Welcome And Guest Introduction

Tom Mueller 0:06

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 Mullen joining us from Bellingham, Washington. Hey Mark. Hello, Tom. Today we're going to focus on a business crisis for the podcast. And today we have with us Jeff Zudok. 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?

Why Supply Chains Are Invisible

SPEAKER_01 1:04

Thanks, Tom. Mark, yep, Jeff Zedok. Go way back. I'm a chemical engineering graduate from the University of Wisconsin. Went to work for mobile oil right out of school and spent uh 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 uh global supply chain roles. The uh activities that I've gotten to participate in uh in the supply chain area, at least, has uh really spanned the gamut of what you can do in supply chain, everything from procurement and raw material management all the way through operational uh activities like warehousing and logistics, and then through, of course, the planning end and uh uh 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, um, 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.

SPEAKER_01 2:28

In fact, uh one of the uh one of the early uh uh 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 ferry. Uh, 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 uh no, there's a there's a lot that happens behind the scenes. And interestingly enough, because of the pandemic, 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 she she blames it like everyone else blames it for everything, right? So uh, you know, for better or worse, uh the supply chain definitely did get pushed to the forefront of uh 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 a supply chain. Right.

Tom Mueller 3:33

Yeah, it's it's interesting because the the pandemic really did push those issues into the forefront. I mean, everything from uh, you know, 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 uh 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 uh you know your local Home Depot or Lowe 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 and talk to us about a particular incident that you worked where you know the crisis leadership skills really came to play, keep the business running.

SPEAKER_01 4:30

Start with an example uh that impacted uh our uh manufacturing facility uh in the US. And in this one particular group I uh worked in for a while, there were two plants, uh, one was in Europe, one was in the US. And uh uh one of the raw materials uh that was used, and these plants just, I guess for color, uh 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 uh making that material, right? The way that actually both these plants are set up uh for that particular raw material, um, we we don't have a lot of on-site or didn't have a lot of on-site storage. We really relied uh one on our supplier, our main supplier, you know, to keep an apple inventory for us. They weren't far away, just a few hours away. Uh but we also made sure that our uh replenishment planning was was extremely robust. So we never ran out, right? And so uh, you know, there was uh you know a good use of our existing systems and and absolutely a very good relationship and a very communicative relationship with that particular key supplier. In this particular case uh that we're talking about, I'm gonna say the error was that uh as this plant and the facility and this business grew, we never changed how we received that material. You know, where you know, maybe 15 years before, what was a day and a half supply was three weeks supply, right? Or two weeks supply. And uh as that business evolved, grew, right, we gained a lot of market share, we just never, you know, made the adjustment or never made the investment to do it. You know, I you know, we both work for big oil companies, right? I mean, I worked for ExxonMobil for a very long time, Europe BP for a very long time. You know, it's funny, these big integrated uh oil and gas companies uh will spend absolutely billions and billions of dollars trying to find and pull oil out of the ground, but they throw nickels around like their manhole covers when it comes to uh uh you know making very small investments sometimes uh just to keep the plant running, you know. Right, yeah, yeah. So uh yeah.

