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From natural disasters like hurricanes and earthquakes to pandemics, cyberattacks, and labor strikes, companies have to navigate so many complexities to get goods where they need to go.
What's their secret weapon to operating within the unknown?
It’s the people.
Welcome to Supply Chain Champions, the show that showcases the stories of those who keep supply chains running smoothly. We're here to highlight their untold stories and share lessons they’ve learned along the way.
Join us as we peel back the curtain on the people who make supply chains work and enhance your own career in the process.
Tune in. Get smart. Move forward.
Michael Jacobs [00:00:00]:
You can't get to a transformation unless you know where you are. And if you don't have the tools to know where you are, it's going to limit your success. When we talk about how do we measure success, it's about perfect order index, it's about on time deliveries, and it's about net promoter score. If we're not seeing our net promoter scores increasing, then we're not doing our job.
Eric Fullerton [00:00:24]:
Welcome to Supply Chain Champions, the show brought to you by project44, where we're talking to the people who make supplement supply chains work. Hello and welcome to another episode of Supply Chain Champions. I am your host, Eric Fullerton. And we've got a fantastic guest today, Michael Jacobs. He is the Senior Vice President of Supply Chain at Ferguson Enterprises. Michael, thanks for, for being on today.
Michael Jacobs [00:00:52]:
A pleasure to be here. Thank you for the invitation.
Eric Fullerton [00:00:55]:
So I want to start by actually flashing back to about eight years ago when you were brought into to Ferguson. What was your mandate there? Like, what were you brought in to do and achieve and accomplish?
Michael Jacobs [00:01:08]:
Well, it's a great question. And joining a company like Ferguson is very unique because our core competency is supply chain. We exist because we can do what the manufacturers can to connect the manufacturers to the building community at large. And when I was interviewing, I asked the question, if I was lucky enough to get this job and we were celebrating a year from now, what would I have done? And it was kind of interesting because I don't think they were expecting that type of question. And really the comment came back with two areas. The first area is that our network is full and we need to do something different with the network. We've built this, this North American regional model and is that really the right model that's going to take us to the future? So it became kind of a strategic discussion on what is the network of the future for Ferguson. The second piece is Supply Chain had been pretty much a standalone type of function.
Michael Jacobs [00:02:10]:
And how do we integrate supply chain not just as a function but as a true business partner to support sales of the organization connecting much closer to the sales organization. And that was really the charter that I set out my first 18 months to achieve.
Eric Fullerton [00:02:26]:
Awesome. So if anyone is listening and they have a job interview coming up, they always get those questions. They should probably steal that because that is, it's an excellent question and I think you probably put them on their heels a little bit. So smart. I wanted to provide a little bit of context about Ferguson because it's a company that is probably in everyone's home, but maybe not necessarily in their heads or on the tip of their tongue. So I'll provide a quick overview and then if you could kind of really take me home with some stuff I'm sure I can't get from just some light research. So Ferguson at the very base, it's like plumbing and heating products, it's HVAC, it's waterworks, industrial fire fabrication, a lot in US and Canada. It's a company that's just shy of 30 billion in revenue.
Eric Fullerton [00:03:14]:
Lot of growth through acquisition. And when you think about the products that you're, you're selling and providing, I think there's almost a million of them. You know, the sizes are from fittings and to pipes and you've got tens of thousands of suppliers. I'm going to stop just because that was a long list. But what did I miss that kind of makes this a unique ecosystem and supply chain?
Michael Jacobs [00:03:38]:
Well, I think you captured a lot of who we are. Really. The kind of. The other component is our business is about projects. We manage projects. 80% of what we do are complex projects. And our goal is to make our customers complex projects, simple, sustainable and successful. That's kind of our motto on how we drive our company.
Michael Jacobs [00:04:00]:
So when you think about the expansion of the Panama Canal, there's our pipe. When you think about the building of the Freedom Towers in New York City, that was one of our projects that all nine of our operating divisions worked on. It's also a business of speed. And about 99.8% of every order that comes in is picked and shipped the same business day. It comes in with cutoffs at the end of the business day. So it's about on time, in full, it's about speed. And as you said, we deal with very small fittings. We also deal with 10,000 pound pipe that's 40ft wide.
