27 minute read
SUPPLY CHAIN
Supply-Chain Focus Should Be “Left of Boom”
By Maurizio P. Scrofani, CCSP, LPC
Scrofani is a well-known supply-chain asset protection professional with over twenty-five years’ experience in retail and manufacturing. He is a prolific writer and frequent speaker at regional and national conferences. Scrofani is a consultant and general partner with MPS Ventures. He was recently named vice president of supply chain security and intelligence for ALTO US. Scrofani can be reached at maurizio@mpsconsultants.com.
Supply-chain asset protection (SCAP) in business has traditionally been reactive instead of proactive. SCAP teams are often housed in headquarters or a regional hub and called upon to investigate incidents and deal with the outcomes. That means the “protection” side of the role isn’t aggressively fulfilled, and the process becomes one of mopping up a mess. The management team may learn something in the aftermath, but collectively the group grows frustrated, and the time-consuming work lacks strategic direction.
Members of the military use the powerful term “left of boom” to describe all events that lead up to an explosion. Left of boom is where one can have a positive effect—gathering intel, training the team, and putting systems in place that make the explosion less likely. Everything to the right of that boom deals with consequences and clean up—securing the area, treating the injured, repairing the infrastructure, and raising morale again.
In retail, far too many loss prevention teams talk about events left of boom but actually and unwillingly function a right-of-boom operation. Being left of boom means being proactive and having the correct resources—the “protection” part of a SCAP team is active. Being right of boom can be brand tarnishing. As an industry, we need to move camp. We need to pick up all our equipment and ideas and move them to the left of the boom. It will generate better results and improve morale. And don’t underestimate the power of morale. Stopping an event from happening is far more satisfying than dealing with the mess after it has happened and sometimes getting a trophy for clean-up work.
We can do many things to get left of boom. We need to consider our roles not just in the companies we work for, but also in the processes that happen in and to our role. SCAP is an integral part of any modern retailer, but it also has a function that lies slightly outside the normal day-to-day running of a store. Being proactive here allows the loss prevention team the opportunity to make a lasting difference to the operation. A retailer that doesn’t get a loss problem under control has a real problem. It bites into profit margins and pushes them closer to the brink. But a proactive asset protection strategy changes all of that. The timeline of events that precede a boom are vitally important. Below is what it could look like.
Left of boom is where one can have a positive effect. Everything to the right of that boom deals with consequences and clean up.
Obtain Capital
The first step on the path to preventing that boom is getting the money you need to perform your operations successfully, which isn’t always easy in a retail environment. Sometimes costs are under heavy control. So you need to do your homework. Know the resources you will require and have them costed thoroughly. Look to the more innovative, hands-off ways of effective loss prevention. You may end up proposing a cost saving or future cost avoidance instead of requesting an increased budget.
Finding innovative ways to use your budget will help you build a proposal that works for you and the company as a whole. Have a defined strategy from the outset to make sure you get the most from the whole process. Think about new ways of doing things, such as: ■ Using WiFi, RFID, Bluetooth, and GPS to track products through your systems. ■ Developing a thorough supply-chain risk-management strategy. ■ Employing feature recognition to address negative event creators as well as to promote a better service experience.
Develop Team Skillsets and Design Your Organization
Once you have the budget, you need to set up your organization. You are now in a position to make your plans. Look at how you might do things differently to create better
outcomes. You may have to start from scratch in many areas to define an operation that will be effective and fit for purpose.
Assess the skills of your existing team and align them with your new way of working to see how they match up. You will need the right players in the right places as well as the correct structure. As you develop these ideas further, you will be able to communicate new roles or new expectations for the team you have and look to recruitment or training to fill any gaps you have identified.
Gather Intel and Provide Resources
If your organization has been gathering information for some time, then this is the point to put that data to use. If you haven’t been gathering intel, then now is the time to start. The more information you have, the more effective you can be. You want to know the answer to questions such as: ■ Where is our product being lost? ■ What procedures do we already have in place? ■ Are they fit for purpose? ■ What would be a more proactive way of dealing with this?
