Transforming Supply Chains: Aludyne’s People-First, Tech-Driven Approach

[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, how are you?

[00:00:32] Terry Onica: I'm doing okay, Jan. As you know, recently, my beautiful, sweet mom passed away and I am just amazed, I'm the executor of my parents will, my dad passed away five years ago, and I just can't believe the amount of manual work that still happens. There's been no improvement since my father passed. I had to go to the social security office locally and have them fax in my paperwork to, I don't know, corporate social security. It's just unbelievable. And just even these other big insurance companies, like, can you fax it? Faxing? Who faxes? You know. It's just amazing.

[00:01:16] Jan Griffiths: If you think that's bad. Let me tell you when my mother passed away in Wales, a long time ago, 2005. But, still, not that long ago. I had to actually sit in the local council office and watch them handwrite out and sign 10 death certificates by hand. They wouldn't even copy them and it had to be done by hand. I couldn't believe it, and this was 2005!

[00:01:46] Terry Onica: I know. And where is all this digitization that we hear about? We can't even get data into a place where we could digitize it yet, you know, and do things like AI. I'm just astounded. I saw no improvement in five years. I thought for sure this time it was going to be easier.

[00:02:04] Jan Griffiths: Yeah.

[00:02:04] Terry Onica: And it's just as bad.

[00:02:06] Jan Griffiths: It's just not. I feel sometimes the word digitization, you know, we toss it around and everybody goes, 'Oh yeah, we got a digitization initiative.' Uh-huh. Yeah. Really? What exactly is it? What are you doing? And that's why, Terry, I am thrilled that our guest today works for a company in a product space in the auto supply chain that's not typically known for being innovative and at the top of their game for digitization. Imagine a casting company, an aluminum casting company. What are they doing for digitization? And I am thrilled, Terry, to welcome to the show today, Alan Shevela from Aludyne. Alan, welcome to the show.

[00:02:58] Alan Shevela: Jan, Terry, thank you both very much for having me today. I'm thrilled to be here and love to share more about Aludyne. As you mentioned, Jan, we are an aluminum and magnesium die cast company. We operate globally throughout the US, North America, Europe, China, making a lot of different products that we sell into, if not all, most of the OEMs, General Motors, Ford, Stellantis, globally.

[00:03:24] Jan Griffiths: Alan, you are no stranger to this industry. You started your career way back in the day in General Motors. You've worked for Honeywell. You were vice president of purchasing for Hella. You've worked for TI Automotive. You've worked for Kasai and now at Aludyne, and you have responsibility for global purchasing and supply chain. Now, I know you as somebody who likes to stay ahead of the game. You're focused on innovation. You're focused on digitization initiatives. I know you as somebody who likes to stay at the forefront of all the initiatives that are happening during this massive transformation that we're going through in the automotive industry. So, Alan, here's a question for you. What are the three top challenges that you're faced with right now?

[00:04:19] Alan Shevela: It's a good question. There's more than three, but if I had to focus on three, I always start with people, the development of people. We talked a little bit earlier about digitization and AI for us trying to accept that transformation and to help us become more efficient, we have to also look into where we can digitize and where we can automate more things. And then, the third, and I would say equally important, is partnerships, and whether that's from my perspective with supplier partnerships or partnerships with cross-functional teams. Those would be on my top three priorities.

[00:04:52] Jan Griffiths: Oh, here we go. Partnerships. You know, we're going to have a great discussion about that, but let's start right at the beginning. Let's talk about developing people. What's going on there, Alan? What are you doing and why?

[00:05:07] Alan Shevela: My core focus is always on people. We can have all great tools, great systems, great everything, but if we don't have great people, we're not going to be successful. So, at my core, one of my priorities is always developing people. I read a quote a while back about you're not truly a leader unless you've developed another leader who's developed another leader. And what that means is you can't stop just at one level below you because as we all have a lot of layers in all of our large global organizations, I personally make a point to touch every layer within the organization, within every function of the organization, making sure that everybody is very clear on our goals, our key performance indicators, and what it's going to take for us to be successful.

