The Leading in a Crisis Podcast
Interviews, stories and lessons learned from experienced crisis leaders. Email the show at Tom@leadinginacrisis.com.
Being an effective leader in a corporate or public crisis situation requires knowledge, tenacity, and influencing skills. Unfortunately, most of us don't get much training or real experience dealing with crisis situations. On this podcast, we will talk with people who have lived through major crisis events and we will tap their experience and stories from the front lines of crisis management.
Your host, Tom Mueller, is a veteran crisis manager and trainer with more than 30 years in the corporate communications and crisis fields. Tom currently works as an executive coach and crisis trainer with WPNT Communications, and as a contract public information officer and trainer through his personal company, Tom Mueller Communications LLC.
Your co-host, Marc Mullen, has over 20 years of experience as a communication strategist. He provides subject matter expertise in a number of communication specializations, including crisis communication plan development, response and recovery communications, emergency notifications and communications, organizational reviews, and after-action reports. He blogs at Blog | Marc Mullen
Our goal is to help you grow your knowledge and awareness so you can be better prepared to lead should a major crisis threaten your organization.
Music credit: Special thanks to Nick Longoria from Austin, Texas for creating the theme music for the podcast.
The Leading in a Crisis Podcast
EP19 Supply chain disruption during Covid - a case study with XOM alum Jeff Zudock
Are you prepared to navigate a supply chain crisis? Will you crack under the pressure, or will you lead like a seasoned captain navigating through a storm? Join us as we share the mic with Jeff Zudock, a supply chain maestro with three decades of experience under his belt at ExxonMobil, now retired.
Jeff gives us a riveting account of managing a supply chain crisis when COVID-induced disruptions threatened a vital raw material's supply. The stakes were high, with potential financial losses scaling millions. But with shrewd communication and the audacity to seek alternative solutions, his team weathered the storm. Let Jeff's story inspire you and arm you with invaluable lessons about supply chain management and crisis leadership.
We'd love to hear from you. Email the show at Tom@leadinginacrisis.com.
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 storytelling, lessons learned and interviews with experienced crisis leaders. I'm Tom Mueller. On our episode today. We're continuing our conversation with supply chain expert Jeff Zudock. Jeff spent more than 30 years at ExxonMobil in commercial roles and then later in supply chain leadership positions. On our episode today, Jeff recounts how he and his team dealt with a major supply chain crisis during the COVID pandemic. Jeff shares with us a great example and outlines key leadership principles that helped guide them through this crisis that are applicable for supply chain leaders and any crisis leader.
Tom Mueller:Let's join the conversation now. Jeff, thanks for being with us. You've got another example here of a supply chain related crisis that relates to COVID. Of course, everybody got familiar with supply chain issues during the COVID pandemic because it seemed like everything went in short supply, starting with paper towels and toilet paper, but then it moved on to Christmas gifts and everything else that gets shipped into and around this country. So I know you've got a specific example of supply chain issue and the crisis that erupted from that. Tell us that story.
Jeff Zudock:I'll tell you this example I think is really interesting from a supply chain perspective again, because it's one of those situations where you really think you got everything all locked up and you just sometimes don't see these slowly developing trends that once they kind of just grow to the point where they're big enough they really cause a disruption.
Jeff Zudock:So a key raw material that we use, both the plant in the US and plant in Europe was supplied by, for the most part, one supplier and this was a contractual. The material was made in the US and we would ship by truck for a plant in the US, but the supplier would ship it via ocean container to the EU. In the pandemic you just mentioned that the container shipping industry was completely disrupted, and I mean completely disrupted. It wasn't just things weren't getting made and so they weren't getting shipped, it just became this massive imbalance of where the containers were because things weren't getting made and they weren't getting shipped. Container availability is really what drives the ability to be able to ship from point A to point B to point C. If the containers aren't in the right place, your stuff's not going anywhere.
Jeff Zudock:So what happened? Well, this is a really interesting issue because we had weekly reviews with this supply. This is our critical. This raw material was. We would meet weekly and we would go over supply to both the plants and they had pretty decent level people on their side that were talking to us, very competent company, and we would go through what's shipping when. When is it going to arrive. What do we need to adapt our production for?
Jeff Zudock:If there was a delay, things like that, right, and so we're all rolling along happy and smiling, right, and one of the folks that worked in one of my teams in Europe mentioned to me that we had gone several weeks without the receipt of one of the particular raw materials they shipped to. There were two big pieces that they. There were two big things that we shipped, and one of them was a company. It came to find out that they were kind of handing off their review of when all these things were going to happen to their group that managed container shipping, and the group that managed container shipping wasn't watching it, no-transcript, thinking it was going, and so they weren't talking to the freight forwarder about these particular containers. They didn't even know.
Tom Mueller:So Jeff set the stage for us. Then the plants running it's got some inventory running low. Now what's the potential financial impact of running out of this raw material?