As you pull together the intel that will allow you to operate left of boom, then you can determine and allocate resources. For example, if you decide feature recognition will create positive change and get you left of boom, then look at the different options available to you and procure the one that works best with your company and customer base. An ideal feature-recognition software system will have uses for various departments.
Design Your Attack Plan
This is where the planning stops and implementation begins—time to put all you have decided into practice. For example, if you have chosen RFID as an effective tool to manage the supply chain of products, then the tags need to be sent to the right locations, attached properly, and monitored. Assessing tools and compliance to the program you have implemented is a necessary part of the process. Reporting a successful new strategy ensures the asset protection team retains backing from those who hold the purse strings.
The attack plan can be to deal with the overall supply-chain asset protection issues in the organization (those that you identified earlier in the process) or to look at a specific event. With supply-chain enterprise criminality being a major threat to the retail industry, intel can uncover a specific attack on your brand or modus operandi. This puts you in the perfect position to deal with these brand-altering events.
Master the Devices Needed
Buying the latest devices to operate effectively and protect your assets is all well and good. But you and your team need to master those devices to use them most effectively. A comprehensive training program (with the solution provider in the room) is the best way to ensure understanding and effectiveness.
If you promote a culture within your team that you want to operate left of boom as much as possible, then they will come with you on this journey. Having the most motivated team with the best tools available and delivering the training and support to maximize the effect of these tools will give the best results. “Culture eats strategy for breakfast” has become a cliché because there is so much truth running right through this statement.
Plan and Execute the Specific Event
If your strategy (and culture) is geared toward preventing one specific event, then you are now in the best place to deliver the results you planned. Your organization will be ready, your plans will be in place, your team will be ready, and you can affect the best plan possible to deal with that specific event. You will be amazed at how many booms you can stop or minimize.
The Boom
This is where, in a normal timeline of events, the boom will happen. The efforts that you have gone to before this point will make one of three things happen: ■ You will delay the boom. There will be longer periods in between these events happening. ■ You will lessen the force of the boom. An event may still happen but not on the scale of how it was before. ■ You will actually stop the boom from happening.
Sometimes you don’t even know if this has happened until shortage numbers come in and success is plain to see.
In any industry, there are issues to be solved. But waiting for them to happen and dealing with the consequences doesn’t feel like much of a strategy. Everything that happens on the right of the boom is “business as usual,” and some may even go as far as calling it unproductive. But learning from an event—a boom—and managing the outcomes can be a part of this valuable process. Add in constant monitoring and any revision to your process, and you have a culture of success and a strategy that continually improves.
EDITOR’S NOTE: Mike Combs is director of asset protection, global supply chain at The Home Depot. Prior to assuming this role in 2008, he was director of loss prevention for AutoZone for six years and held various LP positions with Macy’s for eight years. Combs earned a master of science degree from Eastern Kentucky University in 1990. He is active with the Loss Prevention Research Council, including chairing its supply-chain working group, and is on the board of advisors for CargoNet.
EDITOR: To start out, Mike, share something about yourself that isn’t widely known?
COMBS: Well, one is that I have an identical twin brother. Second is I was a professional golfer for a few years.
EDITOR: Tell us about your golf career.
COMBS: I played for about three and a half years from 1998 to 2001. I played two years on the Asian PGA tour, which was predominantly in Malaysia, China, Thailand, Indonesia, and India; basically, everywhere in Southeast Asia minus Japan. I also played pretty much every minor tour you can think of in the US. In winter months I played in South America on the South American PGA tour. We tried PGA Q-school twice and did not quite make it through that grueling process. But after three and a half years, I wasn’t quite sure I was going to make it. I definitely had the physical game, but the mental side of it was difficult. It was getting better, but it was far from a sure thing. So that is why I decided to get back into the industry and make some money. It’s expensive to golf professionally, except the PGA Tour. If you can break even doing that, you are doing very well. The experience of traveling the world and meeting new people from diverse cultures has changed me forever and really gave me a new perspective on life.
