Industrial Insights Podcast
Industrial Insights with Janet Ydavoy
Episode summary
Good morning, everybody. Welcome to our latest episode of Industrial Insights podcast. I have Janet Ydavoy with us of 910 Advisors and then Robert Chapman, who will be joining us mid conversation.
Full transcript
Justin Smith 00:02
Good morning, everybody. Welcome to our latest episode of Industrial Insights podcast. I have Janet Ydavoy with us of 910 Advisors and then Robert Chapman, who will be joining us mid conversation. And I've worked with their team with the same client and so thankful for them to help provide more horsepower when it comes to the supply chain analysis that's needed for these big companies. So Janet, welcome to the show. Appreciate you spending time with me today.
Janet Ydavoy 00:33
Thank you, thank you for having me.
Justin Smith 00:36
And maybe you can give us a little background, where you came from, some of the places that you've worked and things that you've worked on that brought you to where you are today.
Janet Ydavoy 00:43
Absolutely. Well, I'm currently a senior consultant with 910 advisors. I have about 35 years experience in supply chain, everything from demand to delivery. I'm also a licensed customs broker, so that gives me a little bit of a unique skill set where I'm very comfortable navigating through international trade and customs law and applying that to supply chain solutions and contributing to margin.
Justin Smith 01:23
Yes, and big companies usually have global supply chains. So I'm sure that's a skill set that like you can utilize and help people out more with for sure. And then as far as supply chain goes for work that you do for companies, what are like the primary problems people are having where you help them?
Janet Ydavoy 01:34
Yes. Most of the problems in supply chain, we take the approach where we just break it down to something as fundamental as we can and baseline it. A lot of times it's navigating origin to destination and all the inputs and outputs and everything else in between. A lot of times it's going back to the good old critical path calendar and especially as companies grow and they go from fledgling to a little more mature and as the founders move out of their entrepreneurial role into more of a leadership role, we find that That's where the different. sectors of the company need to align back together again. So again, know, one calendar, one version of the truth. A lot of times it's a baseline solution.
Justin Smith 03:11
I am working with a very large company that is scaling super successful. They just brought on some private equity and we're going from founder led to bringing in all sorts of people and processes. it is like, I'm literally in the middle of this process. if you had talked with me six months ago, I may gloss over when you say that now I'm like, my God, I know exactly what you're talking about. Like, Yeah, you get like a consensus and you get people that like aren't used to working together, much less setting the direction and having every like all the processes in place. feel like that's a huge gap in like the maturation process.
Janet Ydavoy 03:56
It's interesting because the founder is the architect of the company, not necessarily the engineer and definitely not the pilot. And keeping that in mind as the architect has to develop and start to always look towards the future and future proof the company.
Justin Smith 04:20
Yep. So, some of the ways we help, right? One of the examples we went over together was in the supply chain design and optimization and helping companies think through 3PLs and then thinking through their coverage across the country. I know the first time I looked at all of the inputs, that go into LamaSoft and Supply Chain Guru. There were so many of them that like your brain instantly explodes. And so I can definitely resonate with the simplicity and the baseline and like you only add in what are the most important aspects to someone's supply chain. So what would be the first couple places you would start of like a data sources you would look for for people?
Janet Ydavoy 05:15
for 3PL, we would start with the origin and look at it from a global perspective and then bring the lens down into, again, origin to destination. And of course, the final distribution to the consumer. So all of the inputs, all of the variables, including international transportation, port of entry, inland transit, where the optimal location would be for a 3PL, and then distribution to the consumer. And kind of factoring into that almost on a three -dimensional level would be always looking at cost, time, and resources.
Justin Smith 06:12
And you work with just as many 3PLs as you do like a consumer goods and like companies that are non 3PLs that are like larger corporates.
Janet Ydavoy 06:27
Yes, yes, definitely. And there seems to be more of a trend towards 3PLs and outsourcing that pillar of the company.
Justin Smith 06:41
Yeah, I was going to ask you about that. to 3PL or not, or when to, or how do I get out of it and have my own locations? I feel like those are never ending questions we hear when we're asking people, do you need more warehouse space? Are you ready to increase your distribution center count or your footprint? And I feel like so often the first place people go is 3PLs as a bandaid or as a test. or as a way to see where they should be before making larger commitments.
Janet Ydavoy 07:19
There needs to be a synergy. It needs to be like any fundamental relationship, know, the goals have to be aligned and not just in the form of infrastructure, but as far as the business model and managing the business models together. So it makes sense to outsource and especially if you're as a lot of companies are moving towards global distribution. So global inputs and global outputs. Even thinking offshore 3PL.
