Host Mike Grain sits down with Dr. Glenn Richey from Auburn University about supply chian implications to on-shelf availability. In this part 1 episode, Mike and Glenn discuss topics including:

• Supply chain management and inventory accuracy.
• Supply chain complexity and collaboration and product availability.
• Supply chain resilience and nearshoring after global pandemic.

Good morning. Good afternoon. Good evening,

wherever you happen to be this fine day, we are coming to you

with another Conversations on Retail focused on on shelf

availability. And I have the pleasure of talking to Glenn

Richey, I guess your first your official name is Robert Bland

Richey Jr. Right? So we'll have to, we'll have to unpack that a

little bit. Because that's like 18 first names, but that's ...

we'll get to that in a second. But Glenn, why don't you go

ahead, and you're unmuted. Tell us a little bit about yourself

and a little bit of background of how you came to get into the

supply chain area?

Yeah, yeah. Kind of an interesting thing. I think

it's like, most people, Mike, it's, I didn't find supply chain

and found me as kind of the way, way those things happen. Yes,

yeah. So so I'm Glenn Richey, I don't go by Robert only because

that was my father's name. And now my son's name. The Scottish

heritage, you know, I guess we're not very creative we use a

lot of first names. Actually, these are last names, all my for

all of my first name, looking names or last names from that

part of the world. So I got into Supply Chain Management after

undergrad like a lot of people do. I thought I was going to end

up being a sales career somewhere, my family kind of had

a tradition and history of being in those types of jobs. And it

was a time period and in the early 90s, when things were

pretty rocky in sales, and the economy was doing some different

things. And I was at a management trainee program after

doing some work and co ops within manufacturing. And I was

just sure I was going to end up out of that break program in

sales and ended up in purchasing. Right, so ....

The other side of the desk?

Yeah, exactly. Which was, which is kind of a

shock, right. But what was great experience genuine parts

company, SP Richards company put me through the basis for about

nine years in the wholesaling realm where we did a lot of

retail consulting with small to mid sized retailers also, did

some Fillion supply for major players like those folks up in

Bentonville? So, but yeah, that's kind of where my history

took me. So happy that it did. It's been a fantastic career to

be in. Now, I might not have said that in 2020, during the

COVID disruption crisis, but I mean, supply chain managers,

their job is to try to fix those types of problems. So we had

some of those revealed at the time.

Nice. You know, I actually it's funny that you say

that because I do a lot of guest speaking at the University of

Arkansas supply chain with Matt Waller and Brent Williams, and

Donnie and all those folks. And I usually have the first

question is like: how many of you have ever heard of supply

chain before 2020? Not a lot of people raise their hands, right?

And most of them over supply chain career path people. If

there's anything that good that came out of COVID, everybody

understands supply chain is important. The only thing that

came out of that, but there was a whole realization that said,

hey, supply chain is important. And we take it for granted. And

there's opportunities in the supply chain area. So I'm not

sure that you guys put that together as a recruiting video,

but it did certainly drive a lot of interest of people who have

gone from what the heck of supply chain to Wow, it's really

important because there's containers in the middle of the

ship that can't get unloaded. And, man, we got to figure out

this stuff. So you know, in some respects, it was it may be a

blessing in disguise. I mean, I would never want to say a global

pandemic is a blessing for sure. But it did people help people

realize the importance of supply chain. Right.

I think that's totally true. And you know, it

also showed us some of our weaknesses and those types of

things, global displacements and the kind of the distances, and

you know, some of the type products that are difficult to

get -pharmaceuticals come to mind as one of those areas that

was really problematic and maybe not talked about as much as it

probably should have been. So yeah, Mike, I, you know, on a

normal day, I don't get a call asked to speak to Congress. But

that does happen after we screw up the supply chains globally

for a couple of years. So I will say that one of my comments to

them and one of my very first comments to them similar to what

you're saying is to tell them that there is no "the supply

chain," right. This is a massive network and web of different

organizations that come together to get the product where it

needs to be. And if it was 'the' supply chain, the two of us

could fix it, but that's a problem.

