Tom Mueller: 0:07

Hi everyone and welcome to the Leading in a Crisis podcast. On this podcast, we talk all things crisis management and we deliver that through a focus on storytelling, lessons learned and interviews with crisis leaders. I'm Tom Mueller, joining you from Houston today. With me is my co-host, mark Mullin, joining us from Bellingham, washington. Hey, marc, hello Tom. Today we're going to focus on a business crisis for the podcast, and today we have with us Jeff Zudak. Jeff is an expert on managing global supply chain issues and has spent a long career working in supply chain and related fields. And today we're going to talk about a business crisis that was focused on supply chain issues, and Jeff has some interesting stories to share with us around that. So, jeff, welcome to the podcast. Can you give us a quick introduction?

Jeff Zudock: 1:04

Thanks, tom, mark, yep, jeff Zudak. Go way back. I'm a chemical engineering graduate from the University of Wisconsin. I went to work for mobile oil right out of school and spent almost 35 years there, variety of roles. Roughly about half of my career was in commercial roles and the second half of my career was in global supply chain roles. The activities that I've gotten to participate in, in the supply chain area at least, is really span the gamut of what you can do in supply chain Everything from procurement and raw material management all the way through operational activities like warehousing and logistics and then through, of course, the planning end and you know, managing billions of dollars of inventory.

Tom Mueller: 1:51

Jeff, it's interesting for me to think about a crisis from the supply chain perspective, just because it seems to sort of be behind the scenes. It's not something that people are going to hear about on television or hear about on, you know, on talk radio. It's things that happen and they happen every day. Right, there's a process that's in place to make sure that facilities have the raw materials they need to manufacture the things that they do, and it just seems to magically all happen. I think you're here to tell us it doesn't magically all happen, it does not.

Jeff Zudock: 2:32

In fact, one of the early quotes I used to give my old sales team when I transitioned into the supply chain was that there was no such thing as a container theory, and then no one can wave a wand and instantly transport materials from point A to point B. It just doesn't happen that way, right, of course, when I was in those commercial roles it's what I expected, but no, there's a lot that happens behind the scenes and, interestingly, enough because of the pandemic.

Jeff Zudock: 2:57

All of a sudden, the term supply chain really did kind of make it to the front of the vernacular of the world, right? I mean, even my 91-year-old mother, when she doesn't get something in the mail, complains about the supply chain and she blames it like everyone else blames it for everything, right? So for better or worse, the supply chain definitely did get pushed to the forefront of everything that was going on. But the understanding of how supply chains work did not change right, more of the well, it's the supply chain and that's the problem with, not really understanding what drives the supply chain right.

Tom Mueller: 3:34

It's interesting because the pandemic really did push those issues into the forefront. I mean everything from holiday wares at your big box retailers being trapped on containers somewhere offshore or in a port and the logistics just not being able to deliver those. So that's probably helped most people realize how important that supply chain is to getting things right to where consumers can reach out and buy them, whether it's on Amazon or at your local Home Depot or Lowe's store, whatever it is. Well, jeff, now I know you've lived through a number of these situations. You've got a couple stories you're going to share with us today, so let's jump right in and talk to us about a particular incident that you worked, where the crisis leadership skills really came to play. Keep the business running.

Jeff Zudock: 4:30

Sort of an example that impacted our manufacturing facility in the US and in this one particular group I worked in for a while. There were two plants, one was in Europe, one was in the US, and one of the raw materials that was used and these plants just I guess, for color produced a type of polymer. Okay, but one of the raw materials that we used was a filler. It's just clay, right, but nonetheless it's a very important and integral part of making that material right, the way that actually both these plants are set up for that particular raw material. We don't have a lot of onsite or didn't have a lot of onsite storage. We really relied one on our supplier our main supplier, you know, to keep an apple inventory.

