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.

It used to be if you didn't do things right in

the store, a customer's cost to change was driving perhaps

further to another store in an eCommerce type transaction. The

cost of change is the movement of a thumb.

Excellence, professionalism, innovation, and

collegiality. These are the values the Sam M. Walton College

of Business explorers in education, business, and the

lives of people we meet every day, I'm Matt Waller, Dean of

the Walton College and welcome to the Be Epic Podcast. I have

with me today, Tracy Rosser, who has an incredible background in

logistics and supply chain management. He recently was

Executive Vice President of Operations at Uber Freight. He

was with Walmart for 22 years in a number of roles including

Senior Vice President of Transportation and Supply Chain.

But he's been involved in supply chain, operations, distribution,

transportation, and other things. He was actually even

earlier in his career, the General Manager of a Walmart

Distribution Center, which is a huge, huge job. And he is

currently a Strategic Advisor for a private equity firm, known

as NewRoad Capital Partners. Some of you may have heard

earlier podcasts with Clete Brewer, one of the founders of

NewRoad. It's a really amazing private equity firm that

combines both, you know, investor partners with operating

partners. And so they get people with lots of investment,

investing experience and expertise, but also people with

lots of operating experience. Thank you so much, Tracy, for

joining me today. Appreciate it.

You bet. Thanks for having me, Matt.

You know, Tracy, you have an incredible

background. And there's a couple of things I want to make sure I

talk about with you today. One is your learnings from COVID.

And two is supply chain resiliency. I know they're two

things that you have learned a lot about and have a lot of

thoughts on. But before we get into that, if you wouldn't mind.

Let's talk a little bit about your experiences in logistics,

and in operations and supply chain. And if you wouldn't mind,

I'd like to go back to your role managing a Walmart Distribution

Center, which is a huge responsibility. So would you

mind talking about that a little bit?

Sure, Matt. So I'll drop back very quickly for

a little bit of context. Prior to that general manager time. So

I spent nine years right out of college in the truckload sector,

and in truckload transportation, doing you doing dispatch work,

customer service work, and then on the commercial side and

operations side, and then that was kind of my entree into

Walmart, you know, worked in the private fleet for a little bit

at at Walmart. And then was asked to go learn how to run a

distribution center. And so I went through a crash course

training at Warehouse 8 here in Bentonville. And then off to

Lawrence, South Carolina. And it was really interesting, Matt,

because throughout my career up to that point, I had been

engaged with truck drivers in the trucking business, and the

fleet. And so I was always supporting a group that was very

mobile and not at the office at the same time. And so with the

Walmart fleet, I had, I think it was like 12, 1500 drivers that

that was responsible for maintenance facilities,

bettering the western half of the US. And then all of a sudden

in Lawrence, South Carolina show up, and there's, you know,

there's 900-1200 people within the four walls of building that,

that, that you were responsible for supporting every day. And so

that was probably the biggest change was, you know, leading a

group of people that you had to look in the eye and be

accountable to on a daily basis, and then, knowing that everybody

there knew more about the operation than you did. It

didn't matter who they were. They knew more about the

business than I did. And so I had a lot of great teachers from

forklift drivers and unloaders to managers, who were really

patient and taught me a lot about the business. But it was a

great, great learning. So I did that at the Fashion Distribution

Center. And then also we had a and this one was all under one

roof. And it was the only building like it that Walmart

had Matt. And it was, I think, 2.1-2.2 million square feet. And

there was a regional distribution center on the other

side of the firewall, so Warehouse 14 and 15. And so then

I had responsibility for both of those over time.

I can imagine you learned a lot about just the

operations of a ware a distribution center, as well as

managing people of all different types. But you also, of course,

have experience in early in your career at Walmart, you also were

responsible for Inbound US Transportation Operations.

That, that hit more close to home in terms of

what I was really familiar with in terms of the the inbound

transportation side of the business. And so in that role, I

supported all the inbound flows to the Walmart Distribution

Centers. And so it was really, really nice having the trucking

experience, and then the warehousing experience, because

I could kind of tie the two together, and understand how

those pieces really fit well together to achieve overall

success. And that's where I really got to know Walmart

really, really well. Because everybody in the company was a

customer on the on the transportation side. And so we

purchased all the transportation needs for the company, my team

did both domestic and international, and on the

inbound flows. And so because everybody was a customer those,

and that's kind of where I've always started, my my work is

trying to understand what customer needs are both internal

and external. And it was great, it was great learning about the

merchandising side of the business in a different way.

