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.
Rick McDonald [00:00:00]:
This is really about identifying the problems you have to solve in your supply chain, getting them rank order, pairing them up with either human assets or digital assets, and working as quickly as you can to have the change management right. So you get the full utilization out of that gear that you just bought. The marriage of human and digital assets are going to have to accelerate much more quickly. And that's a place that I think we could all stand to really, plus up our game.
Eric Fullerton [00:00:32]:
Welcome to Supply Chain Champions, the show brought to you by project44, where we're talking to the people who make supply chains work.
Eric Fullerton [00:00:41]:
Hello, and welcome to Supply Chain Champions. I'm your host, Eric Fullerton. I am joined today by someone whose supply chain journey went from a metal fabrication factory to Frito-Lay to 32 years at Clorox, culminating as Chief Supply Chain Officer, Rick McDonald. Rick, thank you very much for being here.
Rick McDonald [00:01:05]:
Eric, it's my pleasure. Thank you for inviting me.
Eric Fullerton [00:01:09]:
So, you know, obviously, as I just gave a very brief overview, you know, you've had a long and successful career. You had about 10 years at Frito-Lay, 32 at Clorox, I guess, several years. You're a Chief Supply Chain Officer, many roles within the organization. What I wanted to ask is, when you look back at your career, can you pick a pivotal moment that you can identify that was really just, like, central to your eventual success?
Rick McDonald [00:01:39]:
First of all, I'm impressed. You found the metal fabrication plant factoid that was way back in the time machine. So well done on that. I think my moments of transformation and a pivot point was literally the moment I joined Frito-Lay. It was a very competitive culture, very process-driven, some of the latest technology, and I was working with a very competitive group of people. And all of that just absolutely appealed to me. And when you combine that with the continuous improvement mindset that existed in the PepsiCo companies and especially Frito-Lay at the time, that was super formative for me. And so in those first 10 years, I probably got 20 years worth of experience, or at least in my mind, that's the way I thought about it.
Rick McDonald [00:02:22]:
And that propelled me and carried me forward through the rest of my career, you know.
Eric Fullerton [00:02:26]:
You joined Clorox, I believe, in 1992.
Rick McDonald [00:02:29]:
That's right.
Eric Fullerton [00:02:30]:
Stayed with the company for over 30 years. And I think for. For some of our listeners who are, you know, very experienced in supply chain later in their career, that that seems very normal and exciting. Interesting. I'm sure for some of our listeners, though, that may seem almost like a foreign concept. Right now, it's like three, four years at a company. So, you know, I'm sure that there are many opportunities that you could have pursued outside of that company. I mean, why stay for 32 years?
Rick McDonald [00:03:02]:
For me, I can tell you, when I joined Clorox, I didn't have the intention of staying 32 years. I like the people that I was going to work with. The work was interesting and new and different. And I gave it five years. I said. And I said, you know, I can make a difference here, but probably only for five years. The company was $1.7 billion. We reported earnings last year, 7.1.
Rick McDonald [00:03:24]:
And so obviously a massive amount of growth around the world during that time period. And one of the reasons I stayed was the quality of the people, their competitiveness, their intellect, their sense of purpose and alignment with values that I hold dear to myself. Number two was the work I got to do. Am I learning something? Is it interesting? Am I being challenged? And am I getting to do things that are sort of pushing me into places where I'm not as comfortable? And then, you know, just compensation kind of tie it all together. And. And over the years, I got a lot of different assignments around the world in various parts of our business. I worked in all three of our divisions for general managers. And it felt like different companies to me over that time period because I was getting so many interesting and different opportunities.
Eric Fullerton [00:04:13]:
You know, I'm a little hesitant to talk about this topic. I feel like it comes up in every supply chain conversation that's happened over the past four years. In some ways, it's a little overplayed, but I think in your instance, it's a very worthwhile topic. So COVID-19 pandemic. A little bit of background for, you know, listeners. Obviously, Clorox was in a very unique position.
Eric Fullerton [00:04:39]:
You experienced some massive demand spikes, products like bleach and cleaning products. But from what I've heard you talk about this before, it also affected other core product areas. You're talking trash bags and then charcoal and ranch dressing. And I've also heard you say that the company essentially went from a $6 billion company in revenue to $7 billion almost overnight, which puts this massive stress pressure on and almost breaks resilience that you've baked into your supply chain. So what were some kind of specific tactics that you employed to stay on shelves and to keep your customers happy and to bring back some of that resilience?
