Early in his career, Robert Martichenko recognized that although lean principles had long been utilized to improve manufacturing processes, companies would greatly benefit by extending those practices to partners within the supply chain. This idea led him to launch LeanCor Supply Chain Group, a company that provides lean supply chain and logistics training and education, consulting, and third-party logistics (3PL) services.
Martichenko's mission is to help organizations apply lean thinking to eliminate waste, improve supply chain performance, and build a culture of operational excellence. But this is not just a commercial objective for him. He also devotes a considerable amount of his time to promoting education in this field. In addition to running his company, he is a senior instructor for the Lean Enterprise Institute and the Georgia Tech Supply Chain and Logistics Institute, and is a frequent speaker for industry groups around the world. A Six Sigma Black Belt, Martichenko has written or co-authored six books. Two of them—People: A leader's day-to-day guide to building, managing, and sustaining lean organizations, and Building a Lean Fulfillment Stream—have won the Shingo Research and Professional Publication Award for research and writing that conveys new knowledge and understanding of lean and operational excellence. (He's also just written his first novel, Drift and Hum: The Great Canadian-American Novel, about friendship, growing up in the north, and dealing with life's challenges.)
Martichenko's influence has been widespread. He has expanded the boundaries of supply chain management to include lean practices, a development that is helping businesses to better manage globalization, market and product complexity, and changing customer preferences and demand patterns.
For his thought leadership and devotion to improving professional standards and educational opportunities in supply chain management, Martichenko received the 2015 Distinguished Service Award (DSA) from the Council of Supply Chain Management Professionals. The prestigious award, the organization's highest honor, is given to an individual for significant achievements in the logistics and supply chain management professions.
The Timmins, Ontario, Canada, native recently spoke about lean, innovation, and education with Supply Chain Quarterly Editor Toby Gooley.
Name: Robert Martichenko Title: Chief Executive Officer Organization: LeanCor Supply Chain Group Education: Bachelor's degree in mathematics from the University of Windsor (Ontario); Master of Business Administration in finance from Baker College Business Experience: Worked in the transportation and warehousing industry in Canada and the United States; founded LeanCor in 2005 CSCMP Member: Since 1998
Your education was in mathematics and finance. Has that helped you in your career?
There is no question that mathematics has been and continues to be helpful in my work. A lot of problem solving in logistics and supply chain has an analytical element, and mathematics is extremely helpful. There's very little you can do in supply chain management without that.
My MBA in finance came later; I did that after 10 years in industry. I specifically chose to focus on finance, as opposed to operations, because I was getting operations experience at work. I had recognized that one reason why we were not moving the ball down the field in supply chain as quickly as we needed to is that we were not connecting with the language of finance: revenue, operating costs, margin, and working capital. I thought that was important, and that I needed a more solid education around the language of the [chief executive officer].
Why is the lean philosophy—originally developed for manufacturing—important in supply chain management?
Because lean originally was used for manufacturing, the term "lean manufacturing" took hold, which is unfortunate because it perpetuates the idea that it's only about manufacturing. What lean says to us is to make customer consumption visible, then manufacture and distribute to the pace of customer consumption. So lean in its essence is a supply chain strategy.
If you look at the companies that pioneered this concept and at those that have successfully implemented lean from end to end, they're actually lean supply chain organizations. If you look at the ones with underwhelming or unsuccessful initiatives, it's because they believed lean is only for manufacturing, and they never connected lean to their customers. So what they have is factories that are building inventory faster and stockpiling inventory that's going to sit in a warehouse for six months. That business sees marginal or no actual benefits.
A lot of organizations believe that simply using lean tools to identify and eliminate waste is a lean system. For example, some organizations are using lean tools, such as 5S, quality at the source, and one-piece flow, to improve a particular function. But I would say that's a tactical definition of lean thinking. Then there's a true strategic definition, where you're using it as a business methodology to create a learning culture that is focused on flow. You want to create a business environment where problems are made visible and you can see and fix the root cause by focusing on flow. It's about the end-to-end flow, not just about using tools at the functional level.
You're known as an advocate for supply chain innovation. What role can innovation play in supply chain management?
When people see the word innovation, we most often think of technology. But I think the real breakthrough is not one of technological innovation but one of thought innovation. We have to think about things differently. We need to move away from a focus on achieving economies of scale and toward economies of time. [For example,] reducing lead times is the most important thing we should be doing.
The idea of total cost and understanding the end-to-end system costs of these business decisions—that to me is innovation and the next frontier in supply chain. We're now working on a concept called supply chain advancement, or SCA. At essence, it involves the recognition that people at all levels of an organization make business decisions, but the value or waste created by those decisions will be manifested inside the supply chain. For example, people could make a business decision in marketing, but that decision is not going to create value or waste in marketing, it will do that in the supply chain. The same thing happens in product development, and similarly for all other functions.
What that means is recognizing that every single decision being made in a business is going to have an impact on the supply chain. Whether you have 10 people or 10,000 people in a company, every one of them should have some fundamental knowledge of supply chain management so they will understand the impact their decisions will have on the supply chain.