Justin Smith 08:03
Okay. Can you expand upon that more? That's more of getting from the origin, like, and how you get like either raw materials or your initial product, like to the ship in the first place.
Janet Ydavoy 08:11
right. There is a trend towards 3PLs close to home, Mexico and Canada, where goods could ship to, it's called the de minimis rule, and goods could ship direct to the consumer duty free. setting up 3PLs either in Canada, Mexico, or the more aggressive, would be 3PL at origin. that's, you know, the 3PL would no longer be a 3PL. It would have to be a center of excellence where it could handle all of the, it would have the resources and handle all of the infrastructure because it would be arm's length from, you know, from the US company.
Justin Smith 09:12
Yeah. How would you describe the state of the 3PL community these days of like the size, the common challenges and like main takeaways for corporates?
Janet Ydavoy 09:32
guess to think global and take all of the inputs, all of the data points into consideration. And what I mean by that is not only the origin, but looking at the port of entry and always balancing the cost with transit time. to.
Justin Smith 10:11
Yeah, cost and transit time is the further you get away the more important that is or the larger the ramifications.
Janet Ydavoy 10:20
Right, right.
Justin Smith 10:22
I interviewed the CFO for GXO and XPO logistics and he's so great. And we had a great conversation. And then it was amazing to see how much capital they're pouring into warehouse automation and to see like at the scale of their business and like operating at a very high level. And it was, it was fascinating to learn more about that. And I was really impressed to see like. You hear about warehouse automation and you see it, but like with their locations, like they're really putting their money where their mouth is and like trying to make that like a advantage, like a competitive advantage for them where they've like adapted and evolved and invested more so than other 3PLs. super. Okay. And then, when people start going from one to two to three locations within the U S what are some common issues that they go through?
Janet Ydavoy 11:24
Yeah, that's where it all needs to balance out. it's no, well, the one big factor would be inventory management. But beyond that, how to have the right goods in the right place at the right time. And so it's inventory management on steroids.
Justin Smith 11:51
Yeah, that's a never ending problem. And how do people go wrong? Or how do you help sort them out when it comes to inventory? like, that's more insight. Using data, maybe they're not analyzing, or that's helping them like a forecast further in the future, or helping them like way different decisions.
Janet Ydavoy 12:14
If they have different product sectors and they're, a lot of times they'll look at one product, say they have the major product and then they have some accessories or some other subproduct category. A lot of times there isn't a good balance between having the... Everyone goes for the easy answer and that would be to split up the accessories from the main product. But that's not always the answer because there's the input that would come from the consumer and the demand from the consumer has to factor into that. So that may not be the best way to manage it anymore. And that's we've seen a lot of problems with that.
Justin Smith 13:10
And I'm sure people's inventory skews change over time and their mix changes over time and it can like get out of whack. then when it's... Yeah.
Janet Ydavoy 13:20
and demand changes. So when consumers, and then of course there's always trends. So there's marketing trends for certain items. And it's a matter of managing all of that and not over -inventorying or under -inventorying, keeping that balance.
Justin Smith 13:48
So companies, they do that internally, right? They have people, that's their job. And then it's when they have a problem or right before they're about to make a huge decision, usually when they come to you with their inventory issues.
Janet Ydavoy 14:03
Or if they're looking to expand or they're looking to view their business from more of a global lens. and start to see the global picture, where a lot of companies have regions. There's the Western Hemisphere, Asia, and Europe. And how do you merge those three together and still meet a global demand?
Justin Smith 14:35
Yeah, that's next level. I'm not looking on that large, I haven't zoomed out that far yet, Janet. Yeah, I can only imagine different countries and different regulations and security and the million additional things you need to take into account.
Janet Ydavoy 14:53
And again, coming down to having the right item in the right place at the right time.
Justin Smith 15:00
Yeah, yeah, now and like every quarter in the future. And For inventory, that will be something that you can model just like everything else all comes back down to what can you do with that information and how do you help them? It all comes down to can you model it correctly? And then can you gather accurate assumptions to then play out scenarios? Maybe you can go through that a little bit of how you might take someone's issue and then come up with solutions for them or yeah.