Michael Jacobs [00:04:33]:
So it's a combination of those types of projects and inventory that we manage every day. As you said, we carry over a million SKUs in our network.
Eric Fullerton [00:04:44]:
Okay, awesome. So scale, network complexity, it's all there. It seems to me kind of like when you're brought in for a role like that, there's probably some, some reputation on the line for you. You know, you want to be successful, you want to do things you're going to look back and be proud of and are going to really impact and improve the company. And I think in order to do that, there's some component of transformation and digital transformation that's required. So I'm going to ask you to take us through the PPT of digital transformation, the people, the process and the technology. It's something I think we always kind of talk about when it comes to transforming an organization. Can you start with the people? Because I know for you it's a big topic.
Eric Fullerton [00:05:30]:
Is there an ethos or approach that you believe in? Are there more kind of like tactical things that you focus on to manage the people part of that transformation?
Michael Jacobs [00:05:40]:
Well, it's always about people, and it always starts with people and end with people. And technology is an enabler, but it's about people and surrounding yourself with people who can get things done that's going to drive the success of the supply chain. So it's a very important component. And it's interesting to me because to me, the legacy you leave with an organization is all about succession and people. You know, when you think about the technology piece, the technology will come and go as technology improves. And when you think about robotics, which we're all very much a part of now, it also comes and goes. And five years of technology and robotics that we put in place today probably will be outdated. But what's not outdated is the leadership and the people you put in place.
Michael Jacobs [00:06:26]:
So when I first started here, getting the right team to help lead this very complex supply chain was job number one. And then of course, that followed by technology, because we had a huge gap in technology when I started with the organization and we implemented, I'm going to say, no less than 15 new systems my first 36 months in this role. You can't get to a transformation unless you know where you are. And if you don't have the tools to know where you are, it's going to limit your success. And so really understanding how do we benchmark our baselines, what do we need in terms of information to be successful, was really my second focus behind the people piece. And then the third piece is the process understanding that there's AI out there, there's machine learning, there's robotics that we weren't using at the time when I arrived to really be able to transform the speed at which we could handle orders. And certainly today we can process customer orders in under 10 minutes. I'm going to say three, four years ago, it would take us an hour and a half to get a customer's order together.
Michael Jacobs [00:07:36]:
So all three are very important. But to your words, it all starts with people.
Eric Fullerton [00:07:41]:
Absolutely. But I think that one thing that a lot of supply chain leaders have to deal with in common, of course, is that the people part, but also the technology part, it feels like it's getting harder in some ways because you have to make big bets on tech. And it feels like there's a lot of noise out there. It becomes challenging to really nail down. Like, what are those big bets and how did you prioritize them? So. So how do you approach that when you're thinking about what are these big bets on tech that I'm going to invest in as a leader?
Michael Jacobs [00:08:16]:
Well, tech is very interesting today because as mentioned, everyone talks like we're 10 years down the road and we're not. Artificial intelligence clearly has power and clearly can change the game in terms of capability and speed of, of handling customer orders and things of that nature. The problem is you have to separate the fact from fiction because everyone is talking like it's here. And as you do, the pilots, they're not here. We pilot a lot and we're not afraid to invest a bit in a pilot to make sure that we have a good sense of what a system does and what it doesn't do. But what we've learned, especially in the last 24 months as we piloted things like AI, most of it isn't ready for primetime yet. It's a better mousetrap. It's not a great mousetrap.
Michael Jacobs [00:09:06]:
And you could be ahead of technology, but you really don't want to be. You want to make sure that the technology, as a established and large company, you want to make sure the technology is really working and it suits your business because it's very hard to recover when you put something in place and you can't get orders out the door.
Eric Fullerton [00:09:25]:
Is there a certain decision criteria or due diligence that you're employing to make sure you pick the right solutions if you maybe feel like you don't have the right one? Like, how do you navigate that from a leadership perspective?
