Podcast: Marcia Williams on Supply Chain Optimization and Digital Transformation

Highlights from the Conversation

Can you tell me a little bit about your background and experience in supply chain?

• I’m originally from Uruguay, and I came to the United States to pursue my MBA from Michigan State with concentrations in finance and supply chain.
• From there I had many great opportunities; I worked for Alcoa, the aluminum company, in supply chain, and also for Cummins. In my consulting practice, I’ve had the opportunity to work with small, medium and large companies, like Coty, Lindt, and US Nonwovens.
• My bachelor’s degree is in accounting, and when I thought about starting my MBA I was doing accounting work. I enjoyed preparing financial statements, but I wanted to be more where the action takes place. I wanted to make decisions that generate value that people could see in those financial statements.
• That’s why I started looking for an area where I could use my finance background effectively. During my research I learned about a new field called “supply chain”. No one seemed to know exactly what it was, but I found out that Michigan State ran one of the strongest supply chain programs in the country, so I applied and was accepted.
• Dr. David Closs runs the program now, but when I was a student he was teaching logistics. And even at that time he was doing something completely new: he was running simulations using software applications.
• He mentioned that when many people talk about supply chain, they often don’t know what it is. Even today we need to be mindful of what we mean when we use the different terms. In the end-to-end supply chain there’s procurement, logistics, operations, and warehousing.

How did your finance background shape your perspective on supply chain?

• I use finance to show the value. To get a project accomplished, especially a transformation, we need the help of others.
• The way to get others onside is to show value. What I mean by “value” is an increase in profits. If you don’t have that when you talk to finance, they won’t understand what you mean or why it’s important.
  • By way of an example, a long time ago I worked for a company that had an agreement with a supplier to share savings (they got 50% and our company got 50%). But we didn’t define savings clearly, so they understood “savings” to mean cost avoidance. We were paying that supplier for cost avoidance, and finance was questioning why we had that agreement, because they were looking at the financial statements and they didn’t see a reduction in costs in the profit and loss statements (P&L).
  • We need to be clear about what we’re looking for and the impact, and how we’re going to be measuring the impact.
• Thanks to my background in finance and Six Sigma, I can start by asking what the baseline is, what is the agreed measurement of the baseline, and then we work towards improvement, and quantify again. This ensures that the actions have the intended impact, and we can see that in the numbers.

How did you grow into the broader world of supply chain?

• I started doing procurement; that was my area at Alcoa and at Cummins. But when I joined Cummins there were also many large projects, like implementing procure-to-pay (P2P). There were also other initiatives relating to technology, and I had the opportunity to participate in projects like this that touched all the supply chain functions, extending from procurement through logistics.
• In my view, procurement is an area that extends to all supply chain functions and beyond into marketing, legal, etc. That’s what has allowed me to see all the interrelationships between all the functions and see the whole end-to-end supply chain.
• I mentioned an example with cost reductions earlier, but also you can generate value with new products to increase profitability—that’s more related to marketing. It’s something I work on with some of my consultancy clients.

You’ve seen the full spectrum of supply chain. I’m interested in how you talk to your consultancy clients when you’re taking them on that journey, and where they’re learning to understand and to search for opportunities that can be found there.

• Since I’ve started my practice, I’ve gotten all kinds of requests. Some of them are simple, like “I want to lower my costs”. About five years ago I had a customer that showed me a plastic cap and told me he wanted that exact cap but at a lower price. So that was really specific.
• But sometimes I get requests that start with them requesting something, but really they are actually referring to something else. So when I start working with a client I try to assess where they are.
  • For example, say I recommend an application that gives them full visibility into the supply chain, so that when they place an order, they know how much is in the inventory, how it’s coming and by what date, so they can start using it in manufacturing. Even if that type of tool is the right answer, that can actually be confusing for them because if they’re in a stage where they aren’t placing many purchase orders, it makes no sense to make suggestions about technology.
• In general, I start by looking into each of the areas. I see how they’re doing and make suggestions related to processes and to data. If you don’t have those it doesn’t make sense to add technology, because you’ll get results that aren’t accurate, and their confidence will fail.
• I often look at the different cycles, like cash to cash, and analyze that. After I do that initial assessment, we start looking at priorities and focusing in on two or three. And, no surprises here, I attach metrics so I can measure the baseline.
• In many cases, the requests I get are not coming from supply chain people. They might be coming from a CEO of a growing company and he or she is looking into acquiring more businesses that will make things more complex. Operations then needs to follow, which can create issues. There aren’t a lot of resources that can help with a systematic approach to scaling operations. Because if operations isn’t supporting what marketing is selling, it all falls apart.