Janet Ydavoy 15:29
Yes. And as we saw when we were working together with you on the last project, it's a matter of presenting two to three options and then of course weighing those options with the benefits. and the, you know, doing the cost benefit analysis for each of those and presenting it that way. But also to look at it in terms of, as you said, like scenario planning and do some type of a stress test. to make sure that we're crossing all the T's and dotting all the I's and not missing anything. You know, there's certain ports that have more benefits than others. Inland transit could be prohibitive or cost prohibitive in some cases. So it's a matter of getting it in and knowing, putting it in the right place to get it back out.
Justin Smith 17:03
Yeah, can you give me an example where inland transportation would be cost prohibitive? yeah.
Janet Ydavoy 17:12
In my home state of Florida, we're a peninsula. We're surrounded on all three sides by water. One way in, one way out.
Justin Smith 17:14
Okay? Look out. Love to 75 or what's the... Yeah.
Janet Ydavoy 17:26
75. So.
Justin Smith 17:30
So that's one where like a routing is just not optimal.
Janet Ydavoy 17:36
Mm And then there's ports that have more tax incentives and benefits than others. So those would be more desirable.
Justin Smith 17:56
And that would be the cost of business being cheaper to route your ships there and route your shipments through it or like incentives or what kind of breaks would you ordinarily get like a volume? Yeah.
Janet Ydavoy 18:03
Yes. Absolutely. Yes, if there's a tax break or if it would be an optimal location for a distribution center close to the port, if that works out, that would be another consideration.
Justin Smith 18:27
Yeah. You know, I always get a similar question that I generally don't have a good answer for because the answer usually is it depends, which is one of the great answers out there for people asking general questions. And it's where the proverbial line is in the US where goods, it makes more sense to go into a West Coast port versus an East Coast port. Usually I get that from people that have a significant investment in one area and they're just trying to figure out how to market that and how do you look at that?
Janet Ydavoy 19:07
Yeah, that's definitely a variable in there. Right now, what we would consider would be the state of the labor strikes and how that's impacted. So there's current events that impact in choosing one port over another. LA seems to have quieted down.
Justin Smith 19:20
Yeah.
Janet Ydavoy 19:37
a little bit, but the East Coast seems to be in turmoil as far as labor strikes and and relying on efficiencies in moving goods. Then there's always the Midwest, which makes a lot of sense.
Justin Smith 19:55
Yeah.
Janet Ydavoy 20:01
But then it's a matter of where the goods are coming from, how they're routing internationally, where the port of entry is, and what the inland transit looks like getting it to the Midwest DC.
Justin Smith 20:15
Yeah. And what are the most common routes?
Janet Ydavoy 20:21
East Coast, West Coast. East Coast, West Coast. And then of course either by truck or rail to a distribution center.
Justin Smith 20:23
haha Yeah. I was looking at a couple different like reports and just going through some of the deliverables of like as you're looking through to 3PL or to not and then comparing one location to another. And so common variables are real estate, transportation. Do you factor labor in there or how does the labor equation factor into these analysis?
Janet Ydavoy 21:07
Interesting yes, we do we definitely factor in labor, but labor's kind of there's the there's a mid -range there But absolutely, absolutely.
Justin Smith 21:23
down. Those are kind of the main things I have just thinking through. studies, studies that you guys like where you help people when they're coming up with their supply chain issues. What haven't I asked or what are other like issues other than to 3PL or not where to be within the country? I could think of like technology is maybe a Roberts where people are implementing new technology solutions. What are other issues that are common these days?
Janet Ydavoy 21:58
technology, automation, again you mentioned labor earlier. the one thing that we would look at in terms of real estate is what's happening in that area with competitive distribution centers. Are there several 3PLs that, and what is their... What is their occupancy? Or are they just breaking ground and starting to build? They already have a contract or they will have open space available. And then that's a direct connection to labor and what the constraints might be with being able to build a labor pool. So that's where the real estate comes in.
Justin Smith 22:51
Yeah. And how do you go about checking with all the 3PLs? I got to imagine that's a job in and of itself. We got to hire more people of certain major markets. There's a lot of players. How do you come up with who the best ones are to connect with?
Janet Ydavoy 23:07
Yeah, it's again, We're looking at cost time resources, what resources are available. There's always the ramp up time that needs to be factored in because a lot of times with the timing, the ramp up with the leases and the expiration of the leases and then how to make the smoothest transition possible? it's very disruptive. So do you manage it where you have two DCs working at the same time until you can transition fully into one? And of course the technology piece as well. And how well equipped are they in technology? And what are the needs?