Because the merchants were my customers, the vendors were my

customers. And then we worked and established what I thought

was really great relationships with carrier communities across

all modes, to really help inform them of what our needs were, and

develop some great relationships that that, you know, met the day

to day business needs, but also really helped us through some

very, very critical times whether it was you know, port

strikes or hurricanes or you know, just any type of

disruption. But the other fun thing that was that I learned a

lot about, you know, the the network engineering in how

important the engineering side of the business was, how

important optimization capabilities were, you know, not

only support the growth of the company, but do so in a way that

met the needs of the company and having a network that really

drove best in stock, best freshness and lowest landed

cost. So that's where I really learned a whole lot about the

company and how the company really worked was on a broader

scale was supporting that, that inbound business.

So that, as you said, heading up inbound

transportation, you learned a lot about the company, because

you had to deal with so many people that were needing

transportation services. But then you shifted gears again, no

pun intended. But it's a big shift where you went into store

operations.

Sure, Matt, it was a big shift. What I knew about

store operations at that point, A being a customer, and in

shopping Walmart stores, and then B everything you learn

through osmosis of the Walmart system. To me, this was like

really putting the bow on supply chain, because stores in my

mind, the way that that I thought about them was they were

another point of distribution or another part of the supply

chain. But to me, that's the most important piece of the

supply chain. And it's where the supply chain actually starts.

And then that and then what are your commitments to the customer

that then define how the supply chain should function? And so I

kind of learned that you had to work backwards, then in terms of

really designing a supply chain. And it also, you know, held held

true from a freshness standpoint, because we were you

know, at that point in time you know, we were pretty big grocery

operation. And so most of my stores were supercenters. And

again, I went into that that business with it with literally

hardly any training and I was the benefactor of a lot of

really patient department managers, store managers, market

managers, regional vice presidents that really, really

taught me a lot. And I learned a lot from customers also because

we made a lot of changes during that time. And the customers

would let you know it and the customers knew price like the

back of their hand. And if you changed price a penny they would

tell you. And so and our store associates would hold hold us

very accountable. Matt, I tell you, it was probably the most

valuable experience I had in my time at Walmart.

Wow, that's so interesting. I've heard other

people say that in all different areas of Walmart. Well, and

then, you know, as as Senior Vice President of Operations,

you will, you're responsible for over 300 stores, multi format

stores, and over 20 billion in annual revenue and 90,000

associates. That's a that's a big responsibility. That's,

that's bigger than most, you know, Fortune 500 companies.

Yeah, it was a lot of fun. But boy, you that, you

know, not only what you learn about your internal operations,

but also the communities because everybody's highly engaged in

the communities. You know, your stores are part of the

community, and just the the expectations that the

communities have of a Walmart store, whether it's on a micro

basis, or macro basis. So the internal factors of driving

sales and profitability for the company and doing it right. But

also the external factor as well, which I think is much

about going into the job.

It's interesting, five years in distribution, five

years and transportation, five years in store operations, I

would guess the next one would be five years, but it wasn't it

was longer, six years, and that is Senior Vice President of

Transportation and Supply Chain. And so during that time, you

were managing global transportation, domestic

transportation, the Walmart private fleet, which is

enormous. And last mile/home delivery, merchandising supply

chain services, what a big operation. Would you mind

speaking to a little bit about how that combination of

distribution, transportation, and operations played into your

ability to do that? Conduct that job well?

Yeah, Matt, you know, I was really fortunate to

have that role. And in really, it was a culmination, it was

like when everything kind of came together, because of having

truckload experience, you know, prior to Walmart, a little bit

of the Walmart private fleet experience, then the inbound and

the distribution centers, and then the stores and the time

with customers. I really went into that job with a lens that

was vastly different than had I not gone to the stores, I had a

total view of what is it that we need to do to fuel in stock and

price, because I had seen firsthand how valuable that was,

and I had walked enough competitors to know what

competitors were doing in the marketplace. And I really,

really got a sense of what was important to our customers and

our people, and so the lens that I looked at was, how do we serve

the customer in the way that they deserve to be served that's

consistent with the brand and in what we were trying to do as a

corporation. And then also serve the people and really remove

hurdles so that our people can just get the job done. And

empower our people and give them the tools to get the job done.

