Building Supply Chain Resiliency with Tracy Rosser
This week on the podcast Matt sits down with Tracy Rosser, current Strategic Advisor at NewRoad Capital Partners and previous EVP of Operations at Transplace (now Uber Freight) and SVP of Transportation and Supply Chain at Walmart. Tracy and Matt begin by discussing Tracy’s experiences in logistics, operations, and supply chain: specifically Tracy’s journey from managing a Walmart Distribution Center to SVP of Transportation and Supply Chain. Tracy then dives into the valuable lessons he learned during his time at Transplace (now Uber Freight) in the midst of the pandemic, touching on the importance of bringing the right people to the table to make data-backed decisions. The conversation concludes with a discussion about supply chain resiliency, doing things right the first time, and the importance of having a strategic understanding of supplier relationships.
Transcript
It used to be if you didn't do things right in
Tracy Rosser:the store, a customer's cost to change was driving perhaps
Tracy Rosser:further to another store in an eCommerce type transaction. The
Tracy Rosser:cost of change is the movement of a thumb.
Matt Waller:Excellence, professionalism, innovation, and
Matt Waller:collegiality. These are the values the Sam M. Walton College
Matt Waller:of Business explorers in education, business, and the
Matt Waller:lives of people we meet every day, I'm Matt Waller, Dean of
Matt Waller:the Walton College and welcome to the Be Epic Podcast. I have
Matt Waller:with me today, Tracy Rosser, who has an incredible background in
Matt Waller:logistics and supply chain management. He recently was
Matt Waller:Executive Vice President of Operations at Uber Freight. He
Matt Waller:was with Walmart for 22 years in a number of roles including
Matt Waller:Senior Vice President of Transportation and Supply Chain.
Matt Waller:But he's been involved in supply chain, operations, distribution,
Matt Waller:transportation, and other things. He was actually even
Matt Waller:earlier in his career, the General Manager of a Walmart
Matt Waller:Distribution Center, which is a huge, huge job. And he is
Matt Waller:currently a Strategic Advisor for a private equity firm, known
Matt Waller:as NewRoad Capital Partners. Some of you may have heard
Matt Waller:earlier podcasts with Clete Brewer, one of the founders of
Matt Waller:NewRoad. It's a really amazing private equity firm that
Matt Waller:combines both, you know, investor partners with operating
Matt Waller:partners. And so they get people with lots of investment,
Matt Waller:investing experience and expertise, but also people with
Matt Waller:lots of operating experience. Thank you so much, Tracy, for
Matt Waller:joining me today. Appreciate it.
Tracy Rosser:You bet. Thanks for having me, Matt.
Matt Waller:You know, Tracy, you have an incredible
Matt Waller:background. And there's a couple of things I want to make sure I
Matt Waller:talk about with you today. One is your learnings from COVID.
Matt Waller:And two is supply chain resiliency. I know they're two
Matt Waller:things that you have learned a lot about and have a lot of
Matt Waller:thoughts on. But before we get into that, if you wouldn't mind.
Matt Waller:Let's talk a little bit about your experiences in logistics,
Matt Waller:and in operations and supply chain. And if you wouldn't mind,
Matt Waller:I'd like to go back to your role managing a Walmart Distribution
Matt Waller:Center, which is a huge responsibility. So would you
Matt Waller:mind talking about that a little bit?