You're involved in education as a volunteer, not just through CSCMP, but also at the high school and university levels. Why is that a personal priority?
Some of the work I've enjoyed the most is speaking at universities. I'm also participating in a mentoring program at the College of Charleston (South Carolina, USA). I do this for a few reasons: I am passionate about the industry, and even today, with all the great work that CSCMP has done and the universities are doing, there is still a lack of understanding about the jobs and roles that are available to young people in our field. We're a long way from kids in high school understanding the amazing world of supply chain, and I want to help young people understand the great career opportunities it offers.
Focusing on training and teaching, and getting in front of young people, senior executives, and other professionals also makes me clarify my own thoughts. I've written several books, and writing is my way of synthesizing my own thoughts. When I teach, it's similar.
Confronted with the closed ports, most companies can either route their imports to standard East Coast destinations and wait for the strike to clear, or else re-route those containers to West Coast sites, incurring a three week delay for extra sailing time plus another week required to truck those goods back east, Ron said in an interview at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
However, Uber Freight says its latest platform updates offer a series of mitigation options, including alternative routings, pre-booked allocation and volume during peak season, and providing daily visibility reports on shipments impacted by routings via U.S. east and gulf coast ports. And Ron said the company can also leverage its pool of some 2.3 million truck drivers who have downloaded its smartphone app, targeting them with freight hauling opportunities in the affected regions by pricing those loads “appropriately” through its surge-pricing model.
“If this [strike] continues a month, we will see severe disruptions,” Ron said. “So we can offer them alternatives. We say, if one door is closed, we can open another door? But even with that, there are no magic solutions.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.
CSCMP EDGE attendees gathered Tuesday afternoon for an update and outlook on the truckload (TL) market, which is on the upswing following the longest down cycle in recorded history. Kevin Adamik of RXO (formerly Coyote Logistics), offered an overview of truckload market cycles, highlighting major trends from the recent freight recession and providing an update on where the TL cycle is now.
EDGE 2024, sponsored by the Council of Supply Chain Management Professionals (CSCMP), is taking place this week in Nashville.
Citing data from the Coyote Curve index (which measures year-over-year changes in spot market rates) and other sources, Adamik outlined the dynamics of the TL market. He explained that the last cycle—which lasted from about 2019 to 2024—was longer than the typical three to four-year market cycle, marked by volatile conditions spurred by the Covid-19 pandemic. That cycle is behind us now, he said, adding that the market has reached equilibrium and is headed toward an inflationary environment.
Adamik also told attendees that he expects the new TL cycle to be marked by far less volatility, with a return to more typical conditions. And he offered a slate of supply and demand trends to note as the industry moves into the new cycle.
Supply trends include:
Carrier operating authorities are declining;
Employment in the trucking industry is declining;
Private fleets have expanded, but the expansion has stopped;
Truckload orders are falling.
Demand trends include:
Consumer spending is stable, but is still more service-centric and less goods-intensive;
After a steep decline, imports are on the rise;
Freight volumes have been sluggish but are showing signs of life.
CSCMP EDGE runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Resort.
The relationship between shippers and third-party logistics services providers (3PLs) is at the core of successful supply chain management—so getting that relationship right is vital. A panel of industry experts from both sides of the aisle weighed in on what it takes to create strong 3PL/shipper partnerships on day two of the CSCMP EDGE conference, being held this week in Nashville.
Trust, empathy, and transparency ranked high on the list of key elements required for success in all aspects of the partnership, but there are some specifics for each step of the journey. The panel recommended a handful of actions that should take place early on, including:
Establish relationships.
For 3PLs, understand and get to the heart of the shipper’s data.
Also for 3PLs: Understand the shipper’s reason for outsourcing to a 3PL, along with the shipper’s ultimate goals.
Understand company cultures and be sure they align.
Nurture long-term relationships with good communication.
For shippers, be transparent so that the 3PL fully understands your business.
And there are also some “non-negotiables” when it comes to managing the relationship:
3PLs must demonstrate their commitment to engaging with the shipper’s personnel.
3PLs must also demonstrate their commitment to process discipline, continuous improvement, and innovation.
Shippers should ensure that they understand the 3PL’s demonstrated implementation capabilities—ask to visit established clients.
Trust—which takes longer to establish than both sides may expect.
EDGE 2024 is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and runs through Wednesday, October 2, at the Gaylord Opryland Resort & Convention Center in Nashville.
While the Council of Supply Chain Management Professionals' 2024 EDGE Conference & Exhibition is coming to a close on Wednesday, October 2, in Nashville, Tennessee, mark your calendars for next year's premier supply chain event.
The 2025 conference will take place in National Harbor, Maryland. To register for next year's event—and take advantage of an early-bird discount of $600**—visit https://www.cscmpedge.org/website/62261/edge-2025/.
**EDGE EARLY BIRD Terms & Conditions: Promotion is for the EDGE 2025 conference in National Harbor, Maryland. Offer valid for Premier and Basic Members only. Offer excludes Student, Young Professional, Educator, and Corporate registration types. Offer limited to one per customer. Offer is not retroactive and may not be combined with other offers. Offer is nontransferable and may not be resold. Valid through October 31, 2024.