The Route to Success: Understanding Transportation Dynamics in Supply Chain Management

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets Podcast, where you'll hear from experts of all facets of supply chain in the auto industry to help you prepare for the future. I'm Jan Griffiths, your co-host and producer.

[00:00:17] Terry Onica: I'm Terry Onica, your podcast co-host. Let's dive in.

[00:00:23] Jan Griffiths: Hello, and welcome to another episode of the Auto Supply Chain Prophets Podcast. Let's check in with my co-host, Terry Onica. Terry, what have you been up to?

[00:00:32] Terry Onica: I had lunch today with my Wayne State mentee from a couple of years ago. She's working at American Axle, and Olivia is loving her job. She was just beaming. Right now, she's doing analytics for their supply chain department and really loves it.

[00:00:45] Jan Griffiths: Terry, you and I are both very active with the Wayne State Supply Chain Advisory Board, and I absolutely love that. The fact that we can help shape the future of the talent pipeline in the automotive supply chain, and we can help these people. It just gives us a lot of joy, doesn't it?

[00:01:05] Terry Onica: It's absolutely rewarding. Nothing better.

[00:01:08] Jan Griffiths: And another member on that Wayne State Supply Chain Advisory Board is somebody who has had a stellar career in automotive. He also believes in giving back and is selfless with his time when it comes to Wayne State's supply chain. He is a Wayne State grad and has over 40 years in the auto industry; he actually started with his OEM experience as a production supervisor in the Warren Truck Assembly Plant. Can you imagine what that was like back in the day, back in the eighties? That must have been a really tough environment. But then he worked his way up through Chrysler, whatever word we want to use to describe Stellantis, but he worked his way up through a major OEM, and he retired recently in the position of Vice President of Transportation. So, it gives us great pleasure today to welcome to the show Christopher Mattingly.

[00:02:10] Christopher Mattingly: Hey, thank you very much, Jan, Terry. It's great to be here, and it's great to have that Wayne State background; I love it.

[00:02:17] Jan Griffiths: Yeah, that's how we met. I love the collaboration that we all have. It's bonded us together, hasn't it?

[00:02:24] Terry Onica: Absolutely

[00:02:25] Christopher Mattingly: Yep, absolutely. There's nothing better than being able to give back, whether it's mentoring or showing somebody what a crosstalk really looks like or how a plant really operates. Some of the plant visits we did were really eye-opening experiences for the students. It was great.

[00:02:40] Terry Onica: And there's so many bright students coming up right now. It's really good. And I love the fact that they're learning about data and analytics and AI and all of that stuff because it's going to be so much needed in the future. And what a great generation to start doing that for the supply chain.

[00:02:55] Christopher Mattingly: One of the new things that they're doing, I shouldn't say new, but probably for the last four or five years, are the case study competitions. I know Wayne State does its own with General Motors, one of the big sponsors for that. But they travel the country, different schools, and they do the case studies, and they've won multiple times or top two or three multiple times. But those case studies are real life. It's the kind of work they're going to be doing when they get into one of the OEMs or one of the tier-one suppliers. So, it's very realistic.

[00:03:25] Jan Griffiths: As the students enter the workplace, I'm often thinking about the role models that they have, but I have to ask you, Christopher, when you were at Warren Assembly as a production supervisor, did you ever think that you'd be the Vice President of Transportation someday?

[00:03:46] Christopher Mattingly: No, I could probably say I didn't even know what transportation was when I was working in the plant. I can tell you though, that it's funny we talked about American Axle at the very beginning here, and Dick Dauch, who started American Axle, was our executive vice president for manufacturing at that time. And for us kids, students who just came out of the university and are working in the plant, he was God. We thought he was just such a great leader. We enjoyed working for him. And I heard a story once that when he worked at GM, he became plant manager when he was 30 years old in the Axle plant. So, my goal as a 22-year-old kid coming out of school was to be that plant manager at Warren Truck when I was 30; that's where your vision was at that time. So, vice presidents didn't exist, but plant managers did, so I thought that would be my next step.

[00:04:40] Jan Griffiths: See, that's why it's so important that we share our stories about our careers, about the work that we do. And, of course, I love the podcasting medium to do that, but this storytelling to give people this idea that, yeah, you're going to start off maybe as an analyst or a low-level job, but look what you can be. If you just put in the time, focus, and pay attention, look what can happen. And here you are, you've worked your way up through Stellantis, and now you've got all kinds of lessons to share with us on the podcast today.

[00:05:16] Christopher Mattingly: Yes, looking forward to it.