Tom Mueller 6:48

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

Kiln Shutdown Triggers A Real Crisis

SPEAKER_01 7:01

So that's the really interesting part of the story, is is the the genesis of the problem, right? Uh because uh actually uh when I was uh in a role that uh ExxonMobil created for me years ago, it was a the raw material uh process manager uh job for the chemical company, had uh created with a couple folks on my team uh an entire system around doing uh uh risk mitigation, right? Uh risk identification risk mitigation for raw materials. We we call it SOS security supply, right? We went from you know using it in just one small business uh to uh the entire chemical company using it, and then uh uh even some of the other companies within ExxonMobil had adopted you know some of the better practices from it. Uh we had been using this for years. Uh so we felt like the risks around this particular raw material were mitigated. And uh what uh what we learned uh was that they weren't. So uh I uh kind of laughed because uh the uh uh supply chain manager at this at this particular facility in the US, uh, you know, I talked to him all the time, but uh I don't think there were uh very few weekends where he didn't call me with, you know, something going on. More of a just to let you know, Jeff, right? But uh, you know, always on the cusp of something terrible, but it never happened, right? We had really good mitigations, and so we didn't worry too much about it. This particular time, uh, he calls me on the weekend. He says, Hey, I just gotta let you know we got a real problem. Okay, let's hear it. Uh, our clay supplier uh just informed us that their kiln was actually uh pretty uh significantly in needs of maintenance. And uh they were concerned that if they didn't shut down literally immediately, and they and they had already shut it down, uh, that they would get a failure. And the the time engaged in uh fixing uh the kiln where it was versus having a failure was significantly different, right? I mean, it was it was months or a couple months versus many, many months, right? You know, of course, the first thing uh we do is we say, well, let's take a look at our security of supply plan and you know what's going on and where are we and how long do we have? Usually when we develop mitigations, uh those those mitigations are are uh measured in in weeks, right? So for example, if you have a hurricane, you know, this planet happened to be on the Gulf Coast. Uh, if you have a hurricane, uh you know, I I will tell you, history just tells you, you know, if you can make it through a couple of weeks, you'll you'll have a supply plan back, right? And you know, when you work in the Gulf Coast, as we all know, uh you get hurricanes and things happen, right? And you get floods and variety of things, right? And so uh our our mitigation uh for this particular issue, you know, was a couple of weeks long, a few weeks long. Problem, however, was going to persist for months as we looked to just getting material from our other suppliers. Uh, this is something that I think a lot of companies are an error uh that a lot of companies make. You know, what what happened was we we just didn't buy a lot from those other people. And and there were only two others, right? Uh that we could get material from, period, in the US, right? That that was it. If you don't have that relationship established, it's not like another supplier is gonna let you go from 10% of your you know purchasing to 90% of your purchasing overnight. It's not gonna happen because they have customers at their site. As Ryan and I and a couple other folks kind of looked at the problem and realized that uh the significance and the seriousness of this was huge. And so we formed what we call a QRT, uh uh a quick reaction team. We formed this QRT. And uh what we do is uh we actually staff it with uh folks from a variety of functions that I think uh I'll say typically, normally, a lot of companies wouldn't staff with. So of course we have supply chain. Supply chain runs these when they're when when the raw material uh issues, supply chain is in the league. The uh other folks or the other functions that we would include on this, of course, were manufacturing. We would absolute absolutely include procurement, we would include technology, I'll explain that in a moment. Um, we include the commercial business, so some from sales. Uh, we would always have product management on the team as well. Okay. And then, you know, there may be other ad hoc folks, uh customer service, for example, we would bring in to some of the meetings, right? Because you're going to have some customer communication. Uh, and then we would, of course, sometimes also include uh the third parties themselves, right? It would depend. In this particular case, we we kick this team off immediately. I mean, it was fast, right?

Tom Mueller 11:44

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

How A Quick Reaction Team Works

SPEAKER_01 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 uh, we're only gonna be able to handle 0.2 of X, right? Uh, we got to get on this now. So we set the team up, and uh, I'll I'll start, Tom, with uh kind of highlighting a few of the critical elements of the people you put on that team. Number one, uh, and we already talked about the functions, it it is important to have diversity of uh function on it. Uh when you're in supply chain, and and someone like me, I mean, I'm I'm gonna have worked in a lot of different functions, but still I don't think of everything. And and most certainly not in in with with respect to you know, kind of like the current environment, right? And so while I have experience doing procurement or uh you know product management, whatever, you still want those folks on there. Uh another element that absolutely, and 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. Uh you can't uh 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 QRT in the first place is to make sure that we are able to react quickly, solve quickly, and move on to the next item, right? Um, and you know, there's there's a I'm I'm gonna call it it's 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. Uh, but uh uh, you know, you you there is some order to it, right? Um and uh uh another element is uh meeting frequency, right? Uh so how often do you meet and with whom? Uh usually what we would do is just have a few core people, uh, 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 sub-teams that not everyone participates in, right? There'll be a separate procurement group, there'll be a separate manufacturer. Uh uh, 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 your your mid-you know, strategic view. Uh, but then you got to come all the way back and get extremely tactical. And and you really have to know what those few things are that you gotta solve and in what order to be able to get there. And and and it's a it's a common error in these kinds of meetings where someone will say, Well, wait a minute, we're gonna have a problem with this, you know, sometime down the road, sometime down the stream. Uh, people that have worked with me for years uh have have heard me say this a hundred times, you know, that's step 19 and we're on step three. And so let's let's do three and then let's do four, right? Because solving that right now doesn't do us any good, right? And so uh it it's critically important that we really identify, yeah, what the end game is, but really what those free shoot things are that you got to do. And then uh someone's gotta leave it, right? Someone's gotta 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 and it kind of goes with a without saying, I think, is you know, you know, this is not uh something where we're trying to point fingers, right? There's there's no blame here. It happened, right? It it just doesn't matter right now, right? Because this is all about solving the problem.