Michael Jacobs [00:09:38]:
Well, obviously we go to a lot of the industry conferences to see the technology that's out there and really try to separate what's really applicable to our business from what's just really interesting to know or what's out there. But we do a lot of site visits, of live sites. So if we're looking at global tracking systems, if we're looking at demand forecasting and predictive analytics, everyone talks like the technology works. And as you get into it, you realize it's still in its infancy stages and not ready for prime time. So the due diligence we do, besides obviously going to conferences, meeting with vendors, but we talk to users, and generally speaking, we don't ask the companies for, for a list of references. We say, give us a list of your companies, and then we have our own connections within the companies to try to get a realistic feedback on the technology and how it works, versus just calling somebody who they know is going to give a good reference and kind of walking away with that. So we try to use our own resources to really do our due diligence, to understand the capabilities of what the technology can bring to Ferguson.
Eric Fullerton [00:10:48]:
Awesome. So the process part seems to be where it very often falls down. I think it's also the one that we maybe talk about less. We talk a lot about people, as we should, talk a lot about tech and tech buying, as we should. But I feel like the process part is, you know, the third equally important, maybe in fact, the most important. So how do you make sure that doesn't fall down? It becomes a part of bringing these. These other two components to life.
Michael Jacobs [00:11:14]:
And that's where our engineering team really comes in. As we think about technology, whether it's inside a distribution center, inside of logistics, in demand, forecasting, inventory management, wherever it might be, we examine the process of where we are today. And we actually started this podcast by talking about, if you don't know where you are, you'll never be able to have a roadmap of where you want to go. So before we implement any technology, we generally benchmark where we are today, how long something takes to do, how long it takes to process, the steps that it takes, and then we then map out the new process, and we, of course, critique it as we go. But we start with the documenting of where we are, and then we document where we want to go, Then we pilot it, and if it's successful, we then roll it out. And so it ties the people, the technology, and the process together.
Eric Fullerton [00:12:07]:
I wanted to chat a little bit about the concept of supply chain as a differentiator. Earlier, we chatted a little bit about how it's this kind of core competency for Ferguson, and we talk about this on the podcast a lot. Supply chain is a differentiator. I'm not sure that I've ever seen an example quite like Ferguson. When, you know, I'm looking at Forbes articles and I'm doing this research, I'm seeing direct comments from your CEO. It feels like that's part of the ethos of the company. Right? It's part of that lifeblood of we are going to win on supply chain. How does that happen? Like, where does that come from? And then how do you continue to drive that every single day?
Michael Jacobs [00:12:49]:
I think it comes from the recognition at Ferguson that supply chain is our core competency. We exist as a distributor and a wholesaler because the manufacturer supply chains are not nearly as fast as ours. As I talked about 99.8% shipped same business day, usually delivered same day or very next day. And then kind of on the other side, customers and their complex projects and they depend on us to help them with product selection. They depend on us to manage the cost of projects. And it's really the supply chain that does that. At Ferguson, the supply chain team and the sales team, although our separate teams, they're really one team and we work very, very closely with them. And whether you're a salesperson or you're a supply chain person, it's just geography.
Michael Jacobs [00:13:37]:
We are one team. And if a customer is ever let down, that's the worst thing that could ever happen to Ferguson. We are about the customer. And a lot of supply chains are about productivity, about cost cutting, being the low cost provider. And certainly cost is very important, especially to a wholesaler who doesn't have 70 points of margin like a manufacturer. I mean we work off of very tight margins and we're all about kind of managing our customers projects so they're successful. But it really comes down to that. We are a sales organization and probably our greatest value are the relationships we have with sales.
Michael Jacobs [00:14:15]:
And supply chain is an enabler. Imagine if you will, what we deal with. We get an order that comes in and it needs to be there at 6am and we're delivering to a location that has no address. It's a hole in the ground. And we're delivering pipe to that hole in the ground that's going to be the foundation for a 50 story skyscraper. And there's 200 people there at 6am and if we're not there at 6am there's 200 people not working at 6am and the thing about construction sites is that you can't leave inventory just lying around because obviously it disappears. So we're delivering to places without addresses. We have people who are waiting to the second for us to show up.