Rick McDonald [00:05:25]:
A little bit of the backstory. And true, we did go from a $6 billion company to a $7 billion company overnight. And nobody's supply chain is really set up to be that resilient. And we found out very quickly that there was a lot of truth in that. Starting about December 19, we heard from our colleagues in China that Covid was a thing, even though it wasn't getting talked about much in the US and it was sort of being minimized a little bit in January, I said, we're going to take our forward day of supply targets for all of our products up, and we're just going to run as hard as we can in case it is something anticipating that we'd have a lot of opportunities to sell especially disinfecting products during that time period. So we did that. We ran really hard. And then, you know, the world changed forever in March, April of 2020.
Rick McDonald [00:06:13]:
And we were literally out of stock on almost everything by, you know, let's say, mid-May. So all of our best efforts to increase our days of supply, all that inventory was sold and the demand continued to still be, in some cases, 500% of normal demand. And as an essential business, we were designated essential business. You know, our job was to run as much as we as we could. And so the specific tactics we undertook, which we streamlined our objectives, I said, we're going to have two objectives. We're going to keep our people safe and healthy, and we're going to run our plants as hard as we can, given the needs of our workforce, because we knew we couldn't burn them out at the same time. So doing all the things that we could to run hard safely, but also understanding we, we didn't know how long we were going to have to run. You know, you and I both remember there was a lot of, well, wait till the weather gets warm, Covid will go away.
Rick McDonald [00:07:08]:
That didn't turn out to be true. Wait till it gets cold. That didn't turn out to be true either. All of that stuff was playing around in, in the ecosphere at that point in time, and it was just very uncertain. So that was one thing, two objectives. Second thing we did was we streamlined the number of SKUs we ran. I'll give you an example. Disinfecting wipes had a portfolio at the time of 100,000,020 ish.
Rick McDonald [00:07:31]:
Skus, the general manager, made a really quick and smart decision to say, we're only going to run 15. And obviously that maximized uptime, minimized downtime, it concentrated our suppliers on certain materials that they could produce for us to really allow us to build as much inventory as we could. And so then the other part was running our plants. And that meant creating an environment where our associates felt like it was safe to come to work. And, you know, that was a period of time of great uncertainty. And under the heading of better lucky than good, made a decision to hire an epidemiologist about six weeks into the pandemic. We didn't go out and bid this. We didn't go out and source, you know, three epidemiologists to see what the rates were.
Rick McDonald [00:08:15]:
Somebody on my team knew an individual, Dr. Hudson Garrett, he was affiliated with the CDC, and he greatly helped us kind of think through what was likely coming next. So as an example, when people were running around of the handheld thermometers that many municipalities were requiring for people to come in to work, we had all ours. When masks were in short supply, we had all ours. And social distancing. We were doing that, if not a little bit ahead of, but certainly contemporary with what the CDC was saying were things that should be done. And that gave our folks a lot of confidence that one of the safest places they could be was at one of our factories. And all credit to their courage and just everything they did for making as much product across all of our lines as they possibly could during that time period.
Rick McDonald [00:09:05]:
And they were. They were the real heroes in this story.
Eric Fullerton [00:09:08]:
I wanted to kind of talk a little bit about inventory. I think we've seen in the industry these kind of evolutions or oscillations on the perspective of inventory kind of fluctuating between just in time inventory, kind of increase that cash on hand, lower your inventory levels to just in case, which obviously was critical in Covid, and it's kind of stayed that way. Which of those is best? When, why? Like, how do you think about that?
Rick McDonald [00:09:40]:
We spent quite a bit of time thinking about that. And the reality is there's no one right answer, of course, and it depends on the problem that you're trying to solve and then how and where you think you should apply what I'll call insurance policies in your supply chain. And that is, you know, in some cases, almost a manufacturing plant by manufacturing plant decision, a material by material decision. How many suppliers are there? Are you absolutely sole sourced? Are there any alternatives? You know, one of the things that we did during COVID was we learned that we could source some of our products. A lot of places we never sourced them before. You know, it's a big world. And, you know, when you're just a $7 billion company and you're really focusing on Leveraging your supply with maybe a discrete supplier or two you're not necessarily on the market scanning for. So we, we learned and drove more resilience in the organization by having more of a just in time mindset.
Rick McDonald [00:10:34]:
Especially as we got into and then post Covid, that's helped us going forward. So I think the, you know, the key is going to be where are you really most vulnerable in your supply chain? What is your plan B? The reality is you can't afford an insurance policy for every single eventuality or every single material or plant. And so it's gonna, it's really gonna be about strategically selecting those places where you think you're the most vulnerable.