Jeff Zudock: 5:23

For us they weren't far away, just a few hours away. But we also made sure that our replenishment planning was extremely robust so we never ran out right. And so you know there was, you know, good use of our existing systems and absolutely a very good relationship and a very communicative relationship with that particular key supplier. In this particular case that we're talking about, I'm going to say the error was that as this plant and the facility in this business grew, we never changed how we received that material, where maybe 15 years before, what was a day and a half supply was three weeks supply, right, or two weeks supply, and as that business evolved, grew right, we gained a lot of market share, just never made the adjustment or never made the investment to do it.

Jeff Zudock: 6:21

We both work for big oil companies, right? I mean, I worked for ExxonMobil for a very long time. I worked for DP for a long time. It's funny these big integrated oil and gas companies will spend absolutely billions and billions of dollars trying to find and pull oil out of the ground, but they throw nickels around like the manhole covers when it comes to making very small investments sometimes that just keep the plant running.

Tom Mueller: 6:48

So take us into the supply chain crisis situation that you faced there now with this facility, and what prompted the crisis.

Jeff Zudock: 7:01

So that's the really interesting part of the story. Is the genesis of the problem, right? Because actually when I was in a role that ExxonMobil created four or years ago is a raw material process manager job for the chemical company and created, with a couple of folks on my team, an entire system around doing risk identification, risk mitigation for raw materials. We call it SOS, security and supply right. We went from using it in just one small business to the entire chemical company using it and then even some of the other companies within ExxonMobil had adopted some of the better practices from it. We have been using this for years, so we felt like the risks around this particular raw material were mitigating and what we learned was that they weren't. So I kind of laughed because the supply chain manager at this particular facility in the US I talk to him all the time, but I don't think there were very few weekends where he didn't call me with something going on, more of a just to let you know, jeff, right, but always on the cusp of something terrible.

Jeff Zudock: 8:23

But it never happened right, we had really good mitigations, and so we didn't worry too much about it.

Jeff Zudock: 8:26

This particular time. He calls me on the weekend and he says, hey, I just got to let you know we got a real problem. Okay, let's hear it. Our clay supplier just informed us that their kiln was actually pretty the significantly in needs of maintenance and they were concerned that if they didn't shut down literally immediately and they had already shut it down that they were going to fail to her and the time engaged in fixing the kiln where it was, versus having a failure was significantly different, right?

Jeff Zudock: 9:02

I mean, it was months, or a couple months, versus many, many months, right? You know, of course, the first thing we do is we say, well, let's take a look at our security of supply plan and what's going on and where are we and how long do we have? Usually, when we develop mitigations, those mitigations are measured in weeks, right?

Tom Mueller: 9:25

So, for example, if you have a hurricane.

Jeff Zudock: 9:27

You know this plant happened to be on the Gulf Coast. If you have a hurricane, you know I will tell you. History just tells you. You know, if you can make it through over a couple of weeks, you'll have a supply plan back Right. And you know, when you work in the Gulf Coast, as we all know, you got hurricanes and things happen Right and you get floods and thrives Right.

Jeff Zudock: 9:48

And so our mitigation for this particular issue you know it was a couple of weeks long, few weeks long problem, however, was going to persist for months as we looked to just getting material from our other suppliers. We did not have those issues. This is something that I think a lot of company or an error that a lot of companies may, you know. What happened was we just didn't buy a lot from those other people and there were only two others. Right, that we could get material from period in the US. Right, that was it. You don't have that relationship established.

Jeff Zudock: 10:26

It's not like another supplier is going to let you go from 10% of your you know purchasing going to happen because they have customers that they're selling, as Ryan and I and a couple of the folks kind of looked at the problem and realized that the significance of the seriousness of this was huge, and so we formed what we call a QRT, a quick reaction team. We formed this QRT and what we do is we actually staff it with folks from a variety of functions that I think I'll say typically, normally a lot of companies wouldn't staff with it. So of course, we have supply chain. Supply chain runs when they're when the raw material issues.