Tracy Rosser:Sure, Matt. So I'll drop back very quickly for
Tracy Rosser:a little bit of context. Prior to that general manager time. So
Tracy Rosser:I spent nine years right out of college in the truckload sector,
Tracy Rosser:and in truckload transportation, doing you doing dispatch work,
Tracy Rosser:customer service work, and then on the commercial side and
Tracy Rosser:operations side, and then that was kind of my entree into
Tracy Rosser:Walmart, you know, worked in the private fleet for a little bit
Tracy Rosser:at at Walmart. And then was asked to go learn how to run a
Tracy Rosser:distribution center. And so I went through a crash course
Tracy Rosser:training at Warehouse 8 here in Bentonville. And then off to
Tracy Rosser:Lawrence, South Carolina. And it was really interesting, Matt,
Tracy Rosser:because throughout my career up to that point, I had been
Tracy Rosser:engaged with truck drivers in the trucking business, and the
Tracy Rosser:fleet. And so I was always supporting a group that was very
Tracy Rosser:mobile and not at the office at the same time. And so with the
Tracy Rosser:Walmart fleet, I had, I think it was like 12, 1500 drivers that
Tracy Rosser:that was responsible for maintenance facilities,
Tracy Rosser:bettering the western half of the US. And then all of a sudden
Tracy Rosser:in Lawrence, South Carolina show up, and there's, you know,
Tracy Rosser:there's 900-1200 people within the four walls of building that,
Tracy Rosser:that, that you were responsible for supporting every day. And so
Tracy Rosser:that was probably the biggest change was, you know, leading a
Tracy Rosser:group of people that you had to look in the eye and be
Tracy Rosser:accountable to on a daily basis, and then, knowing that everybody
Tracy Rosser:there knew more about the operation than you did. It
Tracy Rosser:didn't matter who they were. They knew more about the
Tracy Rosser:business than I did. And so I had a lot of great teachers from
Tracy Rosser:forklift drivers and unloaders to managers, who were really
Tracy Rosser:patient and taught me a lot about the business. But it was a
Tracy Rosser:great, great learning. So I did that at the Fashion Distribution
Tracy Rosser:Center. And then also we had a and this one was all under one
Tracy Rosser:roof. And it was the only building like it that Walmart
Tracy Rosser:had Matt. And it was, I think, 2.1-2.2 million square feet. And
Tracy Rosser:there was a regional distribution center on the other
Tracy Rosser:side of the firewall, so Warehouse 14 and 15. And so then
Tracy Rosser:I had responsibility for both of those over time.
Matt Waller:I can imagine you learned a lot about just the
Matt Waller:operations of a ware a distribution center, as well as
Matt Waller:managing people of all different types. But you also, of course,
Matt Waller:have experience in early in your career at Walmart, you also were
Matt Waller:responsible for Inbound US Transportation Operations.
Tracy Rosser:That, that hit more close to home in terms of
Tracy Rosser:what I was really familiar with in terms of the the inbound
Tracy Rosser:transportation side of the business. And so in that role, I
Tracy Rosser:supported all the inbound flows to the Walmart Distribution
Tracy Rosser:Centers. And so it was really, really nice having the trucking
Tracy Rosser:experience, and then the warehousing experience, because
Tracy Rosser:I could kind of tie the two together, and understand how
Tracy Rosser:those pieces really fit well together to achieve overall
Tracy Rosser:success. And that's where I really got to know Walmart
Tracy Rosser:really, really well. Because everybody in the company was a
Tracy Rosser:customer on the on the transportation side. And so we
Tracy Rosser:purchased all the transportation needs for the company, my team
Tracy Rosser:did both domestic and international, and on the
Tracy Rosser:inbound flows. And so because everybody was a customer those,
Tracy Rosser:and that's kind of where I've always started, my my work is
Tracy Rosser:trying to understand what customer needs are both internal
Tracy Rosser:and external. And it was great, it was great learning about the
Tracy Rosser:merchandising side of the business in a different way.
Tracy Rosser:Because the merchants were my customers, the vendors were my
Tracy Rosser:customers. And then we worked and established what I thought
Tracy Rosser:was really great relationships with carrier communities across
Tracy Rosser:all modes, to really help inform them of what our needs were, and
Tracy Rosser:develop some great relationships that that, you know, met the day
Tracy Rosser:to day business needs, but also really helped us through some
Tracy Rosser:very, very critical times whether it was you know, port
Tracy Rosser:strikes or hurricanes or you know, just any type of
Tracy Rosser:disruption. But the other fun thing that was that I learned a
Tracy Rosser:lot about, you know, the the network engineering in how
Tracy Rosser:important the engineering side of the business was, how
Tracy Rosser:important optimization capabilities were, you know, not
Tracy Rosser:only support the growth of the company, but do so in a way that
Tracy Rosser:met the needs of the company and having a network that really
Tracy Rosser:drove best in stock, best freshness and lowest landed
Tracy Rosser:cost. So that's where I really learned a whole lot about the
Tracy Rosser:company and how the company really worked was on a broader
Tracy Rosser:scale was supporting that, that inbound business.