When you were starting out, one of the few software tools available were SAP and Ariba. How have you seen technology evolve from ERP-like systems to the explosion of supply chain platforms of today?

• If a company wants to scale, generally they will need an ERP if they don’t already have one, often SAP. But that’s more related to finance and accounting than to supply chain.
• A smaller company has different needs than a large one. A smaller company will have an accounting system, perhaps QuickBooks, but QuickBooks is not an ERP.
• When companies are scaling up and looking at more powerful systems and they talk about their requirements, often one item on the list is the ability to do simulations. ERPs are not a good solution for that, because they are designed to record transactions in real time, and are not a good tool for supply chain.
• If we move one more step and look at SAP/Ariba, they will also have procure to pay and other tools that give them visibility into the supply chain so they can do planning. They want to know, for example, if a shipment from a supplier is late how will that impact their delivery to their customer.
• Now there are more advanced systems that focus on supply chain and go beyond your own companies to connect with all the suppliers and customers. They do things like planning using artificial intelligence, and show you when you need to take action.

What’s your assessment about what’s happening with current technologies versus what’s coming up?

• It’s been changing very fast, even before COVID, even though it did have a big impact. To take action you need data, and to get the right data you need the right tech.
• Defining your requirements very clearly is such an important part. It’s also important to understand the must-haves versus the nice-to-haves. There are so many applications today, so those things are fundamental to selecting the right one. Select one that provides the core functionalities that you need, then see about any additional functionalities that they offer.
• You can have one or two core systems, for example an ERP and a planning software, which of course need to communicate together. But where there are gaps between the requirements and what the systems are offering, we can see how that gap can be covered—it might be an additional application.
• When I started, no one thought about having a procure-to-pay solution without an ERP, but nowadays there are companies that do that.
• You have to look at your combined effects and see what you need to focus on to grow and meet your customers’ expectations. You build your supply chain based on that.

You’ve written a book called “Transforming Supply Chains”, tell me about that.

• I cover ERP implementation, S&OP, and source-to-pay, but I do it in a way that’s like a story that takes place within a medium-sized business that wants to grow.
• In the first chapter, I show the reader in a simpler way what I show to my consulting clients, illustrating how the things that take place in the supply chain look in financial statements.
• I go through the different kinds transformations that the business goes through to achieve that growth, and I also get into the technical aspects of things like Six Sigma.
• I write a lot about metrics, and change management and the soft aspects that you need to consider, and I provide tools and recommendations that I think will be helpful.
• My goal is to provide a readable story about what you go through when you’re undertaking these supply chains. I like the story or use-case style that you see in books like “The Goal” or “The Phoenix Project”.
• At the end of each chapter, I recap the key points.

Looking ahead into 2021 and coming out of COVID, what are you observing in your current consulting practice?

• One of the key differences now is in how the supply chain is perceived in the organization. It’s no longer just about reducing costs or cost savings, it’s about increasing revenue. It’s both top line and bottom line.
• COVID has shown very clearly that we need to work on building our relationships with our suppliers. We never thought about what happens if our suppliers cannot provide all of the products that we need. Building a relationship with our suppliers is extremely important, because now it’s their market and suppliers select the companies they want to sell to. Contract management and relationships are much more important now.
• If we want to grow we have to learn how to work with suppliers that aren’t in the same room with us. They might be in China, India or other countries. There are time differences and cultural differences that we have to be mindful of, even if we aren’t doing face to face meetings. But we’re learning to develop those relationships, even with our new digital tools. I’ve written about this for Forbes, and I have many examples of working effectively with suppliers I’ve never met.
• I know I keep coming back to metrics, but they really can help with communication in digital relationships, because everyone knows instantly how well we’re doing.
• It’s also very important to be responsive in replying to emails. Answering those emails later in the evening or early in the morning shows people that they’re important.

Any other concluding thoughts?

• We need to take this time as an opportunity. 2020 is supply chain’s year. We need to do those assessments and see how we can do better.

More about Marcia Williams

Marcia earned her MBA in Supply Chain Management and Finance from the Eli Broad College of Business at Michigan State University in 2005. After several successful stints with Alcoa and Cummins, Marcia founded USM Consulting in 2010 to help companies to increase their profits by cost reduction through strategic sourcing and supply chain transformations, including ERP, IBP/S&OP and P2P.

At Alcoa, she led a global online bidding event for calcium silicate parts and achieved $1,400,000 in cost savings (which represented 49% of the total spend). As a sourcing manager for Cummins she managed $165M in annual spend.

Marcia is a Forbes contributor, and hosts a weekly podcast, Adventures in Supply Chain.

• Connect with Marcia on LinkedIn >
• View the USM Supply Chain Consultants Website >
• Listen to the Adventures in Supply Chain podcast >