Jeff Zudock: 11:04

Supply chain is in the lead. The other folks, or the other functions that we've been included on this, of course, were manufacturing. We would absolutely, absolutely include procurement. We would include technology. I'll explain that in a moment. We include the commercial business of some of them sales. We would always have product management on the team as well. Okay, and then you know, there may be other ad hoc folks customer service, for example. We would bring in to some of the meetings, right, because you're going to have some customer communication.

Jeff Zudock: 11:34

And then we've of course sometimes also include the third parties themselves. Right, it would depend. In this particular case, we kick this team off immediately. I mean, it was fast right, All right.

Tom Mueller: 11:45

So you're essentially setting up a crisis management team here to deal with this evolving supply chain crisis.

Jeff Zudock: 11:53

That's exactly right. This would be a normal practice Once we do the assessment and we say, okay, the problem is x and we're only going to be able to handle point two of x. Right, we got to get on this now. So we set the team up and I'll start, tom, with kind of highlighting a few of the critical elements of the people you put on that team. Number one and we already talked about the functions it is important to have diversity of function on it when you're in supply chain and someone like me I mean I'm going to work in a lot of the functions but still I don't think of everything, and most certainly not in with respect to you know, kind of like the current environment, right, and so while I have experience during procurement or you know product management, whatever, you still want those folks on there. Another element that absolutely and this is a critical element is the people that you put in that team have to be able to make decisions without asking for permission Period.

Jeff Zudock: 12:59

You can't have everyone go back and have to talk to the boss or the boss's boss and do nine presentations to get something done. The whole reason we form a QR team, the first place, is to make sure that we are able to react quick, solve quickly and move on to the next item. Right, and you know there's a I'm gonna call it, it's, you know, organized chaos. It's a psychotic ballet, I guess. Right, I mean there's a lot going on all the time, but you know there is some order to it. Right, and another element is meeting frequency, right, so how often do you meet and with whom? Usually, what we would do is just have a few core people, and which is primarily, you know, the five or six people from the functions that I mentioned, meeting every day, right, and then, of course, those people take away activities, right, actions that they have to solve on their own before the next meeting. Right, so there's a lot of subteams that not everyone participates in. Right, there'll be a separate procurement group, there'll be a separate manufacturer. You know those are kind of done separately, and then the next time we get together, the expectation, of course, is that that particular representative has solved or addressed that issue? And, if not solved, what do we need to do to solve it right? And then the last thing I really want to highlight when you assess the problem in the first place, you really do want to look pretty far downstream as to how big a deal this needs to be, but then you actually need to get tactical right. So that's your strategic view, I guess right, or your mid, you know, strategic view. But then you got to come all the way back and get extremely tactical and you really have to know what those new things are that you got to solve and in what order to be able to get there.

Jeff Zudock: 14:49

And it's a common error in these kinds of meetings where someone will say wait a minute, we're going to have a problem with this. You know, sometime down the road, sometime down the street People that have worked with me for years have heard me say this 100 times you know that's step 19 and we're on step three, and so let's do three and then let's do four. Right, because it's solved in that right now doesn't do us any good, right. And so it's critically important that we really identify, yeah, what the end game is, but really what those pre-shoot things are that you got to do and then someone's got to be able to just say, yes, work on that. No, skip that and take the ownership for it. Right Now, you know, embedded in this and kind of goes without saying, I think, is you know, this is not something where we're trying to point fingers, right, there's no blame here. It happened, right, it just doesn't matter right now, right, Because this is all about solving the problem.

Tom Mueller: 15:52

Well, that's easier said than done, isn't it, Jeff? Because, hey, there's a business issue that's come up now. It's potentially going to cost the company millions of dollars, maybe tens of millions of dollars.

Jeff Zudock: 16:08

A day - millions of dollars a day! Yeah, yeah, so I understand that. And yes, of course, everyone wants to start pointing fingers, and you know when you're leading these things, you just have to create the environment and maintaining environment where it just doesn't matter, right? It's okay, you know it happened, right? Move off of that and move on to solving the problem. You have to focus on the process instead of the scale. That's exactly right. You have to follow the process and you have to stick to it. And you know, when you lead these, it's actually like the difficulty, or at least in my experience was never in.