Jeff Zudock:Eight figures in the long run. I mean, if you don't have it, you're talking tons and tons of material that you eventually will not sell. I mentioned earlier, too, that I've worked hard on making sure that our inventories were right. We don't hold too much, we don't hold too little. It's a very hard thing to do. Once you get to that point, there's an underlying assumption that all the elements that feed into that inventory level are going to work. You're going to get the raw materials you need when you need them. For the most part, yeah, this was going to take the utility of that plant ultimately zero. That's how ridiculous it got.
Tom Mueller:So you've got a supplier who's committing to you that they are shipping these materials, but within that supplier's organization they're just not paying close attention to what's going out the door.
Jeff Zudock:They definitely missed that. The containers weren't shipping. Yes, when the epiphany finally happens. We did everything we talked about before we took a look at how big the problem could be. In this case. It was a big deal. What could we do to solve it? That's the first place we went.
Jeff Zudock:The supplier would not air freight material to us. Just to again qualify that a little bit, this particular raw material was the highest percentage material that went into our product. It was almost half the amount of our product that was made up of this. You can imagine we used a lot Instead of air freight. What we needed that in and of itself would have been probably millions of dollars, Definitely many hundreds of thousands, just to get us over a hump. Even they were extremely reluctant to do that. They also said that they couldn't find additional containers to do it.
Jeff Zudock:We actually the very first thing we did after we formed our QR team, all the other things we talked about before you get the right people involved, you get all the different groups involved. What can we solve? What is going to be your product, etc. And what are all of that? One of the things that we did do is we actually rolled in our freight forward. We asked them for solution. What do you think can happen?
Jeff Zudock:We were looking for advice to give back to our supplier. What we learned was that the port that where our plant shipped from was different, of course, than the plant where our supplier shipped from, Because the plants were in different areas. We found out we could actually get containers from our port. Okay, our supplier was not set up to ship from them, and all the you know red tape and admin that comes along with working for a massive, you know company Kind of prevented them from acting very quickly and start shipping out of the port that that we shipped our stuff from. Okay, you know, imagine if, all of a sudden, bp wanted to turn on a dime and say, okay, I've never done this before, but I'm gonna do it tomorrow. It never would have.
Jeff Zudock:Right, no, you know, you got nine months of stuff to go through, right, yeah, and so same thing here. And so what we did was we actually got three containers and shipped our own Wrong material that we had in our warehouse that was going to be used in the US plant, and we shipped it to Europe ourselves and we said to the supplier look, we did this, it like two days, okay, and, and you know, we're able to get 30 containers in the material over from our own inventory which you can replenish by truck, right? So you know that we could do, and there was no shortage of material, right? Again, this was a logistics disruption, so we spent all that money Ship it over there. It got there within a few weeks, and so we were able to extend, you know, our potential funeral a little bit right and start working this problem better.
Jeff Zudock:The suppliers still had real problems getting stuff shipped to where we needed to ship. Long and short of it was that we ended up actually running out. I think it was for about a week that we weren't able to make the materials that we needed to make in the US for that period.
Jeff Zudock:And so yeah, now, we didn't run out for a month, right? W e did shut some lines down, but then the big problem Was that, because all this stuff was in the queue, eventually it all did ship, okay, and it all shipped in a plug. And all of a sudden, we don't have material straggling in. I mean, we're getting, you know, scores of containers.
Jeff Zudock:Okay, so it is showing up at the dock and we don't have any place to put it. We use a lot of third-party warehousing, right, and the one third-party warehouse that we use for this particular plant, actually you've wrecked it an extra building as this whole thing started as we look to the view of how much was gonna come in and we filled that entire building. You know that took a couple of months to write and so for a while you know we're looking for other warehouses. You know what do we do to be keep it important. I actually had to make a decision. Do I pay demurrage
Jeff Zudock:on these containers, or do I, you know, go with the third party? That Is gonna cost me a lot of money. W arehousing, by the way, became extremely expensive during the pandemic.
Tom Mueller:Well, Jeff, for listeners who aren't familiar with demurrage, it's essentially holding, paying a ship to just lay at anchor and wait for you. What's the scale of cost for holding a ship like that?
Jeff Zudock:in this case, the demurrage is not on a ship, it's actually on the container. The answer to your question is hundreds of thousands of dollars over the course of, we'll say, you know something, measured in less than 15 weeks. Okay, you know, because again there's a, there's a flow, right, and we're trying to figure out what the production schedule can be so we can make, you know, pull the stuff out as quickly as we can. And you know how much can we store at the site? You know, can we stack these things to the sky at the site? You know just anything we can do to not incur costs. But it was quite a bit, There was a lot.
Tom Mueller:So decision making on that is that. You know, was that fairly straightforward process or was that something you had to really wrangle?
Jeff Zudock:Well, the nice part about it was, you know, we're keen to the supply chain parts of it, especially the movement storage parts. Right, I got to make the decision right. I mean, it was my job as my group. I ran the supply chain, and so that was up to me, and if I made a mistake it was on me, right, you know. But but at least we could, we could get through it. And I'm going to say I had a great team, right, and I mean a great team.