Great perspective. Great perspective. Well, let's,

Okay, well, yeah, so I've worked a number of

let's unpack a little bit about you. And I told you I was going

to ask this question because this is really a trick question

if I don't say, so you have been part of the supply chain and

obviously part of Auburn University for a while. You've

universities now. A couple of them have pretty good football

got a lot of associates and colleagues and family etc. Get

tell one thing about that about yourself that maybe a lot of

people don't know, I think this would be interesting.

teams. Right. So that that makes for a kind of interesting

transition when you move from Oklahoma to Alabama to Auburn,

which I think some people would call me, you know, Benedict

Auburn, for that move from Alabama to Auburn. But, you

know, this sports are a big thing on university campuses,

and and I've been involved to some degree or the other,

probably most of my colleagues don't know that I started my

college career at South Alabama as a soccer player. I don't look

Soccer?!

like that today.

I was a goalkeeper at the University of South Alabama to

start, start my career. But there's a bit of irony there.

Because when I ended up at the University of Alabama, a couple

of years after being on staff there, a guy named Nick Saban

asked if I would be able to step in and maybe do some recruiting

for the football program at Alabama. So I'm a former college

soccer player who did recruiting for football at the rival school

from where I work today.

Oh, my gosh. All right. So when - for those of

you don't know, you want to talk about a rivalry. Alabama versus

Auburn is one of the most noted out what side of the field do

you sit on Mr. Richie?

I mean, you know, I always love to root for

Auburn. But sometimes when it comes to point, you got to stay

with the people that brought you there my undergraduate degree

from the University of Alabama, so, so yeah, and then you gotta

have Oklahoma in there, too. It's very confusing, very

confusing for me, and for a lot of people here too.

Fascinating, fascinating. Well, that's

awesome. What a great, what a great soundbite. We're gonna get

into supply chain supply chain is really the purpose of the

topic here. But I love to ask this question every time I talk

to somebody, because in it in terms of being a supply chain

professional, you're also a customer, you go into stores

every single day to buy things you want. I spent a lot of time

in Home Depot and Lowe's, because I'm just kind of like

that kind of stuff. And there have been times where I have

looked for a specific wrench or a specific part for a specific

project, and they don't have it. And I've told those stories

multiple times how frustrating that is from a customer

experience. So walk us through, I'm sure you've had an

experience over the last six to 12 months where you went into a

store expecting to pick something up, and you were

disappointed. Please don't say who it was. I don't need that I

don't need that alpha, you can just you know, if it was if it

was a big box retailer that does do it yourself, you say one of

those big box retailers, as much as you can tell us because

you're a customer as well. I'd love to hear your side of the

business being disappointed at the store shelf.

Well you know, all of the supply chain work we do

whether it's whether it's research or teaching these days,

it all starts with the customer, you know, and and the old days

of shoving it down people's throats just just doesn't work.

And it puts companies in a really poor financial position.

