit from a labor standpoint, but now they're definitely better staffed than they were four months ago. Suppliers are getting in a better spot to continue to increase production.
But really, our biggest challenge that we're dealing with when it comes to daily activity is logistics and getting product from point A to point B. In our model, we use third-party distribution partners that are the transaction side. They're taking new orders from the stores and delivering to the stores and taking the orders from the suppliers. For us, that side of the business from D.C. to store throughout the pandemic has been really good.
All things considered, our partners have just done a phenomenal job despite their challenges, labor, et cetera.
SCS: It sounds like you're managing a lot more granular level detail now - things that were never an issue previously.
KA: Look, we're a nine hundred and twenty restaurant chain, pretty complex, with a decent amount of spend that we control and I've got a great team. But we found out further down, deep down on the supply chain, there were ingredients and other things that now we really needed to pay attention to.
However, these challenges have also created opportunities for innovation. Part of what kept us going for the last 18 months is our ability to flex and innovate and that could mean specifications or suppliers. We're always trying to innovate. Customers are happy, and sales are great. That takes organization and structure and communication internally to do that.
SCS: What advice do you have for those who may be considering a career in supply chain or who are already in the business and want to advance? What skills are important and how can people stand out?
KA: If there's one thing in our industry that has changed it's that we are a lot more data-driven than we used to be. Data is so important and you have got to have a skill set for that.
The pandemic has shown us more than ever that you have to have visibility into your supply chain from a data perspective on inventories through all of the ingredients. To get to a category management position where you own that product category, you're negotiating, you're sourcing, and you manage those relationships with your supply partners. Data analytics is important as a background for that function.
Then there's the people side, you have to have the interpersonal skills to go along with that and have a strong ability to build relationships. A supply chain degree is great because that gives a lot of the fundamentals and the blocking and tackling of supply chain. But some of the things I look for are also finance, marketing, R&D, or operations backgrounds. Somebody coming from the field is a great resource who knows the products, knows how they're used - we tap into those resources all the time. I really like to hire somebody that has worked in restaurants. They understand the front line, they understand it and so much of what we go after nowadays is that in-store, such as waste reduction, and labor efficiencies. What can we do to our products to make it easier for our team members in the stores?
In general, I'm always looking for somebody with good business intuition that I can have a conversation with. And the question I always ask is if you owned this business, what would you do? That's the mentality we have to go to work with every day. Think like you own the company, and that's exciting.