Michael Jacobs [00:14:59]:
If we're not there, our customers will fire us. So we need to make sure we're there every single time when they want us to be there. We're very time definite. We have systems that allow our customers to track our trucks from the moment it leaves our distribution centers all the way to the delivery. If they're the second stop, they could see the first stop to the second stop. So we try to do things that give our customers confidence that Our supply chain does what the salesperson says needs to be done.
Eric Fullerton [00:15:27]:
Yeah, absolutely. So customer satisfaction, it seems, you know, this priority, which I think again is part of where you see that competitive differentiation come into place. It could very easily be as a distributor, as you mentioned, it could very easily be cost cutting. It could be very easily be operations, but it is, it's CX, CX, CX. When you think about measuring customer experience, there are things like in stock and on time in full and speed to delivery. Are there other metrics, are there core metrics that you've created that kind of you can measure yourself against or how does the metric and KPI component flush out?
Michael Jacobs [00:16:04]:
Now, obviously metrics are very important, from safety to productivity, all those types of things. But most supply chain people do not have net promoter score tied into their compensation. Here at Ferguson, we do. So, yes, I measure perfect order index, customer satisfaction. I measure quality of accuracy of our picks to make sure that we're supposed to ship a thousand cartons. We ship them and they're the right ones. But we're not just moving cartons, we're managing customer projects. So net promoter score in our company is paramount over everything else.
Michael Jacobs [00:16:41]:
If a customer is not satisfied, it doesn't matter anything else. I am not achieving my goals with productivity, with safety, all the other supply chain components that are really important because we really are a customer centric organization and our supply chain represents that every day.
Eric Fullerton [00:16:59]:
And you say NPS is part of the compensation?
Michael Jacobs [00:17:03]:
Yes, it's tied into all of our compensation.
Eric Fullerton [00:17:05]:
I've actually not heard that in many places. So that's. That is truly CX-first.
Michael Jacobs [00:17:12]:
And I will say this, that we've over time have taken things that were with sales and they moved it in supply chain, which is almost unheard of. And when we talk about how do we measure success, it's about perfect order index, it's about on time deliveries and it's about net promoter score. If we're not seeing our net promoter scores increasing, then we're not doing our job. And generally, if you get everything else right, your in stocks are right, your perfect order is right, Net promoter scores. Right. The growth of the business will follow.
Eric Fullerton [00:17:40]:
Yes, absolutely. Cool. So I wanted to kind of zoom out a little bit, talk a little bit more about you and your career. You know, you've had major roles in supply chain and logistics at Toys R Us, at Keurig, at Ferguson. Are there some seminal moments you look back on and you feel like you could say, well, that really helped set me on a certain trajectory? And could you talk about maybe one or two of those?
Michael Jacobs [00:18:06]:
It's been a lot of years. I didn't start supply chain. I started as a finance person and started my career at Pepsi, then went to what is now CVS. It was called Melville Corporation when I was there, and I was a director of finance and strategy. And my boss comes into my office one day and says, hey, Michael, we have a special project for you. And we don't have anyone at corporate that has a supply chain background. So we want you to run this international logistics project and bring all 13 of our operating businesses under one umbrella, one contract for international sourcing of product. And so I said, great, sounds really interesting.
Michael Jacobs [00:18:44]:
How long will it take to do? He says, it's probably no more than five hours a week, but you're going to learn a lot. Well, five hours a week was really 80 hours a week. And the project was a disaster. And after about four or five months, we got it kind of reorganized and it was highly successful, actually. It was overachieved the goals of the project. And when I finished the project, I was offered a job with one of the operating divisions at a vice president level. I was also offered a director position as running what they called supply chain planning, which was inventory management, integrated planning, demand forecasting. And I took the inventory job at a director level versus a VP-level.