Tom Mueller 15:52

Well, but that's 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. A day, millions of dollars, right? A day, you know, yeah, yeah.

SPEAKER_01 16:10

So uh I understand that. And yes, of course, everyone wants to start pointing fingers, and uh, you know, when you're leading these things, you just have to create the environment and maintain the environment where it just doesn't matter, right? It's okay, you know it it happened, right? Move off of that and move on to solving the problem, right? So 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, you know, moving people along, getting people to make decisions on the team, right? Getting folks to to want to work the problem and find solutions. It was always with the uh higher level management, always, right? Uh, because uh, you know, they just want it solved. Uh and and and you know, uh you don't you don't really want a lot of help from them, right? Usually that just kind of bogged me out. And so uh, you know, for me, for example, I would have several, not daily or anything, but but you know, several meetings, maybe once or twice a week, um, just keeping our VP or whatever informed on what's going on, uh, so that they can relay, you know, some headline or snippet up their chain of command as well as needed. And so uh, you know, some broad communication is important, but you don't want too broad, right? I mean, it's you know, it's it's a balance. Uh, you can't keep people uninformed just because you're working, uh, but uh you don't want to give them too much uh 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?

Reformulation And Production Workarounds

SPEAKER_01 18:09

No, it's not. And this is uh this is where uh all the learnings came from. And that's why I think this is just such a great example. You know, again, of course, you 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, you know, at that time? And then you're left with a gap, right? How much do you need? And you know, we were significantly uh gapped. Okay. I mean, we needed the we need to find material and solutions fast, right? So uh one of the other suppliers, and again, this is an easy thing to do, uh, that we talked to, uh, said, Yeah, you know what, we'll give you material. Not that we're charging us for it, right? We're gonna pay a lot more for it, but so what? Right? I mean, you're gonna you're you you gotta get it in. And uh, you know, they said uh uh somewhere in that conversation, so you know, I assume you're gonna uh you know take use our rail cars, not yours, and blah, blah, blah. And you know, we said, well, wait a minute, we we need trucks, right? We we can't take rail. There's no uh offloading uh spur close enough to these tanks for me to do it. And you know, we don't have blowers installed, even if we did, right? And they said, Well, that's a problem because uh mostly delivered by rail, right? And uh so we said, Listen, uh, 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 if we can find the trucks, so uh we went hunting for trucks, and uh, you know, we we we used a uh rider, a 4PL uh that did a lot of our freight. We called them, uh, 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 haul this type of clay. And that trucking company serviced all three of the suppliers, and that trucking company had absolutely no surplus, none. Everyone's going through driver shortages, that's very common, right? There was no way we even thought about getting our own truck, but there's there was just no availability, right? So where one supplier dropped off, other suppliers picked up, the trucking company uh had no surplus to get us what we needed. So even if we could uh get the product and we did have an opportunity to uh get at least some material to make up the gap, uh we we couldn't get the trucks to do it. And uh, you know, that was that was uh kind of like the big uh learning that we carried forward much later, right? And that was you really got to look at your service suppliers and you know the actual physical supply chain of supply, not just the inventories and you know, uh how often can your customers bring it to you and all that. There's there's there's you know multiple levels of depth that you need to handle. Okay, so now we know that's not a solution, right? And uh that's smarts. Okay. So now what do you do? Uh we looked at a lot of things, uh, but uh I I think the most uh creative thing that came out of it was, and it's one of the reasons we we include our uh product technology people and our process technology people uh in these meetings, is uh we we determined that we could actually use less of this particular material in a lot of the products and still be well within spec. And so literally, even with what supply and inventories that we were gonna have, we were able to generate about half. So we were we were gonna be short about 20%. We were able to generate about 10% of that 20%, uh, just through a little bit of. Reformulation.