Matt Waller:So that, as you said, heading up inbound
Matt Waller:transportation, you learned a lot about the company, because
Matt Waller:you had to deal with so many people that were needing
Matt Waller:transportation services. But then you shifted gears again, no
Matt Waller:pun intended. But it's a big shift where you went into store
Matt Waller:operations.
Tracy Rosser:Sure, Matt, it was a big shift. What I knew about
Tracy Rosser:store operations at that point, A being a customer, and in
Tracy Rosser:shopping Walmart stores, and then B everything you learn
Tracy Rosser:through osmosis of the Walmart system. To me, this was like
Tracy Rosser:really putting the bow on supply chain, because stores in my
Tracy Rosser:mind, the way that that I thought about them was they were
Tracy Rosser:another point of distribution or another part of the supply
Tracy Rosser:chain. But to me, that's the most important piece of the
Tracy Rosser:supply chain. And it's where the supply chain actually starts.
Tracy Rosser:And then that and then what are your commitments to the customer
Tracy Rosser:that then define how the supply chain should function? And so I
Tracy Rosser:kind of learned that you had to work backwards, then in terms of
Tracy Rosser:really designing a supply chain. And it also, you know, held held
Tracy Rosser:true from a freshness standpoint, because we were you
Tracy Rosser:know, at that point in time you know, we were pretty big grocery
Tracy Rosser:operation. And so most of my stores were supercenters. And
Tracy Rosser:again, I went into that that business with it with literally
Tracy Rosser:hardly any training and I was the benefactor of a lot of
Tracy Rosser:really patient department managers, store managers, market
Tracy Rosser:managers, regional vice presidents that really, really
Tracy Rosser:taught me a lot. And I learned a lot from customers also because
Tracy Rosser:we made a lot of changes during that time. And the customers
Tracy Rosser:would let you know it and the customers knew price like the
Tracy Rosser:back of their hand. And if you changed price a penny they would
Tracy Rosser:tell you. And so and our store associates would hold hold us
Tracy Rosser:very accountable. Matt, I tell you, it was probably the most
Tracy Rosser:valuable experience I had in my time at Walmart.
Matt Waller:Wow, that's so interesting. I've heard other
Matt Waller:people say that in all different areas of Walmart. Well, and
Matt Waller:then, you know, as as Senior Vice President of Operations,
Matt Waller:you will, you're responsible for over 300 stores, multi format
Matt Waller:stores, and over 20 billion in annual revenue and 90,000
Matt Waller:associates. That's a that's a big responsibility. That's,
Matt Waller:that's bigger than most, you know, Fortune 500 companies.
Tracy Rosser:Yeah, it was a lot of fun. But boy, you that, you
Tracy Rosser:know, not only what you learn about your internal operations,
Tracy Rosser:but also the communities because everybody's highly engaged in
Tracy Rosser:the communities. You know, your stores are part of the
Tracy Rosser:community, and just the the expectations that the
Tracy Rosser:communities have of a Walmart store, whether it's on a micro
Tracy Rosser:basis, or macro basis. So the internal factors of driving
Tracy Rosser:sales and profitability for the company and doing it right. But
Tracy Rosser:also the external factor as well, which I think is much
Tracy Rosser:about going into the job.
Matt Waller:It's interesting, five years in distribution, five
Matt Waller:years and transportation, five years in store operations, I
Matt Waller:would guess the next one would be five years, but it wasn't it
Matt Waller:was longer, six years, and that is Senior Vice President of
Matt Waller:Transportation and Supply Chain. And so during that time, you
Matt Waller:were managing global transportation, domestic
Matt Waller:transportation, the Walmart private fleet, which is
Matt Waller:enormous. And last mile/home delivery, merchandising supply
Matt Waller:chain services, what a big operation. Would you mind
Matt Waller:speaking to a little bit about how that combination of
Matt Waller:distribution, transportation, and operations played into your
Matt Waller:ability to do that? Conduct that job well?