And then stay out of their way. And, you know, I was playing

around with last mile and had the last mile team in San Bruno

had responsibility for that. And we were just testing and

learning a lot of stuff like, I mean, we were just throwing mud

against the wall, really trying to figure out how we get our

cost per unit down on final mile delivery. And so we were really

playing around a lot in the sandbox. And now that has become

more perfected and it's grown. And so now the number of

deliveries are significantly greater than when I was there

just just because of the sheer number of home deliveries.

Well, you know, ecommerce in general, not just

Walmart, but in general, is so huge now. And reverse logistics,

dealing with the returns has become a really big problem in

the industry in general. Because the policies are so liberal

around taking returns, I can't remember I want to think I read

somewhere that 30% of products are returned that are bought

through eCommerce, something like that. Shoppers don't often

know how challenging it is, and all the costs involved in

reverse logistics. What do you think about that?

If the Rosser household is any barometer of

returns, I would say it's probably 50%. But but I'll tell

you what it is. The returns network in I mean, this with all

due respect, it is like and this held true, like, I got to see it

first and foremost, because again, in that purchasing

transportation standpoint, we had to move all the returns, and

we had to engineer a return network. And there's so much

cost that's there. Again, it's typically and it's funny, you

bring it up, it is one of the and I still think it's like one

of the most ignored pieces of the business. It is a discipline

that that needs more focus to be quite candid with you. Because

of all the costs and all the waste. If it doesn't happen,

right can be just huge dollars of low hanging fruit to go get.

Well, you know, I wasn't planning on bringing it

up in this conversation. But I had just read something in the

Wall Street Journal about this, of course I I've been aware of

it for a long time, at any rate. I want to shift gears a minute

here. You have you are a astute leader, you pay attention to and

you reflect on what you're experiencing. And you read a

lot. I would love to know, what did you learn from COVID?

Wow. Okay, so we'll get into, into the into my

last role, Matt. So I had left Walmart and had the really good

fortune of meeting Frank McGuigan, who was the CEO of

Transplace, which was founded here in Northwest Arkansas. So I

had responsibility for all the operations, Frank had just taken

over as CEO, and, and so I had the good fortune of having

responsibility for the operations of the manage and

transportation business. And the manage a lot of people I think

Transplace is one of the best kept secrets in all of all of

logistics. At the time, when I went there, I think we had about

seven, seven and a half billion dollars in freight under

management. And so many Fortune 100 companies were Transplaces'

customers. It was really interesting. So I was six months

into the job. And I spent my first six months just out

meeting customers. And so I think I visited about 85% of our

revenue. And so I was just getting to know our customers

and our people and then COVID hit. And so, you know, we have a

building here in Northwest Arkansas, and in two or three

days, and we were a technology company, and that was the other

thing, everybody, we had our own TMS platform and all of our

customers ERPs connected with our TMS platform. In gosh,

probably three days, we made a decision to send everybody home.

And so we were and that was all around, you know, our full

operations. So we did that we went remote. And then we started

to learn. And I'll tell you, Matt, there were so many

learnings from COVID and I'm going to jump to supply chain

for just a minute. What happened is resources started to become

really scarce. And so the the two biggest issues that that

arose is labor became incredibly scarce at our customers

facilities, their manufacturing labor, their distribution labor,

and then raw materials became scarce, packaging became scarce.