Eric Fullerton [00:11:01]:
So, you know, obviously supply chains are complex, logistics is complex, operating these ecosystems is complex. But in some ways the goal is almost simple. Like I think about it as velocity.
Rick McDonald [00:11:16]:
Right.
Eric Fullerton [00:11:16]:
Really what you want to do is you want to get inventory where it needs to be faster, more efficiently, more cost effectively. Why is it so hard?
Rick McDonald [00:11:26]:
Well, there are several factors that play into this. And you know, the first one is the interest, the desires and the timing of the consumer. For those of us consumer obsessed like Clorox and many other companies trying to figure out that demand signal is a life's work. And so I think that's number one is just understanding what the consumer is likely going to buy, when they're going to buy it and where they're going to buy it. All of us are set up, or many of us are set up as forecast to stock operations, meaning we're going to have a lot of inventory as our insurance policy against consumer demand that we don't anticipate. That's number one. Number two is really the speed with which things are moving today. I call it operating at the speed of the consumer.
Rick McDonald [00:12:11]:
None of us, you, me, anybody else who is watching this podcast, we're not going back from the conveniences that in some cases same day delivery has afforded to us. Next day delivery, second day delivery, and that creates tremendous pressure on the supply chain. So you combine that with a demand signal that's already not super accurate, and then you throw in an element of speed and now you've got a pretty complicated situation. And if you were making one or two things, you had five SKUs in your portfolio, that'd be one thing. But almost all of us have a very complicated portfolio trying to meet the needs of consumers in certain geographies worldwide. And so I think those are the things that come together and really drive the complexity within the supply chain and the challenges that we face.
Eric Fullerton [00:12:58]:
I wanted to transition a little bit into talking about leadership. One of the things that you've talked about in the past is this importance of honesty and humility and how that can really help with leadership. And I think you mentioned this when you were kind of talking earlier in your career. You had many employees, direct reports that were actually significantly older than you. Can you speak to that? Both in that context, but I think probably just more broadly how honesty and humility is an important cornerstone of leadership.
Rick McDonald [00:13:32]:
I'm actually going to take us back to my metal fabrication days and some things I learned in that operation, because that was in the metal fabrication plan. I had a chance to see, you know, sort of eight hours a day how the foreman in the shop works, decisions that were made. I've got this efficiency gene inside me and I just thought, wow, there, there are probably some better ways to do that. But there was really no interest in hearing input from somebody like me. An 18-year-old who was there for a summer job might not have the right answers, but I certainly have an opinion on how things could be done better. But nobody asked, nobody was interested. And that carried through to my early Frito days. I can't say that I had this moment of, aha, this is what I shall do when I started at Frito la.
Rick McDonald [00:14:18]:
But it occurred to me that I needed to learn how things work from the people who actually knew how they worked and not come in with the assumption that because I had some degree hanging on my wall, that I had knowledge that I didn't have. And I saw a lot of supervisors literally fail because they did not recognize the importance of working with the people who knew what they were doing in the operations, had been doing it for 5, 10, 15, 20 years, and asking questions, how does it work? What are your problems? Is there something I can help with? Those just seem like, well, sure, of course you'd ask those questions, but not everybody does. And I think approaching it like that, you know, not with the idea that I was going to be anybody's friend, but as their supervisor, I can help out in solving some of the problems that made their life on shift more difficult. That kind of stuck with me. And so as I went into roles, I started calling it the voice of the customer. And I would always begin my roles with voice of the customer conversations. In one case, when I was asked to come and fix our global logistics group, there were about 150 people or so in that group spread out in various locations. I had a one on one with every single person I Needed them to know who I was.
Rick McDonald [00:15:27]:
And I needed them to know that we were going to figure this out together. And that while I wanted everybody to make the journey, perhaps everybody wouldn't. And I needed their help to do their very best while we were on this transformation journey. So started it with the metal fabrication shop. The Frito-Lay experience greatly reinforced how important it was. And then I've. I've leveraged that at other stops in my career.
Eric Fullerton [00:15:48]:
When you think about the kind of More in quotes Modern professionals, I think everyone wants to get promoted for good reason, right? They're thinking about the short game, which is like, how do I get promoted in the next 12 months or the next 18 months? But one thing that I think you've spoken about is that lateral moves in the short game may not be as compelling in the long game can greatly enrich your career trajectory. Can you talk a little bit about that and maybe even get specific with some of your examples?