So So you know, when I when I get I'm probably hypercritical

about this stuff, Mike, because I go in and go where's the damn

stuff that ought to be here. It's a guy that spent a good bit

of his career in wholesaling, you know, on shelf availability

is is key for us. You I mean, we are the ones expected to make

sure that the products there. So I'm talking about 99.9, 99.6%

inventory, accuracy and availability at all time. And

those were the old standards. And so when I walk into the

retail venue where I used to do a lot of consulting and can't

find whatever it is, yeah, I do get upset. And I also know from

the research, that that's the trigger point where people

decide to buy elsewhere. And so if you're running that brick and

mortar facility, like you were just talking about whether it be

this do it yourself or that do it yourself, if the product is

not at one and you find it at the other, you're you're pretty

much destined to go back to that store where you found the

product the last time and that means the store that had the

basket of product has lost all of those orders from that

customer. And we all know the cost of trying to reconvert

customers, my issues and the ones that I run into tend to

happen in the grocery business more than anywhere else. It's a

place that I think most of us go to weekly or at least every

couple of weeks. I'm gonna just go every couple of days and I've

done a lot of Supply Chain Finance teaching and the in the

grocery food business. So yeah, I'm the one that does most of

the shopping in this family and, and when the product is not

there, you know, you're irritated, especially when it's

some of these companies that specialize in organic products

or specific health oriented things that you're going. And if

they don't have it, the only other place to take a look is

online, right. So you make that tradition to see if it's online,

the brick and mortar store works kind of as a showroom, which is

not what they want to do. And probably the worst of all it is,

is that, you know, all of the quality that we add from the

supply chain really deals with demand and supply balance. And

you can never get to the demand and supply balance if you don't

know what you didn't sell. So during my comprehensive exams in

my PhD program at Oklahoma, the Dean slipped a little question

into my oral exams that I didn't know it was him; Dean Robbie

Evans, great guy, super helpful. And the thing just said, you

know, 'how do you account for lost sales in a grocery setting

due to poor inventory accuracy?' And I wrote this thing, Mike,

this must have been seven or eight pages thing? And the

answer to the question was: you can't, right. And so I, you've

spelled this out in the oral thing and everything and Dean

Evans looked at me and said: 'Do you believe that shit?' So that

was the kind of real-life practical type of professor I

had to become after that discussion. And you don't,

right. So if that bottle of kombucha that was hot last week,

doesn't get sold doesn't end up on the shelf? And who knows how

many you missed? And so what do you do? Do you the extrapolate

and go long and hope you're right that you missed a bunch of

sales? Because unless the customer comes up to the front

desk, you just don't know. So, you know, we went through, we

went through a period in the 90s, where it seemed like

everybody was going to low inventory, closer at the retail

impact, they have fewer items on the shelf and tighter type

inventory and rely on the suppliers to fill quickly. And I

think we found, you know, during the COVID crisis that we weren't

as streamlined and healthy as we thought we were, which puts the

retailers at extreme risk, right. So yeah, so that's the

kind of crazy stuff that goes through my head when my favorite

bottle of kombucha is not on the shelf at the grocery store.

Right. So when so unpack that one. I'm gonna I'm

gonna I'm gonna double-click. Okay, so that, I don't even know

what kombucha is. I guess that's ... Is that ikea sauce? Or a

liquor?

It's a drink. It's a drink. Yeah.

Thank you. Thank you. Thank you. Kombucha.

A probiotic drink. Yes.

It must be. It must be an Auburn thing. I don't know

what that we don't drink that here in Arkansas. That's all I

can tell you. I don't even know what it is. But alright, so it's

not there. What do you do?

Yeah. So I mean, the first choice is, you know,

do you swap to another brand? Okay, and, you know, I picked

that category, because the brands are very different.

There's a lot of loyalty specifically to different

products in that category. And so if it's not there, I mean,

this is a consumable that you really can't buy on the

internet, right? It's a refrigerated product. And so

you're gonna go somewhere else to try to find it. And, you

know, you're the customer, if they can't find it becomes

completely frustrated, at least, you know, a stain on the on the

business, right? So the other thing that potentially could

happen is now that I've come in on Wednesday, and it's not

there, and I come back here on the next Sunday, let's say

Saturday, Sunday, and I see that it's there, then maybe I

over-buy right. Maybe too much. So now you're not gonna see me

for a couple of weeks on that item. And you also don't know

how to forecast for the next several weeks will be while I'm

not buying and other people may or may not be so so yeah, if

it's not there, lots of bad things happens.

Got it. Got it. I want to I want to I want to

double-click on something you just said here. And I think as I

think through it and again I am not a academic trained

professional I would love to I'm I'm a Glenn Richie wannabe your

a Matt Waller wannabe kind of day. But when I simple mind, I

kind of think of if the store needs product. Okay, well, first

off, just because it's in the store doesn't mean it's on the

shelf. And so there's a whole okay, I may have 27 cases of

sitting in the back room, but they're not a sales floor, you

might as well be out of stock. Because the kiss of death is

asking an associate, 'well let me go back in the back room and

check.' Oh, I wait for this is going to take forever, right?