Michael Jacobs [00:19:26]:
All my colleagues were shocked that I would do that. And my point was I really enjoy supply chain. And what other time in your career can you sidestep and do something different and actually continue on your kind of journey in your career versus just go a straight line with finance? And I always knew in my heart of hearts that I would make that VP-level over time. But when would I have another opportunity to actually grow in supply chain? Which I found very interesting. In my career, I've had many more lateral promotions than actual promotions because I always felt getting the experience is what's going to make you truly successful in your career. It's not necessarily the title. And it's very interesting. So many people as they sit in my office and I said, what are you looking for? Career.
Michael Jacobs [00:20:11]:
They talk about becoming a director or becoming a vice president. And I said, that's great, but how do you get there? You want to be a director? Yes. If you stay in a straight line, just wait your turn. And I guess eventually if you're really good at what you do, you'll have that opportunity. But you really want to get lateral promotions so that you gain all the experience. So when you become the senior person over an area you have done most of the roles under you and you could truly give good direction and challenge properly. And I found that's been a huge benefit to my career, having probably 15 or 20 positions before getting to the most senior levels in the organization.
Eric Fullerton [00:20:48]:
Right. I've heard that before from some of our guests on there's a short game, fastest path and long game learning the most. And that long game approach of learning lateral moves actually doesn't make you a vp. It makes you a better VP or a better SVP. There's some commonality between a lot of folks who, who choose supply chain as, as a profession, but we'll get to that in just a second.
Michael Jacobs [00:21:14]:
Sure.
Eric Fullerton [00:21:14]:
I want to talk a little bit about innovation in your supply chain. We don't have to go too deep into like the AI part. I'm actually thinking about you and your org, like how are you trying to innovate and continue on the path that you've set forth?
Michael Jacobs [00:21:30]:
I sell myself when I interviewed at Ferguson or Keurig or Toys R Us as a transformational leader. And when I was interviewing here, I said I've run DCs but I don't run them anymore. I run logistics, don't do that anymore. And I certainly managed inventory, but don't do that anymore. There'll be people who are better than I am at that today. What I do is I bring transformation. And the way I do that is I look beyond the four walls of the company. I know what we do, but really who is the best in the world at distribution, at E Commerce, fulfillment, at inventory management, what tools do they use, how do they use them? And by benchmarking and really looking at others, you can really out think where your industry is to try to get it to that next level.
Michael Jacobs [00:22:19]:
And there are so many areas of Ferguson, whether as we talked about AI or whether it's robotics or whether it's the way we use our network to create a competitive advantage by getting more inventory closer to the major MSAs with our network optimization work. But it's always about being the best in the world at what we do and as good as anyone else at what they do. And so we do a lot of benchmarking. How do you know you're the best of the world? You know it because you're not just comparing yourself to yourself that you're better than you were. That's incremental improvement. It's who is the best in the world and what do they do versus what you do. And really making determination. Are You a competitor in that area.
Michael Jacobs [00:22:58]:
And so to innovate, we look at many different industries, not just wholesaling and distribution, we look at consumer products, we look at technology, we look at retailing, we look across the spectrum of supply chains to really bring the best thinking into Ferguson.
Eric Fullerton [00:23:13]:
That was great. I want to close on throwing some quick hits questions and seeing what we come up with. So doesn't have to be one word or even just one sentence, but like one clear thought, each one.
Michael Jacobs [00:23:27]:
Cool.
Eric Fullerton [00:23:28]:
All right, so what is one thing that you wish everyone who worked in supply chain knew and the industry would be better for it?
Michael Jacobs [00:23:39]:
The one thing that I think the industry would be better for it would be the way you think. And so many people in not just supply chain, in all industries are swayed by what's in front of them. And you need to be independent in thought. Independence and thought brings you to new levels of capability. And I see so many people who are stuck on what we do. And how do we become incremental versus not being swayed, understanding what we do, but saying how should this work, what should we do? Not be swayed by how others think, but thinking independently to solve problems.
Eric Fullerton [00:24:19]:
Awesome. What is one trait that all of the best supply chain professionals that you know seem to have in common?