Rick McDonald [00:16:24]:
I so strongly believe in this and I've seen it play out both ways. People who have been in it for the long run and they have taken the time to develop themselves to take lateral roles at the same grade level in service of learning something that they would want to apply, need to apply, had to apply later on. I've also seen it work out where people went in more of a vertical path and faster and they got to a key role and they just didn't have. They didn't have what it took to be successful. But the first thing I'd say is regardless of what role you're in or what grade level, learn your craft in every single job. Be known for that person that delivers their commitments over and over and over again. Be reliable. And then this finding the balance between vertical grade level ascension and promotions and laterals to help you learn and facilitate your long career, that's the part that I think some folks are missing out on.
Rick McDonald [00:17:22]:
You know, for me, I spent seven years at the director level in this company that encompassed multiple assignments at the same grade level, working with some different people in different parts of the organization, learning some different skills that served me super well as I continued to advance my career. And had I had not had those assignments, I wouldn't have built the relationships I built. By the way, relationships are as much about, you know, who are you and what do you do as, how does the person think? Do I trust them in challenging situations? Do I trust them in a large leadership role where they're going to be doing a lot of things autonomously? You know, if your boss has to look over your shoulder, they get the wrong person in the job. And so these large roles, you're acting autonomously on many, many occasions. And you're probably not going to get a shot at that job if your supervisor, your manager, doesn't know how you think and doesn't trust your logic and your judgment in some of these very complicated, hard to solve decisions. So I'm a huge fan of taking lateral roles to gain that experience, to develop those relationships, to build that trust through the organization. The other thing it does is it allows you a chance to develop some followership and work on leadership skills with different groups of people. Every group is different.
Rick McDonald [00:18:38]:
Every group has a different vibe, a different culture, a different constituency. And so the more of those unique situations you could put yourself in, the better served you're going to be in the long run.
Eric Fullerton [00:18:50]:
People tend to think of their careers very linearly, but you know, sometimes that the best way to go up is actually to go sideways, even for a little bit. Not only just to get up there, but also, like, from understanding what your skill set is, learning new things, evolving your kind of, like, background and structure, and that can help serve whatever that next role may be.
Rick McDonald [00:19:14]:
So, and I would add two things to that if I could, Eric. First of all, this hopscotchy across the supply chain, I loved it. I'm a very adventurous person. I'm not an expert in everything. And certainly many of the jobs I went to, I didn't know a whole lot about them, but somebody trusted me enough to put me in them based on what I'd done previously. And it gave me the chance to learn something new and experience something new and kind of back to the how'd you end up here? For 32 years, I kept getting new opportunities that kind of fueled my tank, gave me energy, challenged me, drove my stress level through the roof at times because of the combination of performance expectations and what I didn't know about the rule. But that forced me to learn quickly. I would say the second thing is, and you know, people look at me kind of like this sometimes when I say it, but take hard jobs, ask for hard jobs, and then do them well.
Rick McDonald [00:20:05]:
It's one of your best ways to demonstrate to the organization that a, you're capable, you learn quickly, you can overcome obstacles that apparently somebody before you couldn't overcome, and you can make things better. If you gain a reputation for things that you touch get better. That is a reputation that will serve you very, very well. You're not going to get that by two, two and a half year assignments. As you move vertically through the organization, you're going to be lightly touching on those disciplines and those learnings and you'll get to a certain point somebody will. I don't really know who she is or I'm not sure I've seen her in a hard job that will not play well when you're competing for some of the most difficult and largest jobs in the enterprise.
Eric Fullerton [00:20:47]:
I have a couple kind of short style questions for you, almost like quick hits to close this out. I think you have obviously an interesting perspective on this, but what is one trait that all of the best supply chain professionals seem to have?
Rick McDonald [00:21:04]:
I think the best of us are exceptional at problem solving. It means with pace, grabbing the right set of data and or deciding without all the data. As we had to many times during COVID we had to decide and go there wasn't data, there was no history. But grabbing that data, curating the insight and then acting decisively and convincingly and in situations where you've got to convince somebody or a lot of people in the organization this is the right path. Having the right two by four messaging that accompanies that, that explains what you're doing and why you're doing it. And so problem solving I think is that one thing that if you're in the supply chain, you're good at what you do. You're a really good problem solver.
Eric Fullerton [00:21:53]:
You know Rick, it's funny. We've had the pleasure on this podcast of talking to a lot of great professionals and the problem solving equals supply chain professional is something that comes up in every single conversation. So I, I kind of felt like you were going to say that. So it's, it's just funny that these are just these common themes. It's just problem solving is one of those, those key moments. I'm not surprised to that.