[00:05:51] Terry Onica: How'd you do that?

[00:05:53] Alan Shevela: I will openly admit it is not easy. It is very time-consuming, but it is the most valuable thing that we can do as leaders is really focus on the people, and whether that's scheduled one-on-one time or impromptu one-on-one times, walking through the halls of our Aludyne offices here in Southfield, stopping down to finance, making sure that all of our procurement strategies and supply chain strategies are aligned with the finance strategies, the manufacturing strategies. All of the strategies have to be aligned, going toward the same end goal.

[00:06:24] Terry Onica: That's incredible, and I'd love to hear that somebody at your level is really focusing on the people throughout the organization because it's not something that you see very often, and I know how meaningful it can be. Years ago, I worked at Johnson Controls, and Chip McClure was our president of North America. I had the opportunity to work with him and just how much people really appreciate that at a senior level when Executives really care about you, and that really helps people to stay within an organization. So, my hats off to you for spending that time that we really need in today's environment.

[00:06:58] Alan Shevela: Thank you, Terry. To me, like I said, it's the most important thing that leaders can do. People, really talented, high performing, high contribution people have choices where they want to work. I feel it's my responsibility as one of the top leaders here at Aludyne to make sure that people choose to work here at Aludyne because people do have choices and a very competitive marketplace and a marketplace that doesn't always have the right level of talent that we need, it is so vitally important to not only retain your current talent but always be attracting new talent to the company.

[00:07:29] Jan Griffiths: Well, come on, Alan. That's hard when you're being pulled into fires every single day, because that's the nature of the automotive supply chain. How on earth do you make sure that that stays on the top of your priority list?

[00:07:47] Alan Shevela: I live by many; if you want to call them philosophies, mantras, one of them is to make the most of every moment. What I mean by that if I'm in back to back to back to back meetings all day long, if one of them gets out a bit earlier, if I can end one a bit early, I'll take that five or ten minutes, walk out of my office, and just do an impromptu check in with whether somebody on my team, somebody on another cross-functional team. It's really important for all employees to feel a part of something bigger than themselves, to feel a part of a team that, yes, we have a lot of challenges there's no sugarcoating that, especially at the Tier One level. But, again, the most important element of any successful organization are the people running that organization and every single team member. So, it is a very difficult balancing act, but it's one that is very important to me personally and one that I live by to check in with every team member as frequently as I can.

[00:08:38] Terry Onica: So, speaking of the people and looking at trying to digitize your organization, you recently rolled out a project successfully, and I'm sure that has a lot to do with really having the team rally around you. Can you tell us a little bit about that project?

[00:08:56] Alan Shevela: Absolutely. So, when I arrived at Aludyne in 2020, we weren't managing our indirect spend very effectively from a corporate perspective, the spend was managed at a site level, and our sites were doing a good job of it, but not necessarily driving a lot of synergies from one site to the next, and we have a lot of sites. So, very recently, we agreed that we were going to try to build up a corporate indirect procurement team. I've been very well supported from our CEO or CFO, all of the executive leadership team, to roll out a project where we are managing the indirect spend at a much better level from a corporate perspective, meaning that we're driving synergies across all of the plants. So, the project just launched earlier this month; so far, it has been successful, and. I have every bit of confidence that we'll continue to drive continued success, managing the spending more effectively and better. And at the end of the day, really improving the overall management of the spend and improving the success of Aludyne.

[00:09:57] Terry Onica: You know, one of the things that I hear a lot that executives struggle with, like yourself, when you really need to sell it to the C-level, how did you do that with this project?

[00:10:07] Alan Shevela: Speak with data. Here's how much we spend in this area. Here's how much we can save if we drive synergies, commonize suppliers. We have 16 North American sites, and prior to 2020, the sites were managing the spend at a site level. Now that we're managing it across the region, the savings is significant, and we're really excited about where we're going with this project and the successes we're going to see moving forward with this project.