EDITOR: How did you get from golfing into supply-chain asset protection?
COMBS: Early on, I really thought I wanted to be in criminal justice, either a police officer or FBI. My father was a judge in my hometown, and his dad before him was a judge as well. I knew I was into criminal justice, but I leaned more towards law enforcement. So I went to Eastern Kentucky University in its criminal justice program, graduated, and got my master’s degree there.
EDITOR: Given your studies, why didn’t you end up in law enforcement?
COMBS: Well, I was working through college at Kings Island amusement park as supervisor of security. Another guy and I were challenged to start an undercover shoplifting prevention program for all of their shops. As goofy as that sounds in an amusement park, there was a lot of crazy stuff that went on there. We were able to develop that program with the police department there in the amusement park and did that for a couple years. That’s where I really caught the bug.
When I graduated college I got a job with what was then Lazarus department stores, which eventually ended up being Rich’s and then Macy’s. I worked in logistics and then in their stores in different roles. I really fell in love with retail and never looked back.
EDITOR: What was your final position at Lazarus before you left there?
COMBS: I was the regional director of distribution. When we merged with Rich’s, I became a regional director of security for stores. Then, around the time of the Macy’s merger, I took my
I would agree that nine years ago there were probably only a few places doing much more than physical security. To some extent there’s still a lot of focus on security. But absolutely now things are much more automated. There’s much more data. There are more systems. Now there are more people trying to leverage those to craft a better strategy to look at everything end to end versus just the four walls of that warehouse.
I think people who are really looking at the landscape realize that logistics, supply chain, and order fulfillment are where a lot of career growth starts, not only in AP but also in any part of the process. From 2009 to 2015, Home Depot grew from a $500 million online business to $5 billion. So it’s definitely a great career path, and it’s somewhere you can grow your knowledge base as well.
stint in golf. When I came back from the golf venture, I knew I wanted to do something different. Fortunately, Libby Rabun at AutoZone was willing to take a chance on a guy who had been out of the scene for three years. I learned a great deal about the retail business, how to grow profits, and how to run a company profitably at AutoZone. It was a pretty unique opportunity. Libby was a great leader and mentor who championed my career. I owe her a lot.
EDITOR: What then attracted you to Home Depot?
COMBS: When I left AutoZone, I was the director of the field loss prevention team, which was at the time about 4,500 stores. There was a guy by the name of Mike Lamb who I had worked with at Rich’s. Mike called me and said, “We’re going to be transforming the supply-chain AP team at Home Depot. Mainly we’ve shipped from vendors straight to stores, and we’re rolling out a major capital play to build a central fulfillment distribution network. We need someone to help craft the AP team.” I knew Mike’s leadership style. I loved Atlanta. Plus, I was always enamored by Home Depot and their stores as a customer. That’s what got me started listening, and the more I listened, I was really intrigued by the investment they were making in their supply-chain network to set the company up for the future. Now I’ve been here nine years and thankful that Mike put his trust in me.
EDITOR: Thinking about the changes in the supply-chain side of the business from nine years ago until today, have you seen a transition from a role of just physical security to a broader asset protection role?
COMBS: I have, and I would agree that back then there were probably only a few places doing much more than physical security. To some extent there’s still a lot of focus on security. But absolutely now things are much more automated. There’s much more data. There are more systems. Now there are more people trying to leverage those to craft a better strategy to look at everything end to end versus just the four walls of that warehouse.