Justin Smith 24:03
Yeah, it's so funny. The overlapping and thinking through how to transition I'm very familiar with, because we'll help people move from one building to another. And it is incredibly disruptive. And it's so disruptive that a common comment that I'll get from people who are in charge of these projects are how many and more they'll have to do before they retire. And if this is their last one before retiring, because it's like, so difficult and challenging and there's so many like it's extra work upon the regular responsibilities that they have. And so it's really like working overtime. And so it clearly leaves a big impact on them that like they would prefer not to if they don't have to. So, yeah, that is, terribly difficult to juggle. And so I could see why juggling that along with, like when you think of modeling scenarios, Like that is something that is maybe less tangible or less in the model of what's it going to take to pull off this transition.
Janet Ydavoy 25:12
That's when Robert pulls out his Gantt chart. And we start managing it step by step and hitting each of the milestones and then looking at any constraints or issues that come up and managing it real time live as it's happening and then coming up with a solution immediately.
Justin Smith 25:15
Okay I it. I love the project management. This is when it gets real. So you guys will help with implementation and execution, not just the upfront.
Janet Ydavoy 25:50
Yes.
Justin Smith 25:51
And so when you think of some of the critical things in implementation, I got to imagine that's a months long projects, maybe even year long and certain occasions. And then you really have to work with a diversified team. There's so many people that are involved. And so I could I could imagine that's why Robert's on the phone right now.
Janet Ydavoy 26:14
Yes. And that is definitely what's key is pulling together a diversified team and recognizing all of the pillars of the business that need to know and what and when they need to know it so that everyone is moving forward with from one milestone to the next.
Justin Smith 26:44
Yeah. And I can see where this concept of transition or an implementation of a plan is extra work for the team, like employees for the client team. Why it makes sense then to hire you guys so that it's not an undue burden on the team. Would you say 50 % of people that do a network supply bring you on for the implementation or how would you say how often is it that they just they can handle it versus hey can you please help us or maybe even get people that have to implement and then call you after they think they could have done it on their own.
Janet Ydavoy 27:25
That's when we do damage control. would be 911, we're 910. We try and get you before you have to dial 911. But yeah, I would say 50 % sounds about right. Yeah, it's a matter of taking the burden off of the associates day -to -day tasks that they need to address and being able to move it forward.
Justin Smith 27:31
Yes. Yes.
Janet Ydavoy 27:55
as painlessly as possible. So behind the scenes we do a lot of heavy lifting and that seems to ease the burden as well.
Justin Smith 28:07
Yeah. So then you can help them contract with the 3PLs and then all things transition set up. And I love that even the IT component and different like a management system, just like integration.
Janet Ydavoy 28:23
Yes.
Justin Smith 28:25
And is that still highly fraught with issues? Because everybody has a different vintage of something in a different way that it communicates or that we've gotten better?
Janet Ydavoy 28:36
No. No, we haven't gotten better.
Justin Smith 28:40
Okay, that seems like some of those technology solutions, like, it's not that they over promise, but just like the integration, feel like that's always, it's less than what's advertised.
Janet Ydavoy 28:54
Yeah, I don't know. It's that dichotomy between the homegrown and the off the shelf and which is better. And sometimes it's a combination of the two, but the IT component needs to grow with the business. So it has to be something that's scalable.
Justin Smith 29:04
Yes. Yeah, the one you start with isn't the one you end with. You brought up warehouse automation. Can you delve into that a little bit with me? Is that area that you're pretty familiar with? The big question, it's good to be hydrated for this one.
Janet Ydavoy 29:46
Warehouse automation, everything from pick to light, is connected with inventory management. Inventory management has come a long way. there's cross -docking, which is probably the most ideal in... automation, it's not really automation, but it's having a refined system in place where the goods come in and go back out. the distribution is about, it's not about holding goods, it's about allocation.
Justin Smith 30:31
It's a better flow of goods going cross -stock.
Janet Ydavoy 30:45
And so focusing on the allocation demand and not holding the inventory in the warehouse would probably be the best answer.
Justin Smith 31:00
Yeah, when we were doing an assignment for a company for their e -commerce, it was amazing to see how many of the new buildings are cross -stock, but then only in certain markets are they building cross -stocks and only a certain amount and kind of only in certain size ranges. And so it is interesting to think of if you're a developer, when do you do that? And when don't you and it takes more land for more loading and more trucks and more trailers and like it's a less efficient use of the lot for just building like maximum square footage. But it seems like it's increasingly like a useful and increasingly in demand.