[00:10:35] Terry Onica: You know, one of the things I talk about a lot in this show is I hate spreadsheets. I hate manual data, just like I talked about in my introduction. How do you get people to stop those old practices and really embrace automation? Was there anything that you could share with us on that?

[00:10:51] Alan Shevela: Terry, that's a great question. And I think all three of us, and probably all of the viewers will agree that we run too many large global companies on spreadsheets. There's a time and a place for spreadsheets. So, I don't think spreadsheets ever completely go away. But with the tools available to us now, there's a time and a place to gravitate away from spreadsheets. So, to answer your question, to really get the C-suite's attention on that, it comes down to how do we drive more efficiencies? In large global organizations, we're never going to have the number of people we think we need, but a lot of times that mindset is because of all of the manual work that we're doing on spreadsheets. When I can show a return on investment of, yes, this tool is going to cost X amount of dollars. However, it's going to drive this amount of efficiencies in this timeframe. That's what people really can get a lot of energy behind to agree. Yes, we'll spend this money on the front end to drive these efficiencies because the efficiencies aren't a one-time efficiency. It's efficiency from this point moving forward. So, really demonstrating that return on investment.

[00:11:51] Terry Onica: And I look at to so many organizations, everybody wants to get to AI. But one of the things I always look at is you can't get to AI on spreadsheets. So, you need to understand the most important data that you have and make sure you get that into one place or places where you can actually gather all that data and mine it for good nuggets and to be more predictive in nature. But I just don't think sometimes executives understand that we really have to be passionate about getting rid of spreadsheets, to your point, where it's possible, so we really have access to data where we can really start to do some amazing things within the organization.

[00:12:30] Alan Shevela: I agree with you. And that's where, I mentioned earlier, working cross-functionally with all teams. I work very closely here at Aludyne with our head of IT because sometimes from a procurement or supply chain perspective, we can be very creative and think, hey, I really need this tool and that tool. And it's not always conducive to what we currently have. So, working closely to really figure out on the front and what can we do and what's going to be really, really hard to implement and trying to get some of those quick, easy wins, really that snowball effect to help us continue to move forward toward gravitating away from spreadsheets and to more digitization.

[00:13:06] Terry Onica: I love that quick, easy wins. You know, you just got to start someplace, right? It's going to be some work, but I love that you're just saying, let's look for the quick, easy wins and just keep building upon that, and sooner or later, you're going to be there with that kind of approach. I think that's a great approach.

[00:13:23] Jan Griffiths: I'm interested. In knowing why indirect, and let me explain why I'm asking that question, of all my years in purchasing and supply chain, most of the roles I've had, I've had responsibility for indirect spend, but if I am brutally honest, I will tell you that my focus was on direct material because that's what I was measured on. My primary measurement for success, personally and for the function, was purchase price variance, and it is very hard to show the impact of indirect spend cost reduction. We often see that indirect spend is managed at the plant level. It falls under the plant metrics. It doesn't necessarily roll up. It's very difficult to draw a line to your actions and the impact to the bottom line of the business. So, how, Alan, did you overcome that?

[00:14:32] Alan Shevela: Well, like you, Jan, the majority of my career was always focused on PPV, and the majority of the spend often is direct material. So, when you look at our overall spend numbers, we spend a lot of money on raw materials, components, a lot of other things. But when I got here, I quickly realized we also spend a lot of money on indirect MRO services, capital tooling, just a lot of things that if you're not managing that closely, if you're not going out and getting three bids before you buy, you're partnering with somebody that maybe is not giving you the best possible price in the market. So, and don't get me wrong, we are still very much measured by direct material. We still manage that very, very well. I've got a great leader managing direct materials globally for us here at Aludyne. She is phenomenal and I work very closely with her. However, one of the things I noticed that we weren't managing as close or as effectively was all of the indirect spend. So, there's only so much more we can take out of some of the direct spent and we will do everything we can to make sure that we're getting competitive bids and everything, always driving cost savings, always driving that out, number one KPI for all procurement leaders, PPV. However, on the indirect side, we're seeing pretty significant savings since I've been able to build up a really strong indirect team. I've got a great indirect leader here for all of our indirect procurement we spend, and really focused on all areas, not just direct to material, but also indirect material, capital equipment, tooling, everything that we spend money on. Sometimes that tailspin gets lost, but we've really focused on looking at every opportunity here at Aludyne.