Tracy Rosser:Yeah, Matt, you know, I was really fortunate to
Tracy Rosser:have that role. And in really, it was a culmination, it was
Tracy Rosser:like when everything kind of came together, because of having
Tracy Rosser:truckload experience, you know, prior to Walmart, a little bit
Tracy Rosser:of the Walmart private fleet experience, then the inbound and
Tracy Rosser:the distribution centers, and then the stores and the time
Tracy Rosser:with customers. I really went into that job with a lens that
Tracy Rosser:was vastly different than had I not gone to the stores, I had a
Tracy Rosser:total view of what is it that we need to do to fuel in stock and
Tracy Rosser:price, because I had seen firsthand how valuable that was,
Tracy Rosser:and I had walked enough competitors to know what
Tracy Rosser:competitors were doing in the marketplace. And I really,
Tracy Rosser:really got a sense of what was important to our customers and
Tracy Rosser:our people, and so the lens that I looked at was, how do we serve
Tracy Rosser:the customer in the way that they deserve to be served that's
Tracy Rosser:consistent with the brand and in what we were trying to do as a
Tracy Rosser:corporation. And then also serve the people and really remove
Tracy Rosser:hurdles so that our people can just get the job done. And
Tracy Rosser:empower our people and give them the tools to get the job done.
Tracy Rosser:And then stay out of their way. And, you know, I was playing
Tracy Rosser:around with last mile and had the last mile team in San Bruno
Tracy Rosser:had responsibility for that. And we were just testing and
Tracy Rosser:learning a lot of stuff like, I mean, we were just throwing mud
Tracy Rosser:against the wall, really trying to figure out how we get our
Tracy Rosser:cost per unit down on final mile delivery. And so we were really
Tracy Rosser:playing around a lot in the sandbox. And now that has become
Tracy Rosser:more perfected and it's grown. And so now the number of
Tracy Rosser:deliveries are significantly greater than when I was there
Tracy Rosser:just just because of the sheer number of home deliveries.
Matt Waller:Well, you know, ecommerce in general, not just
Matt Waller:Walmart, but in general, is so huge now. And reverse logistics,
Matt Waller:dealing with the returns has become a really big problem in
Matt Waller:the industry in general. Because the policies are so liberal
Matt Waller:around taking returns, I can't remember I want to think I read
Matt Waller:somewhere that 30% of products are returned that are bought
Matt Waller:through eCommerce, something like that. Shoppers don't often
Matt Waller:know how challenging it is, and all the costs involved in
Matt Waller:reverse logistics. What do you think about that?
Tracy Rosser:If the Rosser household is any barometer of
Tracy Rosser:returns, I would say it's probably 50%. But but I'll tell
Tracy Rosser:you what it is. The returns network in I mean, this with all
Tracy Rosser:due respect, it is like and this held true, like, I got to see it
Tracy Rosser:first and foremost, because again, in that purchasing
Tracy Rosser:transportation standpoint, we had to move all the returns, and
Tracy Rosser:we had to engineer a return network. And there's so much
Tracy Rosser:cost that's there. Again, it's typically and it's funny, you
Tracy Rosser:bring it up, it is one of the and I still think it's like one
Tracy Rosser:of the most ignored pieces of the business. It is a discipline
Tracy Rosser:that that needs more focus to be quite candid with you. Because
Tracy Rosser:of all the costs and all the waste. If it doesn't happen,
Tracy Rosser:right can be just huge dollars of low hanging fruit to go get.
Matt Waller:Well, you know, I wasn't planning on bringing it
Matt Waller:up in this conversation. But I had just read something in the
Matt Waller:Wall Street Journal about this, of course I I've been aware of
Matt Waller:it for a long time, at any rate. I want to shift gears a minute
Matt Waller:here. You have you are a astute leader, you pay attention to and
Matt Waller:you reflect on what you're experiencing. And you read a
Matt Waller:lot. I would love to know, what did you learn from COVID?
