The manufacturer of security and safety products quickly adapted its supply chain strategy to continue meeting customers’ needs in the face of the COVID-19 pandemic. The lessons of 2020 are helping the company be ready for the next supply chain disruption.
Mark Kosfeld (kosfeld@uwm.edu) is the associate director of the Supply Chain Management Institute at the University of Wisconsin-Milwaukee’s Sheldon B. Lubar College of Business, with 16 years of supply chain experience.
When the COVID-19 pandemic disrupted supply chains in March 2020, The Master Lock Company had many questions to answer: How do we continue to get our customers the products they need? How do we do so in a manner that keeps our employees safe from the COVID-19 virus? How do we support our suppliers and allow them to continue to produce the components that are needed for our products?
Master Lock, the No. 1 padlock brand in North America, manufactures thousands of stock-keeping units (SKUs) that are used in a wide variety of applications for consumer, commercial, and industrial end-users. Its customers include home centers, hardware stores, retailers, wholesale distributors, and specialty dealers.
Materials are sourced both domestically and internationally for the company’s U.S.-based lock manufacturing business. When materials were in short supply in March 2020, Master Lock took quick and decisive actions to continue to manufacturer and deliver products to its customers.
Empowering a dedicated response team
Immediately, Master Lock launched a cross-functional COVID response team, referred to as the Project Management Office (PMO). Justin Matuszek, director of product management, was appointed to lead the effort. The PMO had representation from product management, sourcing, demand planning, manufacturing, sales, production planning, customer service, and finance.
The objective of the PMO team was to make real-time decisions about how product would be prioritized and delivered to Master Lock’s customers. To manufacture and deliver product in a worldwide pandemic, though, employee health and safety had to be the No. 1 priority, so the PMO team was also responsible for making real-time decisions that kept Master Lock employees safe from the COVID-19 virus.
The PMO’s leaders knew that for the newly formed response team to be successful, it needed dedicated staff across business units as well as executive support. Instead of overloading employees by asking them to contribute part-time to the PMO and cover their normal responsibilities, Master Lock dedicated cross-functional resources to the team. This strategic decision maximized everyone’s focus on the PMO’s objective and removed any competing priorities that would hinder Master Lock’s ability to react.
It was crucial that the PMO establish the right operating rhythm. To begin each day, the response team met for a deep dive into its supply chain activities of the last 24 hours and to set goals for the next 24 hours. Task lists, sometimes down to the hour, were created so PMO team members could hold each other accountable. This structure provided the decision-making speed and agility that was necessary to make real-time supply chain decisions. Matuszek recalls, “There was no waiting for executive summary meetings. We had the authority to make decisions and, if needed, executive leadership was brought in to make sure we remained aligned.”
With the objective defined for the cross-functional response team and the daily operating rhythm in place, the PMO could focus on protecting employees from the COVID-19 virus, protecting Master Lock’s customers, and supporting its suppliers.
Protect the employees
A top priority for the PMO was to ensure that employees could continue to rely on a clean and safe work environment every day. Following U.S. Centers for Disease Control and Prevention (CDC) and local guidelines, Master Lock implemented strict protocols around testing and tracing for COVID-19. Employees were required to wear a face mask and a face shield at facilities where associates worked in close proximity to each other and to maintain social distancing where possible. Clear barriers were also installed to protect associates in offices, cubicles, the cafeteria, and other places where social distancing was difficult to maintain.
Communication also played an important role in keeping employees safe and informed. As market uncertainty increased, the leadership team realized that the frequency and transparency of communications needed to increase. Employees needed to know what decisions had been made about protecting their health and safety and about how to continue to service customers. Leadership shared not only what was known but also what was still unknown in the supply chain. This transparent communication allowed employees to focus on the company’s most critical objectives while also keeping the door open for questions or for employees to voice concerns.
The physical threat of COVID wasn’t the only thing affecting employees. Master Lock’s leadership understood that some employees needed extra support. The company launched a wellness program in 2020 for all employees. The program included additional counseling, daily live-streamed fitness classes with certified instructors, yoga sessions, talks by nutritionists and psychologists, and initial consultations with certified counselors to help employees set personalized mental-health and well-being goals.
Protect the customer
In a time of supply and demand uncertainty, one of the primary concerns was the potential for panic buying. To help address customers’ concerns and protect supply, Master Lock regularly held conference calls with key customers to review the company’s supply chain recovery plan. Master Lock shared supply constraints and recovery plans with those customers and kept them apprised of changes to plans that were based on evolving safety procedures.
Relying heavily on the engineering and product teams, the company identified alternative solutions for customers. In some cases, a similar product was in stock (or the components to manufacture it were in stock) and could be substituted to meet the customer’s needs. In other cases, product had to be reworked at Master Lock’s manufacturing site to support the customer’s requirements.
Finding alternative solutions for customers’ orders created ripple effects throughout Master Lock’s supply chain. Plans that showed the effort, capital, lead time, resources, and material required were quickly pulled together. The team worked cross-functionally to drive quick actions, often with customers’ input and partnership.
“We were given resources from all areas of the business, and if input was needed from a specific discipline, they dropped everything to get the answers needed and respond back to the team,” Matuszek says. “We transitioned from ‘how can our supply chain team fix this’ to ‘how can I help fix this?’ ”
The daily rigor of the PMO and the priority given to customer-focused activities proved to be key to Master Lock’s ability to quickly respond to changing needs. This responsiveness was critical to ensuring that customers could continue to count on Master Lock as a business partner.
