KANE’s new Chief Operating Officer is Richard McDuffie, a 30-year logistics industry veteran with a strong track record of driving operational excellence in logistics across the retail, manufacturing and 3PL industries. We recently sat down with Richard to discuss some of the changes he has seen in the industry over the years and what the future might hold.
Q: How do you see your role at KANE?
A: Mostly as an enabler. In our industry, the people who keep customers happy and make the money are standing in distribution centers and sitting behind the wheel of a truck. Success in the COO role comes from engaging these associates and tapping into their ideas and energy.
Q: Describe your approach to logistics operations.
A: I think my perspective is influenced by the fact that I have spent significant time in third party logistics operations (with Ryder, JB Hunt, and Cardinal Logistics) and on the client side (with AutoZone and Williams Sonoma) directing the efforts of 3PLs. It certainly helps to have a first-hand understanding of the challenges our clients face in trying to turn their supply chains into competitive levers.
Q: Since you have a few decades of experience, what are the major ways logistics operations have changed over the years?
A: Of course, the change has been constant. It’s almost easier to talk about what hasn’t changed, and that’s the fact that this is still a people business. It’s hard to run a successful operation without great people committed to doing right thing for the customer. Technology can enable a greater level of speed and accuracy, which is important. But operational excellence is only achieved through hard work of dedicated people. That’s really the secret sauce.
Q: Would clients agree with this assessment?
A: I think they would, yes. Customers want to work with 3PLs that truly understand their business at an operational level. Again, that comes down to people. “Sticky” is a word used to describe customer relationships that sustain over time. It’s usually associated with technology. When the systems of two companies, let’s say a 3PL and its customer, are connected, it’s commonly believed that the organizations are less likely to disengage because of these deeper systems connections. We don’t hear that term “sticky” in the context of people, and I’m not sure why. Putting on my 3PL customer hat, I really appreciated the 3PL DC manager or supervisor who understood my products and processes as well as I did and was able to make proactive recommendations. Where that kind of contribution exists, a real hole is created if those people go away. I think people have a huge impact on relationship longevity.
Q: Speaking of people, is it becoming harder to find and keep the right people?
A: Absolutely. In fact, it’s probably the single biggest challenge we face in this industry. With the unemployment rate so low, the competition for available jobs is limited and it puts a premium on holding on to existing associates and keeping turnover low. Clients don’t like high-turnover environments because they know it impacts work quality. Thankfully, associate retention is an area where KANE really shines.
Q: Have shipper expectations changed over the years?
A: The biggest difference I have noticed is the speed with which customers want status updates. Shippers have always wanted visibility, but today they want the data immediately and they want to define how and when they receive it. Some only want visibility to the exceptions. There’s so much available data – on inventory, orders, deliveries – that busy executives could never pay attention to it all. They prefer to be notified only when an exception occurs, such as a potential late delivery.
Q: So that alert allows them to take action?
A: Actually, they prefer to be informed of the potential problem and the 3PL’s recommended fix. 3PLs need to be accountable and proactive about identifying and addressing these exceptions. No customer likes unhappy surprises. As the expert operators, it’s up to us to prevent them.
Q: Is there anything that you believe needs “fixing” in order to maximize the benefits of 3PL outsourcing?
A: This is getting into the weeds a little, but one of the absolute keys to success in transforming a logistics operation is having a thorough data set that accurately reflects the operating environment. Believe it or not, this is sometimes difficult to get. Corporate logistics departments have become so lean that they struggle to keep the data updated or to pull it in a way that’s useful. When a 3PL gets inaccurate data, the solution design will reflect it, and that could spell disaster when the business starts operating.
Q: Can anything be done?
A: It comes down to having open, honest discussions at the solution design stage. There’s a time for a 3PL to be flexible and “easy to do business with,” but this is not one of them. If needed, we must push back if the data set is poor or partial. Data integrity can be painful and time-consuming, but it ultimately translates into the best, most economical solution.
Q: What operational challenges are on the horizon?
A: Well, one that’s here now and not just on the horizon is omni-channel distribution. As retail sales skew more and more toward eCommerce, KANE is handling a larger and larger percentage of these direct-to-consumer orders. That’s an exciting change and our business is evolving to handle high-volume, pick and pack operations right alongside traditional retail distribution.
Q: Any closing thoughts?
A: Just that I’ve known and admired KANE for many years as an industry observer and a direct competitor. I could not be more excited about the opportunity to lead its warehousing and transportation teams.