[00:16:09] Jan Griffiths: How did it get finance to buy in?

[00:16:12] Alan Shevela: Never easy because it's never in the budget. But, again, going back to what Terry and I were talking about earlier with really demonstrating that return on investment. And that is a very hard sell because I need you to approve money that's not currently in the budget or put it in the budget for next year. And yes, you are not going to get a return on day one, but the return we're seeing so far early and really focusing on indirect procurement spend and this new initiative that we just launched earlier this month is already showing positive return. So, it all goes back to I want to spend X amount, but I'm going to return X amount times X amount. So, I'm really excited with some of the transformations we're making here at Aludyne.

[00:16:52] Jan Griffiths: That's great. I have a question about the digitization piece of this. I mean, I understand the concept of corporate indirect sourcing, pulling the spend together, leveraging the spend, but what are the key points in this digitization process, the technology behind this that's going to allow this to happen?

[00:17:13] Alan Shevela: We're really having that two and even three-way communication. What I mean by that is making sure there's portals in place where it's not always somebody exchanging an email or exchanging a spreadsheet, but going back and forth with portals of people that are Aludyne employees inputting information in the portal, our supplier partners inputting information in the portal, and making sure we have that constant communication that is not always manual constant communication.

[00:17:40] Terry Onica: It's always great to have one version of the truth, isn't it? So, everybody can collaborate better and see what everybody else is seeing. It always drives so many benefits when you're all on the same page, especially in purchasing. I can't imagine with all the suppliers that you have both indirect and direct to be able to have that capability to put it all in one place and everybody can see it at the same time.

[00:18:02] Alan Shevela: Exactly. And real time is the key, right? Because instead of the traditional way of exchanging emails with either word documents where the three of us have communicated through a Google doc, it's just making sure that we're communicating real time. We're seeing the information real time and there's no delay or no using an old version of a document.

[00:18:20] Jan Griffiths: Alan, let's go to your third point, partnerships. You know, I don't know how many times I have heard the OEMs get up on stage in various conferences and talk about, we want to partner with our suppliers, but their actions say the exact opposite. What is going on in your world regarding partnerships?

[00:18:44] Alan Shevela: So, in my world, from my perspective as the Vice President of Global Procurement and Supply Chain, my partnerships I'm driving are with our suppliers. So, I don't have a ton of interaction with our customers. Obviously, that's for our Head of Sales and Commercial Operations. But, from my perspective, driving partnerships is so vitally important to our success. The constant communication. So, things, as both of you know, don't always go right and typically, don't go as we plan in the automotive supply chain, specifically, at the Tier One level. So, my idea of a partnership is being transparent and having constant communication, even when the information is not what the other side wants to hear. At least if we are proactively communicating, we're giving our supplier partners a chance to react to that and a chance to adjust to that and really having that constant communication. I spend the majority of my time, not only with the teams here that I'm working on developing, but also with my supplier partners that I'm talking with on a daily and sometimes hourly basis, just to make sure that we're crystal clear on all the shifts, all the changes, because it's very common to have shifts in volume, shifts in production, shifts in pretty much all of our plans that we agreed on a month ago may change very quickly.

[00:19:58] Jan Griffiths: How do you prioritize who you need to talk to? Because I'm sure you've got hundreds and hundreds of suppliers and there are suppliers that certainly have a massive impact to Aludyne that you're definitely going to keep a good relationship with, but you can't possibly do that with every single supplier. So, how do you prioritize that?