[00:05:18] Terry Onica: So, Christopher, looking at your background, and you've worked about just in every area you can think of in supply chain, what should OEMs and tier ones be working on? What do you think is the most critical in supply chain today?

[00:05:31] Christopher Mattingly: The things that I thought were the most important, they're also very difficult and haven't yet been achieved to the level that they need to be achieved, but the first one is end-to-end visibility, and that's true for parts as well as vehicles because in transportation, I have to do both and it's really global. When you think about how parts move today, I'll give you a quick example: We had parts that were in milk runs in Europe. Were picked up and would go to our export facility in Europe, got on an intermodal container, got shipped to the port, got to the port, got on a boat, went from the boat to the US or Canada or Mexico, got to the port there, got unloaded, that intermodal container eventually got on a chassis, got driven to the rail yard, went from the rail yard up to where our plant was, got unloaded at a rail yard there, and loaded on another chassis and it delivered to our plants. My vision has always been to have that end-to-end visibility of those parts, and it's not an easy thing to do. When you think about it, in today's world, we measure it and monitor it with websites with EDI, but it's all individual transactions from the different providers that you have. In the world that I see someday in the future, we're going to be able to grab that digital data from every one of these systems, standardize that data, and then compare and forecast when those arrivals are going to be and compare that to what the build plan is at our OEM plants. And then, we'll know what's in trouble. We have thousands, 5,000 parts coming to every assembly plant every day. If there's a way we can narrow that down to 10 to 20 parts that we need to watch and monitor that are gonna be tight to be able to get to the plant, that would be the perfect world. Today, we do it, we manage through it, but I know there's a better way, and someday somebody's gonna invent that tool, that digital data sharing that's gonna be able to make that happen. The second area that I think is important is schedule stability. I know tier-one suppliers would agree with that. But Christopher's definition of schedule stability in a perfect world would be a two-week frozen rope where you maintain the sequence in that assembly plant for that two-week period, and it can be done. I've been to South Carolina, where there's an OEM there that does it. They, in fact, have expanded it so that they're actually building wear harnesses in sequence in Mexico, shipping them to South Carolina in time for the vehicle to show up in the trim line where those wear harnesses are installed. For a supply chain guy, it's something you enjoy watching, but I've even seen plants in Europe do the same thing. It's not easy, right? You need to design those assembly plants at the very beginning to be able to maintain that sequence or to have the ability to recover sequence when things happen in the plant. But the benefits for the supply chain, transportation, and tier one suppliers for being able to cascade that down to tier two and tier three suppliers are incredible. Just think about the efficiencies when you can predict exactly what's going to happen two weeks from now, really does make a supply chain world a lot easier to deal with.

[00:08:49] Terry Onica: Schedule stability is the number one complaint I hear about from tier ones, and below is the lack of visibility into that. And I wish there's some way, and I know one day there's gonna be a way, that we can figure out a pipeline to communicate down the supply chain faster than what we do today because it takes so long. Someone to be able to crack that nut and how we can feed that supply chain faster on any kind of critical communication that we need to have. That's going to be huge. And I'm hoping technology will be able to do that soon.

[00:09:24] Christopher Mattingly: Yeah, I agree. That digital data being able to extract all that information from all those different systems and be able to share that with the entire supply chain, I think it's important to be able to enable that to happen.

[00:09:36] Terry Onica: Absolutely. Christopher, you've worked in a lot of different departments in your career, and you've worked with suppliers. So, how do you think we can better collaborate, not only internally within departments, but with suppliers? Do you have any thoughts on how we can improve that?

[00:09:54] Christopher Mattingly: The key for any kind of barrier-busting is getting aligned on what each individual goal are in the different departments and looking for those areas where you can collaborate. Where you can work with each other for both of you to be able to meet your particular objectives; when we have a particular issue in, let's say, a manufacturing plant and just the day-to-day operations of the plant, it was very helpful for us to have a daily meeting with engineering, supplier quality, purchasing, supply chain, and we would all meet and have an agenda on the five topics that we needed to align and be able to solve together as a company versus as a department. Just because it's a supplier quality issue, does it mean it's just supplier quality's responsibility to help resolve that? Engineering needs to have their input in terms of what they need to do. The supply chain needs to be considered because we may have to change schedules in order to make that happen. So, how do you support making that happen? Manufacturing will have to implement or execute those things in the specific shop floor environments. So, getting aligned on what the particular objective is and figuring out how we can all collaborate to make that happen, I think, is important. There's no better way than communication, but first of all, understanding the specific requirements in each one of the departments so that we can make the better or best decision for the company moving forward.