Jeff Zudock:The folks in Europe were phenomenal. They're in the folks in the US that we work with too, because some of my global jobs were phenomenal and they, I mean just the, the ideas that they came up with and, you know, frankly, even the stewardship mechanisms that they created on the spot to help us through this. We ended up using Farming and the future, right, it was great, the big connector this time. And so, again, the QRT was formed. We did the same thing.
Jeff Zudock:You know, this time you got to do it over a pond, and so you know we're up early because we're talking to Europe, right, and we want to give them as much time as we can to get them to work through their day, right. So it's not like we're waiting until late o'clock to call them. We're working up a, you know, five in the morning, four, three in the morning, whatever you know, as much as we can to have these calls and the connectivity with the manufacturing organization, in this case is is really what helped us, helped us through the pieces that we couldn't do on our own.
Jeff Zudock:You know, we had this terrible event where we ran on a stop and then, we had this, you know I'm going to say was almost this, this ridiculous event where we had just way, way, way too much and the amount of inventory that actually came in lasted us like for months and months and months and months. I mean, we were so oversupplied and, you know, we still had contractual requirements to take certain amounts of material right, and so it just kept getting worse right. But we ended up creating some really like is it some great? Logistics solutions and working with both third parties and with our manufacturing folks.
Tom Mueller:So, Jeff, if you just sort of step back and look at the big picture again, summarizing key lessons learned around, you know, around the leadership aspects of this and others, what? How would you summarize that?
Jeff Zudock:And number one, you know, quickly assess the issue as quickly as you can and figure out where those those key problems are that you need to solve first and then stick to that plan. In this situation I mentioned before you know people that work with me hear me say all the time you know we're on step three, don't worry about step 19. This was riddled with that. Riddled with it, you know. Oh, we can't make this. All that customers got to run out. Oh, this is it. You know what. You can't worry about. That you know, because right now, I just got to get you know material to plan right and so knowing which problem to solve for second, third, fourth, absolutely critical, of course, getting the team together right and getting the people that can just make decisions and move forward. In this case, we had no issues with that. None, at least on our side. Our supplier had some issues there, for sure, and they sometimes got a little slow, but that was a process issue on their end, right, trusting folks to come up with solutions, just really letting people do what you know their ability and capability allows them to do and create, really worked well. I just some incredibly creative ideas that maybe we're sitting there the whole time and no one really thought about until you're in the crisis. But then giving them the opportunity just to do it, yeah, sounds like a great idea. Make it happen. If it didn't work, and a couple things that didn't work, that's all right. Move on, don't worry about it. You know it's not like you know anybody died or you know anything like that. There's nothing like that, right. So, you know, give them the space to really shine and do it in trust, right?
Jeff Zudock:But again, the other piece is to and I don't remember if I said this in the other example, but mapping those waypoints and checking the boxes and making sure you are where you need to be. And if you're not, what are you going to do to get there as quickly as you can? You know, is it a problem you can take off and get rid of? But that stewardship of you know, where are you? What's the next thing you got to do? Where are you? What's the next thing you got to do? It's really critical.
Jeff Zudock:And then, from the leadership end to when you're leading these teams, you just you got to be confident, right, and you just have to re-zoot it, and I'm going to, you know, make some coin and I don't know if any of the people I used to work with are going to listen to this. I hope so. I'm going to send them a link. But I had a great team and I trust them and I knew they knew how to do. You know their end of what they needed much better than I could have ever done Right, and I just I loved watching them do it Right. I it was just enjoying to see them, you know, just dig in on this stuff and wrangle it and solve it. You know and they stressed less, I think, because you know I and some of the other high-level folks that were involved said you know what you got it. Make it happen, you're good.
Tom Mueller:And you're giving them space to operate, and that's that can be a tough skill. You have to make the assignment and let people deliver.
Jeff Zudock:You're, you're, you're. You're in the wrong job. You're. All you're going to do is slow things down and actually create more problems in the world. Sounds like good leaders make good teams. You know, I got lucky. Everybody on my team was either a really good leader or they were on their way to the coming one. They were tremendous influencers. I'll say it that way. So, yeah, it was good, so stressful, of course, disappointed at some points. Yeah, I mean, you always are right, but you know the cup's always half full. You're going to solve the problem. We got good people and that's why, frankly, that's why I never really worried too much about stuff. Right, I hired a lot of the people that worked on my team, okay, right, so, and I felt like I did that, right, you know, and so I wasn't worried about them getting a solution right.
Tom Mueller:Jeff, thanks so much for joining us. We're going to wrap it up here, but it's been just our pleasure talking with you today and kind of learning some leadership lessons through the lens of supply chain crisis. So thank you very much for making time and we hope you'll come back again soon.
Jeff Zudock:Anytime. Thank you very much, enjoyed it a lot. Marc Mullen: Thanks, jeff.
Tom Mueller:All right. 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 soon for another episode of the Leading in a Crisis podcast.
