First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  August 1, 2008  

Limited Brands’ Nick LaHowchic Unplugged, Part 2


In Part 1 of my interview with Nick LaHowchic, former head of supply chain at the Limited Brands, I called him “the thinking man’s supply chain executive,” and as I reread the Transcript of Part 2, I came away convinced that characterization was spot on. There is an intellectual rigor to the way Nick thinks about supply chain that is simply not often found.

Gilmore Says:
I also really enjoyed our dive into how you might assess whether a company’s supply chain needs fixing or not.  His first step – look at what the organization said it would do over the past few years, versus what actually happened. How would your supply chain stack up in that regard?

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We covered a lot of ground in part 1 (link above), and now I would like to summarize part 2, which again traversed some very interesting supply chain terrain.

One consistent theme through any discussion with LaHowchic is looking at the entire supply chain as a truly connected system – not a series of different functions. The supply chain is like a balloon, he told me – you squeeze it in one place, and a problem pops out somewhere else.

“Without a total business systems view, if you want to make corrective actions, you look at simplistically as just fixing this or that, without looking at the whole,” he told me.

Another consistent theme is getting the metrics right – again, not letting metrics create a siloed functional view of supply chain performance.

“If you are continuing to reward subsets of the process with no connection to the results in any other areas, then you are forever going to have people trying to do the best they can do at that one area and really screw up the rest of the supply chain,” he said. You want metrics that help “get to the best answer for the company, as opposed to looking at what’s best for manufacturing or what’s best for transportation. It just never comes out right for the company overall if you have that type of culture and systems.”

I also really enjoyed our dive into how you might assess whether a company’s supply chain needs fixing or not.  His first step – look at what the organization said it would do over the past few years, versus what actually happened. How would your supply chain stack up in that regard?

“You will learn a lot from that exercise,” he said.

“In many companies, it’s often that the discussion hasn’t been at the right level, nobody brought a focus to it, or there has been some great rhetoric but no action was taken,” he added. In too many companies, plans for supply chain improvement “continue to go as just great rhetoric.”

I asked LaHowchic how a company would know it was time for a “supply chain transformation.” A key point, he said, is recognizing that what makes a good supply chain for a given company can change very rapidly. Understanding what the right supply chain is for a company right now is an exercise in constant vigilance.

Many companies “are doing what seem to be good [supply chain] things, but those good things are against a set of targets that are years old. So they are not the right things today to really make a difference to be more competitive with the customer in the marketplace,” LaHowchic said.

One easy example – companies that were running a tight supply chain ship, but which have been focused primarily as a domestic supply chain. Go global, and what worked well in the past no longer is very relevant.

Companies “come to find out is that when they start to go overseas, the existing models they had were way off in terms of global organizational and operational performance,” LaHowchic observed.

Next, a very important topic for many SCDigest readers. My experience is that when a supply chain transformation is initiated, it’s almost always when a new supply chain executive is brought in, or perhaps a new CEO who perceives a need to shake up the supply chain. So, the key question is: can the existing team really lead a supply chain transformation?

Sometimes, LaHowchic said – but I got the idea not too often. He said frankly that sometimes a supply chain organization in trouble lacks the talent to lead a transformational effort. Even if they have the talent, too often complacency with the current model and performance has set in, and changes need to be made. Who hasn’t seen that situation sometime in their career?

“When you have people doing the same thing for a long time, it becomes equally challenging for them to really think in a sense about their self-destruction and reinvention,” LaHowchic added.

Interestingly, LaHowchic brought up an example from his own career, when he was at medical device maker Becton Dickenson. It had a fine, global executive team. It developed a solid strategic plan. Just as a double check, they brought in well known author/consultant Jim Collins (Good to Great) to have a look at the plan – and he promptly told them it was mostly baloney (a little stronger term, actually).  Collins told the execs “You think you are this capable, but it’s an aspiration, not a reality. Test your numbers. Detail what it will really take to get there.”

Finally, I liked the discussion we had about changing delivery schedules at Limited Brands. When LaHowchic came in, store deliveries were optimized based on transportation – not store efficiencies. LaHowchic wanted to change that – deliver on scheduled times, allowing stores to get the right receiving personnel in place and also increasing selling time on the floor.

“When I started to look at it that way, the first reaction was: We have never done it that way, why would we want to do that?” LaHowchic said. “The result of this effort was hitting 98% of deliveries within 2-hour windows, to 6500 stores, doing it for less than they did 5 years before relative to overall increases in transportation expense.”

There is a lot more, including LaHowchic’s advice for middle managers wanting to reach senior levels, but we’re out of space – hint: work hard, but don’t be too patient. You’ll find all that and more in the full transcript.

I promise you will enjoy it.

What’s your reaction to LaHowchic’s view on supply chain management? Can the existing team really lead a supply chain transformation? Why do companies settle into supply chain complacency – and how can you avoid that trap? Let us know your thoughts at the Feedback button below.

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