[00:11:27] Terry Onica: And I think that's really key. I know that even in my career, you look at departments sometimes, and they have different KPIs. Sometimes, departments can be stubborn and say, 'Oh, that's not my job, right?' And I love it when I'm in a culture of you just do the right things You may have a KPI, and it may be conflicting, but we altogether just do the right thing for the company and for our suppliers, and I think that's so critical to have that thinking all the time as well. But I really agree with you.

[00:11:53] Jan Griffiths: It is. But I wonder, as companies scale, and they get bigger, and they get larger, and you're talking about a major OEM, you have to have some type of organization and structure. So, yeah, I hate to say it, but there has to be some type of silo. But there's got to be structure when you've got an organization that size, and people have to have responsibilities; they just do. But it's the mindset and the leadership and the culture behind it that has to change. When the culture is: Listen, we're all in. We're all in to fix this problem and help this supplier and get this part moving. We're all in, no matter what, whether it's engineering, supply quality, like you say, purchasing, transportation, whatever. We're all in. It's when people retreat back into those silos and protect their turf. That's when the problem starts. When you have leaders at the top who start to behave that way, often they don't realize that that is emulated all the way and disseminated all the way through the organization. And then, people start behaving that way. So, it starts right at the top. When leaders at the top can say, 'Yes, it doesn't matter whose issue it is, we're all in to solve this together as a team, as a business.' That's when we can really move a culture forward.

[00:13:16] Christopher Mattingly: Yep, I agree 100%. And those daily meetings that I talked about in my example, those meetings need to be run by the heads of these departments, right? It needs to be the Executive Vice President of Engineering, Manufacturing, and Supply Chain, as well as the workers, like myself, underneath to try and make sure it happens. But you need to lead from the top for sure, and if they're involved and participate in those meetings, everybody feels like it's our decision versus manufacturing's decision or engineering's decision, and you're going to get more cooperation and collaboration at that point.

[00:13:53] Terry Onica: Absolutely. Going into your transportation role, what are the greatest challenges today, and what are some of the disruptions?

[00:14:02] Christopher Mattingly: I think most people that work in the transportation world today would say that our number one issue is: I'll just blanket call it capacity, port capacity, ocean vessel capacity, and that's either for parts or for vehicles, truck capacity, truckers driving vehicles for either parts or for vehicles, shipping. Capacity is the issue. And then, you want to balance that with I need cost-effective solutions. Ideally, if I had an infinite amount of capacity, I could design the perfect route, whether it's coming from Europe to North America or if it's just moving from Ward, Michigan to Detroit, Michigan; I would have the most effective route possible, and it'd be the cheapest, most efficient, robust process in place. But that's not the world we live in now. That capacity isn't always there. So, you need alternative routings to be able to address that shortfall in capacity. Well, those alternative routings are going to cost more money. That's just the way it is. If that alternative one was a cheap way to do it, then you would have done that first, or you wouldn't have had to come up with the alternative routing, right? So, the balancing of how do I get more capacity and how do I manage the capacity shortfall with the least amount of cost is the way to go. Managing capacity is a difficult thing when you compare it to the cost because it's not for free. It's going to be more expensive, but you can't run your company out of money, right? You've got to find a cost-effective solution for that. Just a couple of examples: we had some issues where we didn't have enough rail capacity in the Toledo area. Normally, we would just load them on rail coming out of that facility, and then they would go to all kinds of states in the West. We didn't have enough capacity to be able to make it, so the shortfall was made up by trucking vehicles from Toledo to Chicago, where we were able to find another rail ramp to load those vehicles onto the rail and then ship them to the western part of the United States. It cost a little bit more money, but we had a cure that could make that happen in a cost-effective manner, and, of course, all the sales organizations and dealers are very happy that their vehicles are flowing. So, we work with purchasing in order to make those kinds of things happen. Another example is trying to come up with an alternative way and a more cost-effective way. If you remember, we had Port of Montreal went on strike a year or two ago. One of the solutions that we came up with after that particular strike was: Is there a way we could quote some material that's coming across from Europe to go to the Port of Halifax? Make that a good alternative, but still maintain your port in Montreal. So, when events like the port strike happen in the future, now it's just a matter of shifting volume from Montreal to Halifax versus trying to find a whole new port rider, find a whole new trucking company, find a whole new intermodal guy from the Halifax area. I've already got an infrastructure set up; it's just a matter now of managing the additional capacity to be able to make that happen. So, you're going to think longer term, structural things that are in place to be able to give you the flexibility you need. You can tear those down if you ever get rail car capacity back, but while you still have that shortage of rail cars, these two alternatives will be good, viable options for the company.