But the triggers to deliver product to the store if it's

kind of a replenishment process is three fold. Three pieces of

very simple data that I think of: number one, how many do I

have? Right? Number two: how many do I think I'll sell today?

That's kind of the forecast And the third one is: if I order it

today, how long before I get it? So I'm sure there's 500 other

ones you would say. But let's just say that those are the

three. To talk to us a little bit, you said inventory

accuracy. And you and I were working on some stuff prior to

this call that unfortunately, got put on hold right now. But

it will try to measure the impact of inventory accuracy to

sales. Talk to us about the impacts of things like, okay,

Grant, those are the three, how much do I have? How much am I

going to sell? And when I'm going to get it, I would think

when I'm going to get is probably the most reliable? What

are the challenges of trying to get an accurate sales forecast

and an accurate on hand?

I mean, that's, that's the you and I both know,

that's, that's, that's a crazy question, right? Because there's

so many things at play. And you know, when you think back, you

know, when I think back to the late 80s, early 90s, still had a

lot of specialty shops, right? You mentioned some hardware

stores earlier, lots of those mall hardware store, small

office product stores, and the owner could walk through in the

afternoon and go need this need that need this need that. And

then the refill would be typically be overnight, which

which was a really nice situation, now you've got these

stores that have 200,000 square foot, and who knows how many

SKU's, you know, continually influx growing and, and

shrinking and doing like the accordion to try to figure out

what the right mix is. And so as we add and make those things

more complex, we end up in a situation where it's more likely

that we're going to have missed sales. And so you know, you've

kind of put that in your head, I remember some of these

hypermarket type type stores trying to do home delivery or

you know, direct pickup and finding out that the customer

ordered 10 items, and only seven are in stock. And even though it

looked like the items were in stock, well, those blue T shirts

were actually all extra small or something like that. So those

needs and consistencies, and the customer wanted, was not there.

So I mean, all of those things have to get come together, Mike,

they gotta be synchronized. You need to have a good business

partner that can be with you on the forecasting and say, you

know, kind of know your actions, know your activities. And you

know, all the tech that we use is very important. But there's

also managerial decision making that comes within those

forecasts. And and we got to have people there, high people

involvement, to make those types of decisions. Otherwise,

somebody comes in and makes a big order. It's a one time

thing, we repeat it now we have money tied up in something we

can't sell, which is the other side of of kind of this

discussion.

Great point. Well, so how does somebody from a

procurement buying potential selling role suddenly flip the

script and go into the supply chain? What was it about the

supply chain that intrigued you to go and get a degree and then

basically spend your most of your professional life focusing

on supply chains?

Yeah, and it's been most of my life has been

tied towards it, you know, it. I mean, I was lucky enough, I

guess, to get tied with with Genuine Parts Company, which is

an outstanding distribution, business very, very cost

focused, and very, very service quality oriented. So a good

portion of my training came, you know, from that experience with

that company that kind of opened my eyes to these crazy

distribution networks, all the relationships between business

business, to business, marketing, business, business

management. And I can also see, I guess, at the time that the

world was changing, that that the information Tech was

becoming much stronger, people were starting to move more

towards e commerce, not that not that they were even there, but

But certainly, they were moving towards e commerce when I

started to get involved in this. And on the finance side of

things, people were saying, we're cutting out the middleman,

we're gonna get rid of wholesalers, this is how we're

going to save money. But the reality of the supply chain

network was there's no way that could happen. Because there were

too many customers at the end, right? So you can have major

manufacturers delivered to, you know, a major retailer, but you

probably can't have major manufacturers deliver every

customer, right? And so I kind of saw that activity going on

the rise of third party players and, and got really interested

in it and, you know, then sometime along the way, I

decided I'd leave the real world and study from the other side,

right? And so, I mean, I think it's a it's a dynamic field,

it's always changing. And, you know, as somebody that that

started this thing out as a goalkeeper, you're trying to

keep all the balls out of the net, but in play, and and at

least, you know, have your head on a swivel so you can see what

the next disruption is what the next problem is.