And then the other thing that became scarce was the supply and

demand imbalance because of truck drivers became scarce. And

then you had you had a dip in demand initially, and then

demand skyrocketed as people started settling in at home. So

some areas demand just declined. But in other areas, you know, it

just demand just escalated relative to resources that were

available. And so what started happening is, customers were

shipping our customers were shipping from where ever they

had inventory, the network did not matter. Because you had the

Walmarts of the world and the Kroger's and Target's of the

world Costco's that needed merchandise. And so people were

shipping wherever they had merchandise and their fill rates

diminished from probably, you know, 100-95% fill rates, in

some cases, 40% fill rates. So you had all these trucks that

were running significantly greater distances, with far

fewer units on them. So your cost per unit was really high,

your lead times have totally changed. And so and then the

carriers networks are now disrupted. And so now you had a

total hodgepodge of things happening and costs were going

through the roof for our customers. Customers were

starving for data because their costs were escalating, and they

didn't know why. And so we had to go from really generating

monthly reports or quarterly reports on people's networks, to

now we were really seeing the need to run data and analytics

at the daily basis, weekly basis and rolling it up so we could

show our customers what was happening in the network. And

then we started to advise them on where there was waste and

leakage. But the problems were so big and so complex. What I

learned is, and it was fantastic, because it's

something that I had an insatiable appetite for in my in

my previous days at Walmart. And we felt like we kept our C suite

really informed is our customers really needed to bring a CEO to

the table, the Chief Financial Officer to the table, the Chief

Operating Officer, Chief Commercial Officer, Head of

Manufacturing, Head of Supply Chain. And we had customers that

really did a great job of getting those people to the

table. Because the decisions were huge, the dollars are huge,

customer service impacts were huge, that they needed the data

to make decisions that were bigger than just a Chief Supply

Chain Officer. And then we saw companies that didn't do a good

job of that. And so it was our job to help facilitate that. I

think if good things came out of COVID, it's the from a supply

chain perspective, is information became more real

time and data and analytics and people's understanding of the

drivers of their network and cost and waste, improved.

Now, everyone's kind of aware of supply chain.

You know in economics they say the best way to figure out the

marginal benefit of something is to remove it. Right? In other

words, by having problems in the supply chain that helped

everyone see the the what it's doing, what it's providing, how

critical it is to business, it is business, really. How do you

think this current, let's assume that, you're right, there's a

lot more information people are paying more attention to it. Do

you think that'll make supply chains more resilient in the

future if we maintain that?

I hope so and I think so. I think people learned

what were the vulnerabilities were. So I think people are

shoring up vulnerabilities. And so when you do that, like Matt,

we saw people that didn't have network designs completed and or

they didn't have the capability to re-engineer their network on

the fly. So as as there were external forces that would cause

you to re-engineer what your network was. And that was one of

the things Walmart did a phenomenal job. We had a great

engine set of engineers, great set of people, had great

technology. And the, what I would call the realignment

process, was really sound.

When will you say realigned? You mean, which DCs

served which stores?

Exactly. You know, it affects your inbound flow. So

there were companies that lived with significant suboptimal

networks because they didn't have the capability and the

muscle to realign and so and everything starts with a great

blueprint. So if you didn't have the great blueprint, then there

was, you know, you had to figure out where the waste was. And so

I still see that as a shortfall for a lot of shippers.

Well, I think part of that lack on the shipper side

often is a result of just not emphasizing supply chain

logistics to the point that they should.

Yep, and Matt, a couple of other things that

would tell you that I think about when I think about supply

chain resiliency, it's kind of doing things right the first

time gives you degrees of resiliency when there's

disruption. And then the other piece that's not talked about,

and I saw this where a lot of shippers at Transplace would own

their own carrier contracts, or own their own, or they would a

lot of shippers have procurement. That held a lot of

weight in the procurement divisions that held a lot of

weight in their companies. And so these are strategies that

shippers have. But what they what they failed to have is the

the appropriate relationships with their providers. I would

tell you having those relationships is incredibly

important and having a strategic understanding of how you're

going to work with each other, when there's disruption is

incredibly important. And so you spend all your time working on

those things when times are good, so that when times aren't

good. You know, you've got something in place that puts you

in a better position than your competitors.

Well Tracy this has been extremely insightful.

Congratulations on your amazing career and journey and really

appreciate you taking time from your busy schedule to visit with

me this morning.

No it's an honor to spend time with you Matt and

appreciate the conversation.

On behalf of the Sam M. Walton College of

Business I want to thank everyone for spending time with

us for another engaging conversation. You can subscribe

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