[00:20:19] Alan Shevela: It's not easy. I will say that all of our supplier partners are very important to me. I value them all very much, but you're right. We have a lot of suppliers and I cannot manage relationships every hour of every day with all of them. So, I do have to prioritize and I prioritize based on the impact, the impact to Aludyne, the impact to the suppliers, the impact to all of the functional areas and all of the people involved. And that is a very dynamic list. It's not a list that I can set on a Monday and it won't be the same list on Tuesday. It'll really depend on what's happening in the industry, shifts in the industry. Yesterday, there was a Canadian rail strike that affects a lot of everything moving from Canada by rail that we buy. So, my shift yesterday quickly focused to those suppliers that we received material by rail on.

[00:21:05] Terry Onica: In the auto industry, the OEMs often tell you as a Tier One what they want you to do a Tier Two. And really to get that message down the supply chain. How do you get that collaboration going with the next tier and then kind of mentor them to say, you know what, you really need to do this with your suppliers too, whether it's risk assessment or maybe it's an electronic communication? How do you do that?

[00:21:33] Alan Shevela: I go back to the constant communication, and I like to have that personalized communication. It's not always possible with the number of suppliers that we have. So there are times that we have to lean on some mass communication. And I really want to speak in the spirit of transparency, explaining to our suppliers so that they can clearly explain to their suppliers, here's what we're being asked of. And there's a lot of initiatives being added all the time from our OEM customers. We don't always have the number of resources to accomplish everything that's being asked of us. And I have to take into consideration that here's down the line, there's a good chance they have even less resources. So, really prioritizing all of the different demands of our time, all of the initiatives, and which ones have the biggest impact and which ones we need to focus on first. Really putting a Parado together, this initiative is the most important, make sure everybody accomplishes this one as quickly as possible, and then going down the list of prioritizations.

[00:22:28] Jan Griffiths: Alan, what is the one thing, the one action that you would give to our listeners today, our audiences, primarily automotive, purchasing, supply chain, quality people. One thing that they should start doing right now as they think about transforming their supply chain for the future. What would that be?

[00:22:51] Alan Shevela: Every interaction that you have, focus on making a positive impact. And what I mean by that is there's so much of our lives, professionally, personally, that are out of our control. We do the best we can to deal with every situation and every circumstance, but we do control our attitude, how we treat people, and our effort. We can make the choice no matter what the situation, no matter what the challenging circumstances are. We can choose to make a positive impact and I know that sounds at times soft and fluffy, but it is something that we control that we can try to make a positive impact on people, on the situation, on every element of our lives.

[00:23:31] Terry Onica: I love that. I really like that. And I'm going to take that and remember that for the next time, I'm in something. To think what can I do as I walk away or I'm in a situation to make something positive come out of that. I really like that. That's a great piece of advice.

[00:23:47] Alan Shevela: It goes along with what a lot of people say, oh, I've got all these challenges, and I'll take a deep breath, and I'll say, What an opportunity. What an opportunity we have to solve these challenges together. And if you look at it from more of an optimistic, positive approach versus a negative, miserable, oh, this is really challenging. It is. We have a great opportunity to work together to be a part of solving these challenging issues.

[00:24:09] Jan Griffiths: What I like about that, Alan, is the ripple effect of what you just said. Here, you are the Global VP of Supply Chain and Purchasing in a Tier One. If that's the mindset that you hold every day, the impact that will have to all stakeholders around you, and then people see that and the people on your team see that, and then they start emulating that behavior and that mindset, what a tremendous impact that can have. That can shift the culture. Can totally shift the culture. Yes.

[00:24:44] Alan Shevela: Something as simple as walking around high fiving people. Somebody told me years ago, it's very hard to ignore somebody if they're walking towards you and you have your hand in the air, their human nature reaction is to put their hand up and high five you. And if there's just that positive energy transformation.

[00:25:02] Jan Griffiths: I love it.

[00:25:02] Terry Onica: Jan, I think we have an authentic leader here.

[00:25:06] Jan Griffiths: I think we do. I think we do. Alan Shevela, thank you so much for joining us today.

[00:25:12] Alan Shevela: Absolutely. Thank you both for having me today. It's been a pleasure. I always enjoy talking about these topics and always enjoy talking with both of you.

[00:25:17] Terry Onica: Thank you so much.

[00:25:22] 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.