Awesome, awesome. Well, this, this particular

channel, and frankly, a lot of what I do is all focused on

shelf availability and people like well, supply chain on shelf

availability are the same thing? Well, no, they're not. Because

Because I would argue you can have a very perfect set up

supply chain that delivers product to a store. But because

of operational challenges, it's not where it's supposed to be.

So I'm going to exclude those for a second. But as we think

about on shelf availability, the supply chain, and I don't know

if you've ever seen those videos, I saw it a few times

I've given in classes, which is how a number two pencil is made.

Have you ever seen this?. And it's got 40,000 people working

together and trying to figure out how to get rubber from here

and metal from here and lead from here. And you go, how do we

have any pencils at all? I mean, he's like, just so complicated.

But that's a small fraction of the complexity of the supply

chain. So what is a supply chain? How that was I think

about all the different ways that customers can buy omni

channel brick and mortar, combination of pickup and MOPIS

and ROPIS, and all those other kinds of real things with which

is buy online, pick up in store and then doing research. What

role does the supply chain play in making sure that products

available for the customer no matter where however they want

it?

Yeah, I mean, the I would say that we have, you

know, forecasting techniques that involve cooperating with a

lot of different players right in I think that's, that's really

key is to have. And we call it collaborative planning for

forecasting and replenishment, right? When in supply chain, we

can make an acronym out of anything. So CPFR is is is what

we talk about there. And, you know, people treat it as a real

kind of strong, specific program. But if you can think

about it, you know, you get the heads together across the

different levels, what the manufacturer is able to do, what

the distribution network is able to deliver in the amount of time

that's available. And of course, there are lots of different

options, and then what the needs are at the end. So I mean, you

need the retailer to be able to predict what they think the

sales will be so that the manufacturer can get all of

those different lines of product in place. So think about that

funnel, you just talked about that pencil, and all the

interconnections for that pencil all come back to what the

customer does on the end, right. And so it's really the customer

the triggers that work but in order for the product to be on

the shelf that works gotta be in process before the forecast is

even made. Right? So those things need to be ongoing

updated. Good contact. I mean, there are great companies out

there, you know, that are doing this, this type of thing. I know

that my son will actually be in Bentonville for a couple of

couple of months. This summer actually working with our RFID

lab for Walmart. So Walmart RFID. Lab. Some interesting

stuff. Yeah. So maybe I need to look ly the look them up. I've

spent a few years by the 22. Working on RFID for Walmart. So

let's either be doing up there. There. I'm not 100% Sure. Maybe

it's maybe a little bit incognito. But oh, that's true.

That's true. It's all about getting the different

technologies in place so they can support decision making. And

you know, well that's fantastic and bad. That's so that's

certainly what they're what they're known for.

Well, but I can tell you, he's gonna have you calling

the hogs from Auburn when you do that.

I've already got enough programs I got a root for

right now, Mike, don't do that.

Nah, I think we didn't add another one. Because

I still haven't. I mean, now we're gonna really go off

tangent. Is your mascot a tiger or an eagle?

Oh, here down here. Yeah.

Which one is it? Pick one!

That's right. I mean, or ...

Which one is it?! We have a Razorback. Now I don't

know what a Razorback means. But a Razorback hog is our is our

mascot. We have one. You're the only university I know that has

two.

Yeah,

Yeah, I will tell you that I plugged in some of

this stuff into one of the AI things and was like, Okay, why

is the Auburn's mascot the tiger? This is probably six

months ago. And part of the AI spit out was that it's related

to the number of tigers that are in the Alabama and Georgia

region. Which obviously is not true. But it's a little bit of

both, you know, it's a little bit of a more is more is better?