[00:17:33] Jan Griffiths: Seems like you've always got to stay ahead of the game, right? Because you never know what's happening. You're never going to know where the next strike is or where the next port problem is. Something is going to clog up the entire system, and somehow, you have to be ready for that, even though you don't have a crystal ball and you don't know what's coming at you.

[00:17:49] Christopher Mattingly: Yep, exactly. Another example is the US-Mexico border. We've had situations where we had a demonstration in Texas, Laredo, right where the World Trade Bridge is at. That was making it difficult for shipments to get in and out of that particular bridge. So, the result of that challenging moment was to look at all the bridges that we have that get us into the US and Mexico and figure out what our contingency plan is. What would it take to move certain routes to these different bridges? And we found out all kinds of things. For instance, one of the bridges, you can't have airbags. Any kind of flammable type products will cross. So, well, that bridge is out. We're going to have to find another bridge for those commodities. They all have different operating hours. They all have different days of the week that they're going to operate. So, you've got to be flexible enough to find the right carriers, the right bridges that you want to work for, but you know what all your routes are going northbound and southbound, so it just takes time to be able to map out. Here are my contingency plans for these routes. Here are the carriers that are going to do it. They know they have the capacity to make it happen. Make sure your customs paperwork is accurate because those are all different when it goes from bridge to bridge, so you want to make sure that's all covered. A lot goes into contingency planning, but it can be done. Just in case there's another strike somewhere along the way or a protest along the way that you want to be able to manage because, at the end of the day, our leadership is expecting us to still get the part there, make it there on time, and keep the product flowing to all of our customers that are waiting to buy our new vehicles, right? So, you got to find a way.

[00:19:34] Jan Griffiths: When you're in the role, you're Vice President of Transportation, you need to work on contingency plans. I got to believe that's one of those things you're like, oh, I don't really want to work on it because there's no immediate feedback or payback to that, but there is when there's a problem, but having to devote time, energy, and resources to contingency planning, what goes through your head from a leadership perspective when you do that?

[00:20:04] Christopher Mattingly: Boy, you are absolutely right. Not only is it tedious, and it's not the sexy thing that you want to work on, and it requires other departments; you need purchasing perhaps to help you out, other 3PLs to help you out, and other carriers. They're busy working on their day-to-day, and now you've got to carve out time for them to work on the contingency planning. The key for me has always been to start at the top, right? You've got to work with the Head of Purchasing. You've got to work with the leadership and other organizations to dedicate that time. The good thing is it doesn't need to be done right now if you're doing contingency planning. So you can take three weeks or a month to be able to develop this plan. It doesn't have to get done right away, so you do have some flexibility from that standpoint, but you need to stay disciplined because you're going to get sucked into the day-to-day. So, you got to make sure you carve out that time and make that planning happen, but you're right; that's why it doesn't get done.

[00:20:59] Jan Griffiths: Yeah, I guess once you've been through a couple of emergency situations when you have to develop a contingency plan on the spot, you don't have one, you go through that a few times, and you don't want to feel that pain again. So, that's probably enough to fuel you to want to devote time and energy to contingency planning.

[00:21:18] Christopher Mattingly: That's a good point. Because of my 40 years of experience, I've been working in various different organizations, and I have all of those different perspectives of all those different events that have happened over time. If you've never had to live it and survive it, you're probably not as motivated as someone like myself who's lived it and had to survive through it to be able to come up with those contingency plans.

[00:21:43] Terry Onica: Another thing we talk about here, often, is about getting rid of that firefighter mentality. I know when I used to work at Johnson Controls when we were potentially going to short ship Chrysler, all the bells and whistles, and everybody, you know, got it done, and everybody was so happy that we got it done. But then, did they go back oftentimes and make sure they put things in place to make sure it doesn't happen again? We see that a lot in the industry when we go through an event. Did we learn from it? And if we did learn from it, are we going back and making sure it doesn't happen again? And getting out of this firefighting mode. Because I see it a lot, I was just in a conversation the other day, and I'm like, 'Your organization needs to get out of firefighting mode and get into this proactive mindset that we're not going to firefight anymore. We're gonna do the right things and use the right technologies to prevent these firefighting activities that we do quite a bit. Do you agree? Have you seen that too in your career?