Tracy Rosser:Wow. Okay, so we'll get into, into the into my
Tracy Rosser:last role, Matt. So I had left Walmart and had the really good
Tracy Rosser:fortune of meeting Frank McGuigan, who was the CEO of
Tracy Rosser:Transplace, which was founded here in Northwest Arkansas. So I
Tracy Rosser:had responsibility for all the operations, Frank had just taken
Tracy Rosser:over as CEO, and, and so I had the good fortune of having
Tracy Rosser:responsibility for the operations of the manage and
Tracy Rosser:transportation business. And the manage a lot of people I think
Tracy Rosser:Transplace is one of the best kept secrets in all of all of
Tracy Rosser:logistics. At the time, when I went there, I think we had about
Tracy Rosser:seven, seven and a half billion dollars in freight under
Tracy Rosser:management. And so many Fortune 100 companies were Transplaces'
Tracy Rosser:customers. It was really interesting. So I was six months
Tracy Rosser:into the job. And I spent my first six months just out
Tracy Rosser:meeting customers. And so I think I visited about 85% of our
Tracy Rosser:revenue. And so I was just getting to know our customers
Tracy Rosser:and our people and then COVID hit. And so, you know, we have a
Tracy Rosser:building here in Northwest Arkansas, and in two or three
Tracy Rosser:days, and we were a technology company, and that was the other
Tracy Rosser:thing, everybody, we had our own TMS platform and all of our
Tracy Rosser:customers ERPs connected with our TMS platform. In gosh,
Tracy Rosser:probably three days, we made a decision to send everybody home.
Tracy Rosser:And so we were and that was all around, you know, our full
Tracy Rosser:operations. So we did that we went remote. And then we started
Tracy Rosser:to learn. And I'll tell you, Matt, there were so many
Tracy Rosser:learnings from COVID and I'm going to jump to supply chain
Tracy Rosser:for just a minute. What happened is resources started to become
Tracy Rosser:really scarce. And so the the two biggest issues that that
Tracy Rosser:arose is labor became incredibly scarce at our customers
Tracy Rosser:facilities, their manufacturing labor, their distribution labor,
Tracy Rosser:and then raw materials became scarce, packaging became scarce.
Tracy Rosser:And then the other thing that became scarce was the supply and
Tracy Rosser:demand imbalance because of truck drivers became scarce. And
Tracy Rosser:then you had you had a dip in demand initially, and then
Tracy Rosser:demand skyrocketed as people started settling in at home. So
Tracy Rosser:some areas demand just declined. But in other areas, you know, it
Tracy Rosser:just demand just escalated relative to resources that were
Tracy Rosser:available. And so what started happening is, customers were
Tracy Rosser:shipping our customers were shipping from where ever they
Tracy Rosser:had inventory, the network did not matter. Because you had the
Tracy Rosser:Walmarts of the world and the Kroger's and Target's of the
Tracy Rosser:world Costco's that needed merchandise. And so people were
Tracy Rosser:shipping wherever they had merchandise and their fill rates
Tracy Rosser:diminished from probably, you know, 100-95% fill rates, in
Tracy Rosser:some cases, 40% fill rates. So you had all these trucks that
Tracy Rosser:were running significantly greater distances, with far
Tracy Rosser:fewer units on them. So your cost per unit was really high,
Tracy Rosser:your lead times have totally changed. And so and then the
Tracy Rosser:carriers networks are now disrupted. And so now you had a
Tracy Rosser:total hodgepodge of things happening and costs were going
Tracy Rosser:through the roof for our customers. Customers were
Tracy Rosser:starving for data because their costs were escalating, and they
Tracy Rosser:didn't know why. And so we had to go from really generating
Tracy Rosser:monthly reports or quarterly reports on people's networks, to
Tracy Rosser:now we were really seeing the need to run data and analytics
Tracy Rosser:at the daily basis, weekly basis and rolling it up so we could
Tracy Rosser:show our customers what was happening in the network. And
Tracy Rosser:then we started to advise them on where there was waste and
Tracy Rosser:leakage. But the problems were so big and so complex. What I
Tracy Rosser:learned is, and it was fantastic, because it's
Tracy Rosser:something that I had an insatiable appetite for in my in
Tracy Rosser:my previous days at Walmart. And we felt like we kept our C suite
Tracy Rosser:really informed is our customers really needed to bring a CEO to
Tracy Rosser:the table, the Chief Financial Officer to the table, the Chief
Tracy Rosser:Operating Officer, Chief Commercial Officer, Head of
Tracy Rosser:Manufacturing, Head of Supply Chain. And we had customers that
Tracy Rosser:really did a great job of getting those people to the
Tracy Rosser:table. Because the decisions were huge, the dollars are huge,
Tracy Rosser:customer service impacts were huge, that they needed the data
Tracy Rosser:to make decisions that were bigger than just a Chief Supply
Tracy Rosser:Chain Officer. And then we saw companies that didn't do a good
Tracy Rosser:job of that. And so it was our job to help facilitate that. I
Tracy Rosser:think if good things came out of COVID, it's the from a supply
Tracy Rosser:chain perspective, is information became more real
Tracy Rosser:time and data and analytics and people's understanding of the
Tracy Rosser:drivers of their network and cost and waste, improved.