Support the suppliers
Master Lock also met regularly with suppliers of the key components in its products. These suppliers shared what they knew about labor, raw materials, and product availability, and Master Lock did the same. They also shared information about new government regulations, methods for protecting employees from COVID-19, and changing business practices. As the suppliers navigated the pandemic and started to ramp up production, the meetings transitioned from information sharing to Master Lock working collaboratively with its suppliers on a daily production schedule. This daily communication was critical to ensure the right product was produced to meet changing customer demands.
One of the options the PMO considered was to vertically integrate manufacturing of the components that were in short supply. Master Lock’s analysis showed that vertically integrating would not allow the company to react quickly enough to supply chain disruptions. To adapt as quickly as possible to the changes in supply and demand, Master Lock instead focused on increasing its suppliers’ surge capacity and reducing their lead times. Toward that end, the company partnered closely with its suppliers, engaging in data-driven discussions around commodities, materials, labor, transportation, and other factors impacting product cost and service levels.
In one instance, Master Lock worked with a key supplier to increase production capacity by 25% in about eight weeks. The supplier shared information on how quickly capacity could be added and whether constraints were a matter of labor and/or equipment. Master Lock and the supplier laid out a plan to optimize the investment in additional capacity. Some of these discussions were already in motion prior to the pandemic, but with the immediate need for surge capacity, the project was able to be fast-tracked at this supplier.
Creating a path forward for 2021
Largely because of Master Lock’s experience during the pandemic, risk assessments and discussions are now part of the company’s “daily huddle,” a cross-functional standing meeting designed to update all employees on key business operations, including safety, quality, cost, orders, shipments, and supply. Each functional team provides an update on key performance indicators, obstacles, and situations that may impact revenue or growth so that employees and leadership keep their finger on the pulse of the business.
Prior to the pandemic, Master Lock had launched a “Next Generation Sourcing” initiative, but the pandemic environment provided additional guidance for the sourcing strategy. Through this initiative, Master Lock continues to strengthen supplier partnerships with surge capacity in mind, assess make vs. buy decisions, and find ways to reduce lead time for critical products and components.
The company also continues to prioritize finite resources using an “80/20” approach. In general, 20% of a company’s products create 80% of the value; accordingly, 80/20principles are emphasized throughout the organization so that finite resources are used to manufacture and deliver the 20% of the products that drive 80% of the value. These principles are proving especially valuable as the company decides which components warrant increased spending on airfreight and which components should be shipped via the standard ocean freight. This approach ensures that key product inputs can be delivered in time to meet customers’ needs.
Master Lock was able to successfully adapt its supply chain amid the challenges of the pandemic. Today, the company continues to benefit from what it learned in 2020, and many of the practices put into place during that time continue to help the business. With all the progress it made, the supply chain team is staying agile to be able to meet customers’ needs—no matter the environment.
J.B. Hunt President and CEO Shelley Simpson answers a question from the audience at the Tuesday afternoon keynote session at CSCMP's EDGE Conference. CSCMP President and CEO Mark Baxa listens attentively to her response.
Most of the time when CEOs present at an industry conference, they like to talk about their companies’ success stories. Not J.B. Hunt’s Shelley Simpson. Speaking today at the Council of Supply Chain Management Professionals’ (CSCMP) annual EDGE Conference, the trucking company’s president and CEO led with a story about a time that the company lost a major customer.
According to Simpson, the company had a customer of their dedicated contract business in 2001 that was consistently making late shipments with no lead time. “We were working like crazy to try to satisfy them, and lost their business,” Simpson said.
When the team at J.B. Hunt later met with the customer’s chief supply chain officer, they related all they had been doing for the company. “We told him that we were literally sitting our drivers and our trucks just for you, just to cover your shipments,” Simpson said. “And he said to us, ‘You never shared everything you were doing for us.’”
Out of that experience, came J.B. Hunt’s Customer Value Delivery framework. This framework, according to Simpson, provides a roadmap for creating value and anticipating customer needs.
Framework for Excellence
J.B. Hunt created the above framework to help them formulate better relationships with customers.
The framework consists of five steps:
Understand customer needs: It all starts, according to Simpson, with building a strong relationship with the customer and then using the information gained from those discussions to build a custom plan for the customer.
Deliver expectations: This step involves delivering on the promises made in that custom plan.
Measure results: J.B. Hunt believes that they are not done when freight makes it to the destination. They also need to measure how successful they were versus what the customer expected from them.
Communicate performance: This step involves a two-way exchange, where J.B. Hunt walks the customer through their performance and gets verbal agreement on whether or not they have met the customer’s needs.
Anticipate new value: Here J.B. Hunt looks at what they are hearing from their customer today and then uses that information to derive what the customer may be looking for in the future.
Simpson said the most important part of the process is the fourth step, communicating performance (perhaps reflecting the piece that went wrong in that initial failed customer relationship).
Not only can this framework be used to drive excellence in a company, but it can also be adapted as a model for driving personal excellence, Simpson said. Instead of understanding the customer needs, the process starts with understanding yourself: what your strengths and interests are. This understanding helps drive a personal development plan and personal goals for the year, which can be measured and assessed. For example, each year, Simpson gives herself a letter grade on each of her personal goals and communicates her assessment back to her boss. She has also found it helpful to anticipate where opportunities lie beyond what she is personally doing.
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.