Jeff Zudock: 16:49

You know, moving people along, getting people to make decisions on the team right, getting folks to want to work the problem and find solutions it was always with the higher level management, always right, because you know they just want it solved and you know you don't really want a lot of help from them, right? Usually that just kind of bothers me, and so you know, for me, for example, I would have several, not daily or anything, but you know, several meetings, maybe once or twice a week, just keeping our VP or whatever informed on what's going on so that they can relay, you know, some headline or snippet up their chain of command as well as needed. And so you know, some broad communication is important, but you don't want too broad, right, I mean it's, you know it's a balance. You can't keep people uninformed just because you're working, but you don't want to give them too much because you really don't want them getting engaged either, right?

Tom Mueller: 17:48

Okay, jeff. So you've got a clay supplier now who has said, hey, we're going to stop supplying you. It's a critical element for your facilities to make products for your customers. You've set up the QRT team. You're working it, but it's not always as simple as just solving that. One problem is it.

Jeff Zudock: 18:09

No, it's not, and this is where all the learnings came from, and that's why I think this is just such a great example. You know again, of course, you try to do simple things. You know find other stuff. How much inventory does that particular supplier have? You know they're declaring force measure. How much are we going to get? What does that do to our production.

Jeff Zudock: 18:28

And then you're left with a gap, right? How much do you need? And you know we were significantly gapped. Okay, I mean, we needed the, we needed the fine material and solutions fast, right? So one of the other suppliers- and again this is an easy thing to do.

Jeff Zudock: 18:47

That we talked to said yeah, you know what, we'll give you material, another charge of this for it. Right, we're going to pay a lot more for it. But so what? Right, I mean you're going to. You got to get it then, and you know, they said somewhere in that conversation so you know, I assume you're going to. You know, take use our rail cars, not yours. Blah, blah, blah.

Jeff Zudock: 19:07

And you know we said, well, wait a minute, we need trucks. Right, we can't take rail. There's no offloading spur close enough to these tanks for me to do it, and you know we don't have blowers installed. That even if we did right. And they said, well, that's a problem because mostly delivered by rail, right, and so we said, listen, okay, what if we can find the truck? You know, maybe we'll even translate take it out of a rail car, you know, fill three trucks with it, something like that, we'll find a solution. But we can find the trucks.

Jeff Zudock: 19:39

So we went hunting for trucks and you know, we used a Ryder, a 4PL, that did a lot of our freight. We called them, called a couple other companies we knew, and we said, hey, you know, we need this stuff picked up. What we learned was there was one trucking company that had the type of equipment to all this type of play, and that trucking company service all three of the suppliers, and that trucking company had absolutely no surplus. No, everyone's going to driver's show, which is that's very common, right? There was no way we even thought about getting our own truck, but there's no availability, right. So we're once a fire dropped off, all the suppliers picked up, the trucking company had no surplus to get us what we need it. So even if we could Get the product and we did have an opportunity to get at least some material to make up the gap we couldn't get the trucks to do it.

Jeff Zudock: 20:41

And you know, that was that was kind of like the big learning that we carried forward much later. Right, and that was you really gotta look at your service suppliers and you know the actual physical supply chain of supply, Not just the inventories, and you know how often can your customers bring it to you and all that there's, there's, there's, you know, multiple levels of death that you need to have. Okay. So now we know that's not a solution, right, and that's smarts, okay. So now what do you do? We looked at a lot of things, but I think the most creative thing that came out of it was and it's one of the reasons we include our product technology, people.

Jeff Zudock: 21:31

And a process technology people in these meetings is. So we determined that we could actually use less of this particular material In a lot of the products and still be well with inspect, and so literally even with what supply and inventories that we were gonna have, we were able to generate About half, so we were gonna be short about 20%. We were able to generate about 10% of that 20%, just for a little bit of reformulation.