Matt Waller:Now, everyone's kind of aware of supply chain.
Matt Waller:You know in economics they say the best way to figure out the
Matt Waller:marginal benefit of something is to remove it. Right? In other
Matt Waller:words, by having problems in the supply chain that helped
Matt Waller:everyone see the the what it's doing, what it's providing, how
Matt Waller:critical it is to business, it is business, really. How do you
Matt Waller:think this current, let's assume that, you're right, there's a
Matt Waller:lot more information people are paying more attention to it. Do
Matt Waller:you think that'll make supply chains more resilient in the
Matt Waller:future if we maintain that?
Tracy Rosser:I hope so and I think so. I think people learned
Tracy Rosser:what were the vulnerabilities were. So I think people are
Tracy Rosser:shoring up vulnerabilities. And so when you do that, like Matt,
Tracy Rosser:we saw people that didn't have network designs completed and or
Tracy Rosser:they didn't have the capability to re-engineer their network on
Tracy Rosser:the fly. So as as there were external forces that would cause
Tracy Rosser:you to re-engineer what your network was. And that was one of
Tracy Rosser:the things Walmart did a phenomenal job. We had a great
Tracy Rosser:engine set of engineers, great set of people, had great
Tracy Rosser:technology. And the, what I would call the realignment
Tracy Rosser:process, was really sound.
Matt Waller:When will you say realigned? You mean, which DCs
Matt Waller:served which stores?
Tracy Rosser:Exactly. You know, it affects your inbound flow. So
Tracy Rosser:there were companies that lived with significant suboptimal
Tracy Rosser:networks because they didn't have the capability and the
Tracy Rosser:muscle to realign and so and everything starts with a great
Tracy Rosser:blueprint. So if you didn't have the great blueprint, then there
Tracy Rosser:was, you know, you had to figure out where the waste was. And so
Tracy Rosser:I still see that as a shortfall for a lot of shippers.
Matt Waller:Well, I think part of that lack on the shipper side
Matt Waller:often is a result of just not emphasizing supply chain
Matt Waller:logistics to the point that they should.
Tracy Rosser:Yep, and Matt, a couple of other things that
Tracy Rosser:would tell you that I think about when I think about supply
Tracy Rosser:chain resiliency, it's kind of doing things right the first
Tracy Rosser:time gives you degrees of resiliency when there's
Tracy Rosser:disruption. And then the other piece that's not talked about,
Tracy Rosser:and I saw this where a lot of shippers at Transplace would own
Tracy Rosser:their own carrier contracts, or own their own, or they would a
Tracy Rosser:lot of shippers have procurement. That held a lot of
Tracy Rosser:weight in the procurement divisions that held a lot of
Tracy Rosser:weight in their companies. And so these are strategies that
Tracy Rosser:shippers have. But what they what they failed to have is the
Tracy Rosser:the appropriate relationships with their providers. I would
Tracy Rosser:tell you having those relationships is incredibly
Tracy Rosser:important and having a strategic understanding of how you're
Tracy Rosser:going to work with each other, when there's disruption is
Tracy Rosser:incredibly important. And so you spend all your time working on
Tracy Rosser:those things when times are good, so that when times aren't
Tracy Rosser:good. You know, you've got something in place that puts you
Tracy Rosser:in a better position than your competitors.
Matt Waller:Well Tracy this has been extremely insightful.
Matt Waller:Congratulations on your amazing career and journey and really
Matt Waller:appreciate you taking time from your busy schedule to visit with
Matt Waller:me this morning.
Tracy Rosser:No it's an honor to spend time with you Matt and
Tracy Rosser:appreciate the conversation.
Matt Waller:On behalf of the Sam M. Walton College of
Matt Waller:Business I want to thank everyone for spending time with
Matt Waller:us for another engaging conversation. You can subscribe
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