Janet Ydavoy 31:40
Mm Yes, and better at balancing because then looking at the cost benefit part of the equation, not holding inventory is optimal.
Justin Smith 32:04
Yeah. I have found some people, you go in their warehouse and even if it's several hundred thousand feet, you may see almost no automation whatsoever. And people still just like, maybe not doing it the same way they've always done it, but just like less, less machines of some kind move an inventory. When do you see people don't do that? Is that just not making the capital investment? Or I think sometimes it's like what products you have, not all products. Like, does it make sense to move or to think about moving in a different way or investing in a solution for?
Janet Ydavoy 32:48
Well, when does a distribution center go from, I guess what I was trying to say is I'm thinking about returns and How do you manage returns when now with the downside of direct to consumer is that returns are up as much as 50%. And how does a distribution center go from being a cost center to a profit center? And how do you manage the returns, re -inventory the returns, and then reallocate them, hopefully, if it's not anything that's seasonal?
Justin Smith 33:19
That's huge.
Janet Ydavoy 33:40
So that's a huge issue. Right at around 20 % was considered a normal average. And you could still be profitable with 20 % returns, because it was factored in with most retailers. But when it gets up around 40 and 50%, And then there's a seasonality. So if you looked at the timeline from when the goods are shipped to the consumer, the consumer has X number of days to make the decision whether or not they want to keep it or return it. And it's become a shopping habit for every consumer. So within the...
Justin Smith 34:32
I'm trying not to partake in that, but I do see it in my household, yes.
Janet Ydavoy 34:36
Yeah, we all do and we've all become conditioned to it. So after 30 days, it's returned and then it's sorted and then re reinvent oried and then hopefully it can be resold. So yeah, it's it's definitely something that that needs to be put under the microscope and and how do we, you know, how do we get our arms around it?
Justin Smith 35:08
I love how do you turn it into a profit center, right? You got to imagine what people's margin like there. That's probably a huge component part of their net margin. Yeah. That is way beyond my pay grade of modeling skills. I'm happy just to get the locations on the map, the transportation to the customers, and then I'm a happy man. So trying to deal with returns.
Janet Ydavoy 35:19
Mm
Justin Smith 35:36
I could see where that's going to take a whole level of like a sophistication. and then to have it in the same building or do you have so many that you need your own building for it? I gotta imagine that's part of the analysis as well. Or you gotta be on the biggest scale to have your own location for returns.
Janet Ydavoy 35:55
Yes, or would it become in the future, would it just become a different business model where the goods are returned to say a third party location and then sold off price. So, you know, the goods never return to the distribution, the original distribution center or 3PL.
Justin Smith 36:18
You and I sell returns on eBay and split the profits with the person that sold it in the first place. So you can see like there's a business model in there for returns.
Janet Ydavoy 36:27
Totally.
Justin Smith 36:32
I love it. I would think this is a great intro for people that are thinking about modeling and dealing with the issues in their supply chain and inventory and thinking about what to do about it and having resources out there like you and your team. I'm curious, what do you look out on the horizon? Like what are some trends that you think are impactful that are out there? What's exciting in the future that you look out for that? applies and impacts these people that you work with.
Janet Ydavoy 37:05
Well, I think some of the topics we already hit on. how to think and act globally, what are the emerging consumer trends that we need to be aware of. And how to streamline. I think there's a lot that will impact the overall supply chain in the future. And streamlining everything from manufacturing all the way through to distribution and then to the ultimate consumer.
Justin Smith 37:49
We can do better there. There's plenty of improvements all along the chain. I feel like with technology, the integration part's got to improve too, and that should help communication be faster and be clearer and lead to less inventory at the end of the day. And that should be a big one that's on the horizon. But maybe it's always been on the horizon, but I'm getting a little closer.
Janet Ydavoy 38:06
Yes. Real. It has, but you're right, real true demand planning that is efficient.
Justin Smith 38:23
Yeah, that's a big one. Jana, I appreciate you spending time with me and kind of opening up the ask me anything type of sets like a session when it comes to supply chain. If people have questions, why can they reach you and your team?
Janet Ydavoy 38:40
You can reach us at 910ADV.com That's AlphaDeltaVictory .com.
Justin Smith 38:52
Awesome. Thank you, Janet. Look forward to catching up with you later.
Janet Ydavoy 38:56
Thank you so much, Justin. Take care. Bye -bye.
Justin Smith 38:59
Okay, bye bye.