[00:22:41] Christopher Mattingly: Yeah, absolutely. You know, I've got Thousands of examples of that. I guess the first thing that I would say is: We're never going to stop firefighting. There's always going to be something we didn't think of that's going to happen to us that we're going to have to work our way out of it. And there are things that we know of, like a supplier location has a fire, and they're out of commission for weeks, and they need to move tooling from that facility to another facility. There's no way you could predict when and where, and how that's going to happen. However, you can put the criteria together on when it happens anywhere in the world. You got to do this, you got to do that. You have to have those plans in place about whose responsibility it is to find the carrier to move the tools. Whose responsibility is it to validate that the tools are up and running in the new location that they're in? Whose responsibilities is it to blah, blah, blah? You get the gist of it. You can have a generic contingency plan for those kinds of events that aren't necessarily specific to the bridges going across the US and Mexico. Those are known monuments that you can plan around.

[00:23:55] Terry Onica: And where I see a lot in my job is with suppliers fighting using technology, you know, to plan and schedule and communicate with suppliers. Well, I can do that in the spreadsheet. Yeah, you can, but it's not the most effective way to do something, and you're getting behind, and you probably have too much inventory or maybe too little inventory. So, I see that a lot in that area with mentality with technology. Oh, we can just keep doing this because if something happens, we never short-chip the customer because we just break into this firefighting mode. And it's like, you could be getting rid of some of these problems and get out of that kind of mentality. So, I see that a lot, and it just frustrates me so much.

[00:24:37] Christopher Mattingly: Yeah, and some of those, especially, when you get it out of tier two, tier three, tier four, maybe some of those smaller companies that are at that level, it just doesn't make sense from an investment perspective to be able to put the right tools in place to automate as much as possible. They just can't afford it. You can't put a good business case together for that. So, I do understand that. There may be a need someday where OEMs and tier ones need to help provide those global shields and those systems to be able to help those lower-tiered suppliers be able to survive and provide the technology they need that we all enjoy at the levels that we're at.

[00:25:16] Terry Onica: I agree. Some kind of collaboration. Absolutely.

[00:25:19] Jan Griffiths: Christopher, in light of the massive transformation that we're going through in the automotive industry today, looking through the lens of transportation in the auto industry, what is one thing, one action leaders could take, whether it's OEMs or in the tier, one thing that they could do to help them be in a better position or prepare for the future for transportation as this industry transforms?

[00:25:46] Christopher Mattingly: When I thought about answering that question, I thought about one of the great leaders we had in my supply chain world. He had an expression that I thought really hit the nail on the head: Only the paranoid survives. And it gets to that contingency planning type attitude when it comes to the supply chain. There are going to be problems. Things are going to go wrong. There are going to be failure modes. So what? We get paid to figure out how are we going to mitigate and minimize the impact of that particular issue. That's our responsibility as leaders is to be able to do that contingency planning to make it happen. It's almost like you want to look at your supply chain as it's mapped out, and you would say to yourself, 'What happens if I fail here? What's gonna happen?' It's almost like you want a warning system that says, 'Oh, step two didn't happen!' And there's an alarm that goes off, and somebody has to go do something with that alarm. And if you can't create an alarm or a warning system when some of those steps don't happen, then you're going to think about what are those mitigation plans, and we've talked about amending those things already in the podcast here today. You do have to put in the time. It's not easy. It's not fun. As I said before, it's not sexy; it's hard work, and it requires a lot of discipline and it requires a lot of collaboration from a lot of different organizations to make a robust plan to be able to survive. But if you put the time in, you're gonna be happy you did when those bad things do happen, and they will happen. It's coming. One of the things that we set up in 1999-2000 we tied our transportation system to our production systems in the assembly plant world. We call it the PC portal. And that gave us the ability to, using EDI, understand when the material was picked up, when it was in transit, when it arrived in the plants, and compare that to the build schedules in the plants. And there's an alarm that will go off if that shipment leaves too late and it's not going to be able to make it to the plant before we run out of parts. Those are the kinds of alarm systems you need because you can't look at all 5,000 parts every day. You really need to get narrowed down to those 10 or 20 parts that you need that could impact your production for the day. Being able to have that technology to compare what's in transit to what's being built every day, every hour, is an example of an alarm system that helps shield our assembly plants from bad things from happening.

[00:28:20] Jan Griffiths: Great example. Well, Christopher, it's been an absolute pleasure having you on the show. Thank you for joining us today.

[00:28:27] Christopher Mattingly: Thank you. I appreciate it. I had fun. You know I'm very passionate about supply chain. It was fun to talk about it. Yeah, even though I'm retired, I still think about it every now and then. What's going on, and what can I do differently?

[00:28:38] Jan Griffiths: I'm sure you do.

[00:28:40] Christopher Mattingly: So, this kind of gives me a little boost of energy. So, thank you for having me today.

[00:28:45] Terry Onica: Thank you for being with us.

[00:29:00] Jan Griffiths: Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how or click the link in the show notes below.