Michael Jacobs [00:24:28]:
Servient leadership. It's about developing your people and it's about working for your people. I am one person. I have 5,000 people in my group. There is no way one person can do what 5,000 people can do. How you deploy your people, how you engage your people is probably the most important thing for supply chain leader to really drive new levels of success because they're getting the most out of all of their people, not just themselves.
Eric Fullerton [00:24:56]:
Awesome talk. Supply chain trends. I have a hint. I think I know what you might say, but can I get one supply chain trend that is overrated and why and one that is underrated?
Michael Jacobs [00:25:09]:
Well, I will say the overrated is pretty simple as you said. I think artificial intelligence is here and it works. But is it really ready for prime time? I don't think so. Through all the pilots that we've done, we have yet to find something that is truly revolutionary to what we do. I believe we're on the cusp of some really great things. I don't think the technology is quite there yet, but you can see it's right around the corner. It's just not yet on the street. I think the other piece of technology that really works well is robotics.
Michael Jacobs [00:25:48]:
Through robotics, we've gotten better utilization of our buildings. We are as much as 3 to 400% more productive than we were through traditional methods. And we are faster than we've ever been. As mentioned, we could do things in 10 minutes today that used to take over an hour for a human to do and walk a building. So I think there's just so much applicability to so many industries in robotics. The problem is it's a pretty hefty investment and you need to be able to explain where the return is and really analyze the benefits versus the cost. But I think robotics is something that is a game changer for many companies. And even a company like Ferguson, where we're dealing with 5,000 pound pipe, you'd say, how can robotics really help you? And the answer is 65% of what we actually handle can be handled by robot.
Michael Jacobs [00:26:38]:
And we've learned that. And so there's just a lot of applicability. And how you bring that to your organization can really gauge future success. And the other point that I'll make is about people and how you engage people. I think that, as I mentioned before, being a servient leader is very important, but bringing out the best of your people is very important. I'm a strong believer in the power of the crowds, that the crowd has a better view than any individual. And getting feedback from your people, listening to the feedback and adjusting from that feedback is also a very important component to an executive success.
Eric Fullerton [00:27:16]:
One last question for you and then we'll wrap it up. What's your hot take on the industry supply chain today that you think most folks may not agree with?
Michael Jacobs [00:27:27]:
Well, I think supply chain people will agree with this. I think COVID was probably one of the best things that could have happened to supply chain because it taught people the value of a powerful supply chain versus a lackluster supply chain. It puts supply chain really at the front of the boardroom versus the back of the boardroom as just being a cost cutting exercise. Cost cutting is important, but if you don't have the product, you could cut all the costs in the world. It really doesn't matter all that much. And so I think between COVID followed by west coast issues, followed by the Suez Canal issues, followed by the east coast issues, followed by ships hitting bridges. There's been so much disruption in supply chain. And really the great supply chains are the ones that take it in stride, have plans in place and actually execute plans.
Michael Jacobs [00:28:21]:
And they don't wait till the last moment when there's a disaster. They're way ahead of it. And I think that for Ferguson, that's a large part of the secret to our success is how we proactively manage a lot of these disruptions that are happening. And even how we managed through COVID, that even through COVID, we were always in a good inventory position, and that kind of carried us through. And our company grew, I think, almost 25% during COVID and that's because we had the product that others weren't able to get. And I think that's a big differentiator for great supply chain leaders.
Eric Fullerton [00:28:54]:
Yeah. Is that resiliency? All right, Michael, It's a great conversation. Your expertise and knowledge is very palpable. So thanks for spending some time with us, and I know all of our guests appreciate it. Thank you as well for being a supply chain champion.
Michael Jacobs [00:29:11]:
Well, Eric, thank you for the time today. It's just a pleasure to be able to talk about what we do at Ferguson, the supply chain industry, and really the factors that lead to success. So thank you for all you do as well.
Eric Fullerton [00:29:26]:
Thank you for listening to Supply Chain Champions. To get connected and learn more, visit project44.com and click the link in the comments. To subscribe to project44's newsletter. Tune in, get smart, and move forward.