I don't know.

I love it. All right, well, so talk to us. We

just we basically feel like it feels like we're on the other

side of the global pandemic. But as I kind of set up before the

global pandemic was horrible in a lot of different ways. A lot

of people passed away and a lot of people were just absolutely

scared to death and all kinds of supply chain challenges too. But

it did make people aware of this thing called the supply chain.

So what are we out of that now? Is that hold we back to whatever

normal looks like that's kind of like four years later. What are

your thoughts on that?

Yeah, I feel like it depends on the product line,

right? We've seen some some products, heavy manufacturing,

that kind of thing and really move and adjust and try to be

better in terms of responsiveness and then we see

some others that have kind of gone back to business as usual,

hoping that things go back to business as usual. You know, I,

when I think about this, and this is a part of my research

agenda is that I feel like we underestimated risk, which is

quite obvious. And all of this, this chase toward optimization

of pricing. So you start looking for partners regardless of where

they are in the world, regardless of the political

risk, regardless of the economic risk, and try to come up with

the low landed cost coming from wherever to you know, and so a

lot of that drove us to suppliers in China, they have,

you know, good, good quality support from labor, they can

make some good products. You know, I know early in

manufacturing for China, they were making Christmas tree

lights, right. And if you think a thing that upsets customers

when you lose one of those lights set. And so nowadays,

they're producing all kinds of things, right that customers

love. But that stretched at stripe and stretched us to a

position where if their government makes a decision, it

impacts all of our different supply chains that run through

there. Not to mention the other things that we saw health

related issues, they're having some labor related issues now.

So So in all honesty, we need to do re-shoring and find better

backups and alternatives. And Mike you may remember, you know,

in the early 90s, we were on a three call at least system with

most of our suppliers, you had an A customer out there that

would fill 75-80% of your stuff, you'd have a 50 to 20 right,

with a B customer, a supplier, sorry, and then you'd have

somebody at the bottom that's getting 3-5%. And it's healthy

competition that want to move up that ladder. And your systems

are all in place so that if one of those messes up, you can flip

the switch and bring more in from the other. Now, obviously,

there's contracting, there's capacity issues and that type of

thing. But it at least gives us some some level of support. So

we get to see more movement movement to that. Yeah, the bad

news for Western countries is that the Chinese businessman

realize this quite some time ago, probably a couple of five

year plans ago. So I think we may have even talked to spend

some time in Africa every summer working with researchers and to

help with supply chains in Central Africa. I go down to the

breakfast each morning. And there'll be, you know, heavy

duty, high quality business people from China, and they are

talking to several different local Africans at each table. So

it might be five on one here five on one, they're looking for

opportunities to spring up businesses, in locations that

are nearshoring, to places like the United States and Europe. So

that's an area I think that Western countries need to be

more involved, especially the United States, and certainly in

Latin America. And if we really want to see that move away from

the disruption we ended up in, we need to become more

responsive, right? We need to be thinking about flexibility,

adaptability, agility, and improvising when we need to,

those are the things where the focus needs to be not consistent

optimization of our costs. And, and so I think we'll figure that

out, you know, Brian Gibson and I have have written a few things

for Accenture that I think are helping train some purchasing

agents to think a little bit more broadly along those lines.

And of course, then there are all kinds of other issues that

come into play, like regulation, sustainability, and those types

of things that we'll have to see. But I don't think we're out

of it until the network's been redrawn. And then after the

network's redrawn, it has to continually be adjusted. Right.

So I wouldn't wish this on anybody. But if 2025 We

have another global pandemic, are we in a better position than

we were in 2020? Are we still in the same?

I mean, I think I think we're in a better position

largely because strategically decision makers and supply

chains have had to go out and look and see what the options

are now, whether they've made the change or whether they've

been able to build infrastructure and or a new

place to, to source product, or how about a new issue in terms

of labor actually training these people up so they can do the

work in these parts of the world where we really don't always

always get product, or our huge important issues. So yeah.