Rick McDonald [00:22:20]:
Well and honestly, it's one of the things that makes this such a great discipline and a great choice for a career. If you don't mind uncertainty, you don't mind complexity, you don't mind hard problems. You like working with a lot of interesting people doing cool stuff. I mean, I can't think of a better place in an organization to plant your flag.
Eric Fullerton [00:22:39]:
Absolutely. So I wanted to play a little game called overrated and underrated. We're experiencing lots of trends today as we speak. So I was hoping you could pick one trend that you think is overrated and why and then one that's, that's underrated and why.
Rick McDonald [00:22:59]:
I'll make this comment with Respect to the fast-moving consumer goods segment. This concept of blockchain, you know, we were super hot on that for a minute or two and it's now cooled off. Do I think there's a role for blockchain at some future point as more supply chain visibility and ways to connect the supply chain end-to-end digitally occur? Yes, I do. At this point in time though, that's not a place where I think a lot of us are investing or spending much of our mind share. Talking about underrated is the value of change management in digital transformations. And it is from personal experience both sides of the coin. I can tell you when you do it well, it is amazing. When you don't do it well, it's equally disappointing.
Rick McDonald [00:23:45]:
And it's one of the reasons why I think McKinsey's reporting only 30% of all digital initiatives are achieving the ROI that is promised by whoever got approval for the spending is the change management. It's not about the tools, it's about the human beings involved and it's the mindset skill set then the tool set and change management across all that. And I think that's just a way underrated and underinvested component of digital transformations.
Eric Fullerton [00:24:10]:
It's a great answer. I think all the tech, all the AI supply chains is a people business, right? And you have to, you have to think about that part of it and actually to make use of whatever technology you may be investing in. I think it's a super important point. Is there one thing that you kind of wish everyone who worked in supply chain knew that would make the industry better for it?
Rick McDonald [00:24:37]:
If I sum up where I think the supply chain is going and what is going to be important in these next five years, it's the ability to digitally transform and to balance human assets with digital assets. Many of us are underinvested in tools and systems. The change management hasn't been there for some of the tools and systems we have invested in. And I think this concept of digital fluency in supply chain leadership is exceptionally important. What do I mean by that? Well, it's not A. A plus B equals C. That just because you grew up with a digital, a digital landscape including your mobile phone, you're somehow digitally fluent. I'm talking about technology solutions like artificial intelligence, including machine learning, robotic process automation.
Rick McDonald [00:25:22]:
You know, you've got gen AI in the mix. So what, what are the problems you have and can they be solved with some sort of digital solution? I think there are many leaders who are not up to speed enough their digital Fluency isn't high enough for them to be able to make have an informed conversation first of all and then make informed decisions about which problems to solve, in which order, with which tools and what the balance of human and digital assets should be. Between that, for me that would be one thing. If I could push a button and plus everybody up on one dimension, it would be their digital fluency.
Eric Fullerton [00:25:56]:
All right, so one last question. You know this is a podcast, so you know, trying to go a little bit viral at least. And I want to ask you for your hot take. What's your hot take on the supply chain industry today or where it's going? And you circled around the drain on a couple of these things a little bit. So what's your hot take?
Rick McDonald [00:26:13]:
This will not surprise you. I'm going to circle right back to this whole digital agenda idea and my hot take on this is you're not already transforming digitally, you're behind. This is really about identifying the problems you have to solve in your supply chain, getting them rank order, pairing them up with either human assets or digital assets, and working as quickly as you can to have the change management right so you get the full utilization out of that gear that you just bought. And it's focusing on the mindset of leadership, it's the upskilling and reskilling of all the people who will need to operate that new gear and then it's deploying that tool set. And I just believe that because of human availability, not only numbers but skills and the speed of the consumer and the value that we all have to drive for that consumer through end to end visibility, the marriage of human and digital assets are going to have to accelerate much more quickly. And that's a place that I think we could all stand to really plus up our game.
Eric Fullerton [00:27:14]:
Rick, you did really well on the rapid fire questions. I just wanted to, you know, to thank you for spending some time with us today talking about your experience, your expertise, your background, giving some really good advice for anyone who's interested in pursuing this profession or is already in it. Thanks for spending time with us. But most importantly, I think thank you for for being a supply chain champion.
Rick McDonald [00:27:37]:
Well, I appreciate that, Eric. It's been a fun show and I've enjoyed it greatly. Thank you for the invitation.
Eric Fullerton [00:27:45]:
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.