Tom Mueller: 22:01

Jeff, let me just clarify that that was the value of having the R&D folks on that quick response team. Having them at the table, they were able to go back and figure that out.

Jeff Zudock: 22:11

Yep, absolutely. And because, look, I never would have thought of that. Maybe the product manager would have known that, maybe not. I mean, if it was someone that had been around for a long time, sure, if it was someone that hadn't been around for a long time, then, no, they would have no way of knowing that. So that's, that was exactly the value of it.

Jeff Zudock: 22:29

Having the procurement folks on there was absolutely critical. Also, the procurement rep ended up negotiating supply with one of the other two suppliers for more material that we were able to get delivered from their existing logistics system to help close that gap as well, which was great. We actually included also a representative from the manufacturing plant in Europe as well, so that we could figure out what materials that we could potentially make there. And you know, while again, there's got to be expense, you know, with moving this material around and things like that, right, you're going to disrupt your storage and things like that, but nonetheless you're going to be able to make it. And you know, as long as we could do a substitute the approvals were already there. You know we were able to do that as well.

Jeff Zudock: 23:20

You know, here's a here is a good leadership element of this. You know good leaders listen and and they act based on that information, right? I mean, as long as you'd staff your team with people that you know are competent, right, and are going to do what they need to do, then you got to pay attention to them. This was such a great learning, and I will tell you, I've asked that question since then. Every time we've had a supply problem, right. Honestly, it's one of the first things I started asking, and, you know, more times than nothing, it's just no, but I'll never you know, regardless of what I do in the future, right? I'll never not ask that question again.

Tom Mueller: 23:58

That question being can we reformulate this?

Jeff Zudock: 24:01

Can we reformulate Is there anything we can do? Can we use last? Can we use something slightly different? Right? Yeah, absolutely Never, even with us. And so, yeah, having those folks in the room was always beneficial. Every QRT we ever did, I was always really glad they were there, really glad, Well.

Tom Mueller: 24:19

Jeff, this is sort of a layer after layer of crisis developments happening here. Kind of sounds like a regular crisis, doesn't it, mark? Yeah, it does. You know stuff comes over the trance. Imagine that you weren't expecting. You've got to react to it. Hopefully you've got the right people on the team to do that. How did you resolve this situation ultimately, then?

Jeff Zudock: 24:42

So ultimately, as I said, we did some temporary reformulation, which helped a lot with some of the materials.

Jeff Zudock: 24:50

We did end up eventually getting some additional supply and that was measured in, I think, a couple of months right, and it wasn't a ton of material, but it was something, and we had the plant in Europe pick up some of the slack that we couldn't need.

Jeff Zudock: 25:08

We also had a lot of active conversation through our commercial group with our customers a lot, and so where we might be delivering high levels of inventory to certain customers, we just went to them and said, look, this is our problem, can we kind of feed you a little more as you need it, versus not, so that we can distribute the wealth a little bit right? We had to change our production plans pretty significantly. So, like the supply chain planning group was part of the group that worked for me and we had to look at all the different inventories of all the different materials we had and we said, ok, what are we going to risk not making so we can make stuff that we're low on right, so that we can deliver it, things that we ran on campaigns, so maybe a couple times a year, how far can we push them out, right, not make them based on those inventories?

Jeff Zudock: 26:03

So we changed a lot right, a whole lot, and then, of course, we had to manage the logistics around that as well. What can we ship quickly? What do we have to get out to where it needs to be right away, versus waiting for it to be made? That was quite a balance. It was again for me. I love that right.

Jeff Zudock: 26:26

I mean, you really learn a lot about your system where it's robust and where it's not. You learn a ton about the people you work with, a ton right who's freaking out and who's, frankly, who's measured and calm and confident and optimistic versus pessimistic. That's great.