Tom Mueller 22:01

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

SPEAKER_01 22:11

Yep, absolutely. And 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. Having the procurement folks on there uh was absolutely critical, also. Procurement rep ended up negotiating uh supply with one of the other two suppliers for more material uh that we were able to get delivered uh from their existing logistics system to help you know close that gap as well, which was great. We actually included uh also a representative of uh from the manufacturing plant in Europe as well, uh, so that we could figure out what materials that we could potentially make there. And you know, while again, there's gonna be expense uh, you know, with uh moving this material around and things like that, right? You're gonna disrupt your storage and things like that. But nonetheless, you're gonna be able to make it. And, you know, as long as we could do a substitution, the approvals were were already there, you know, we were able to do that as well. And you know, here's a here's a good leadership element to this. You know, good leaders listen and and and they act based on that information, right? I mean, as long as you staff your team with people that you know are competent, right, and and are going to do what they need to do, then you got to pay attention to them. This was uh such a great learning. And and I will tell you, I've asked that question since then every time we've had a supply problem, right? Honestly, it's it's it's one of the first things I started asking. And you know, more times than not, the answer is no. Uh, but I'll I'll 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 from?

SPEAKER_01 24:01

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

Tom Mueller 24:18

Well, Jeff, this is a 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 transom at you 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?

SPEAKER_01 24:42

So ultimately, uh, as I said, we did uh some temporary uh reformulation, which helped a lot uh with some of the materials. Uh, we did end up uh eventually getting some additional supply. Uh, and that was measured in, I think, a couple of months, right? And it wasn't, you know, a ton of material, but it was something. Uh, and uh, we had uh the plant in Europe pick up you know some of the slack that that we couldn't need. We also had a lot of active conversation through our commercial group uh with our customers a lot. And so uh where we might be delivering you know high levels of inventory to certain customers, you know, we just went to them and said, look, this is our problem. Uh, can we, you know, kind of feed you a little more, you know, as you need it uh versus not so that we can, you know, distribute the wealth a little bit, right? We had to change our production plans pretty significantly, you know. So, like uh uh the supply chain planning group uh was uh part of the group that worked for me. Uh and we had them look at all the different inventories of all the different materials we had, and we said, okay, 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. Uh 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. 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 you know, what do we have that get out to where it needs to be right away versus waiting for it to be made? Uh it was quite a balance. It was uh uh again, for me, uh, I love that, right? I I I mean it was stressful, but it was a lot of fun to work too. I mean, you really learn a lot about your system, uh, where it's robust and and where it's not. Uh, you learn a ton about the people you work with, a ton, right? Uh, you know, who's freaking out and who's, you know, frankly, who's 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.

SPEAKER_01 26:55

Yep. You also sound like um you're a good incident, Commander. Well, thank you. Yeah, no, I absolutely love it. I appreciate you saying that. I uh I enjoyed it. I I think uh based on the feedback I used to get, uh, the vast majority of people that I worked with uh really enjoyed having me as uh either their leader or their partner or whatever. And 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 and you're sort of stepping back and observing people and how are they doing? So, do you can you cite an example for us of uh somebody in a situation like this who you know who didn't quite meet expectations or perform as well as you'd liked? And what can we sort of take away from from that example?

SPEAKER_01 27:43

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

Tom Mueller 28:30

So uh and and it it it happened, and I'm sure it followed that because do you think that was just the the pressure of this situation or the person just didn't quite have the temperament to work in a high stress situation?

SPEAKER_01 28:44

Oh no, no, it was the human. I'm I'm positive of it, yeah. Um, yeah, I mean, some people are just better at 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, uh, I don't really I 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 in in the big petrochemical companies, is as crazy as it seems, and it always seemed crazy to me. There were lots of people that just never wanted to make a decision. Uh, and you could have a long career without having to say yes, making your boss say yes, right. Uh, 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?

SPEAKER_01 29:52

Number one, assess the problem as accurately as you can, as quickly as you can, with as much depth and breadth as as you're able to, and make the decision about what you need to solve, you know, whatever those first few elements are to get you, you know, push in the right direction. And don't don't delay on that. Another key takeaway is having diversity of uh function and knowledge on uh on these teams is absolutely critical. It solves problems. And there's there's there's no question about it, right? Uh, even if those people are just sounding boards for other people's ideas, right? Um, it's really important to have you know a good diverse team uh uh working. Uh and the members of that team, and this is you know the big piece too, it are 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 but the piece that uh I I never uh ever want people to forget about is that you know, the vigilance of of doing your assessment, just constantly being vigilant about looking at everything across your supply chain very regular basis to see what could disrupt it is really important, right? You you're uh I 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? So yeah, those would be my takeaways.

Tom Mueller 31:25

All 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 gonna wrap up this portion of our conversation with Jeff Zudok 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.