Tom Mueller: 26:47

Well, jeff, I have to say you sound a bit like an adrenaline junkie, which many of us who work in crisis management kind of are. Marc Mullen: Yep, you also sound like you're a good incident commander.

Jeff Zudock: 27:00

Well, thank you. Yeah, no, I absolutely love it. I appreciate you saying that I enjoyed it. I think, based on the feedback I used to get, the vast majority of people that I worked with really enjoyed having me as either their leader or their partner or whatever. Yeah, it was a lot of fun.

Tom Mueller: 27:18

So, jeff, you've talked a little bit about the pressures that people feel in these kinds of situations, and you're sort of stepping back and observing people, and how are they doing so? Can you cite an example for us of somebody in a situation like this who didn't quite meet expectations or perform as well as you'd liked, and what can we sort of take away from that example?

Jeff Zudock: 27:44

Yeah, it's a good question actually. Yeah, of course. I mean, wherever you're at, in whatever situation, when it's these quick disruptions, you're going to get people that are just not going to respond as well as you want them to. In this particular case, we started with somebody on the team that was just really bad about getting back to their subgroup and getting the answers we needed in the first couple of days, and I actually ended up talking first to the person I ended up in the first supervisor and I just said give me somebody else, I just can't deal with this. And it happened and I'm sure it followed that.

Tom Mueller: 28:35

And do you think that was just the pressure of this situation or the person just didn't quite have the temperament to work in a high-stress situation?

Jeff Zudock: 28:44

Oh no, no, it was the human on part of the board.

Tom Mueller: 28:47

Yeah.

Jeff Zudock: 28:48

Yeah, I mean, some people are just dealing with this kind of stress, right? And, and you know, accountability, and usually it revolves around that, right? Oh, if I say this, I'm accountable, right? In this particular case I don't really we didn't get far enough to, you know, with this person to see if it was the accountability thing. It was just they weren't doing what they needed to do and again, we didn't have time to mess around, so we got rid of them. And in another, you know, I can give you other examples where people actually were afraid to make a decision, which, again, in the big petrochemical companies as crazy as it seems, it always seemed crazy to me there were lots of people that just never wanted to make a decision and you could have a long career without having to say yes, making your boss say yes, right, but when you're in these situations, you can't have that.

Tom Mueller: 29:42

Final question, Jeff out of this crisis that evolved into multiple levels, are there two or three key takeaways that you'd highlight for other managers? What would those be?

Jeff Zudock: 29:52

Number one assess the problem as accurately as you can, as quickly as you can, with as much depth and breadth as you're able to, and make the decision about what you need to solve.

Jeff Zudock: 30:04

You know whatever those first few elements are to get you, you know, pushing the right direction, and don't delay on that.

Jeff Zudock: 30:10

Another key takeaway is having diversity of function and knowledge on these teams is absolutely critical. It solves problems and there's no question about it, right, even if those people are just sounding boards for other people's ideas. Right, it's really important to have, you know, a good, diverse team working on it and the members of that team and this is, you know, the big piece too are able to make the decisions that you need to move to the next step right, without asking for permission. You know they have whatever authority or permissions or whatever an organization can give them. But the piece that I never, ever, want people to forget about is that you know the vigilance of doing your asses, constantly being vigilant about working at everything across your supply chain very regular basis to see what could disrupt. It is really important, right. We have lots of other things that came up over the pandemic, and you know before and after, of course right, but they solved quickly because we did a good job of that right.

Tom Mueller: 31:25

TAll right, jeff, that's been terrific. It's been a lot of fun catching up with you and talking about this supply chain crisis situation. Thanks for being with us. That's going to wrap up this portion of our conversation with Jeff Zudak on supply chain issues, and thanks for joining us for this episode of the Leading in a Crisis podcast. If you like what you're hearing here, then please like and subscribe to the podcast and give us a five star rating, and please tell your friends and colleagues about us as well, and we'll see you again on the next episode.