The great thing about going to Home Depot at that time was that we were at the development stages of a long-term supply-chain transformation. We were able to build an infrastructure, both team and technology, that had the vision of our long-term strategy guiding us. Starting from scratch like we did, we are able to build the physical security aspects from the outside in to where we have a really sound, secure network of distribution centers. The controls are great. You don’t have a lot of unknowns like you do in a store environment with customers, returns, and all that. By setting up the proper controls up front, we didn’t have to deal with questions like, “Did we put the right fence up, do we have the right alarms, how are we controlling visitors, and is our freight secure?” We can trust that those types of things are solid, so you can focus on other things.
EDITOR: What do you mean when you talk about your process being end to end?
COMBS: As we built our supply chain, we were also building infrastructure for omni-channel retail, which we call interconnected retail at Home Depot. So we built out online fulfillment centers that are connecting our online sales to the customers. They’re also delivering to our stores through our other distribution network. So there are a lot of moving parts, and inventory is moving around to fulfill the customers’ needs in any way possible. What we figured out pretty early on is that we needed to build our facilities around an end-to-end view, meaning from vendor to customer. From the time product leaves the vendor to the time it gets to the customer, and even the reverse logistics process when a customer does a return and gives it back to us, we have complete visibility throughout. Our senior leaders supported having AP look at loss from an end-to-end perspective. It really matches up with how Adrian Beck has been preaching for several years. His work has been enlightening in this area.
We have a shrink exposure report that a member of my team created that helps us look at the end-to-end process. It also gives operations leaders a tool to watch how they’re doing week to week on shrink and loss exposure. It’s not just the inventory shrink that we look at. We do manage that, but we look at everything from damages to parcel carrier credits or customers saying they didn’t get what they wanted and making a return—the whole process.
EDITOR: Give us a brief look at the size and breadth of the operation that falls under your responsibility.
COMBS: To support Home Depot’s global supply chain, we manage these key areas: the safety and environmental
regulations throughout the supply chain; the end-to-end shrink and loss; physical security; cargo security; and theft and fraud. And finally, we audit the outbound accuracy of what the distribution centers are sending to our stores.
All in all, we have about sixty-nine Home Depot locations around the country—some of which have a group of buildings, so it’s more of a campus environment. Also, a year and a half ago, Home Depot bought a great company called Interline Brands, so we also support their business, which is another ninety-plus locations scattered around the country.
EDITOR: How many people report to you, and what functions do they perform?
COMBS: I have five senior managers reporting to me. One manages the store-support center and the ten team members there. They design, develop, build, and support our supply-chain teams. I also have four geographically based senior managers who control a group of facilities. Three of those line up with the north, south, and west regional configuration, just like how Home Depot runs its stores. A fourth is in charge of the Interline Brands company and the program there.
EDITOR: Would you say that you and your people spend more time in the operational compliance disciplines than you do necessarily in theft and fraud investigations?
COMBS: Without a doubt, especially early on. I’ve been here nine years, and that’s about the time we started the supply-chain network. For the first few years, about half that time was operational compliance where we’ve gotten very, very stable, and the results, whether they are shrink or safety, have been trending great for six years now.
EDITOR: In a Home Depot store, safety is a very critical discipline. Do you have a safety manager or somebody on your staff who leads that effort?
COMBS: We own safety as well. It has not been my discipline over my career, so I’ve learned a lot from my peers at Home Depot like Bryce Bennett, director of safety for store. Bryce was on my team prior to his promotion, and he helped develop our safety programs along with our safety manager, David Bell. David helped us build some really good programs to help drive safety.
Most of our injuries are ergonomic related, so we built a comprehensive program with the help of a company called Safety in Motion. The program is all about teaching people how to do things the right way from an ergonomic standpoint. It doesn’t teach you never to do something; rather it teaches you how to do things in a less stressful way in order to prevent repetitive-motion injuries. A small change between a “stressed” body position and a “better” body position can make a huge difference in our associates’ lives, both at work and at home.
We’ve also tried looking at safety from other perspectives. The typical measurements in safety performance are the OSHA rates of workplace injuries. As we’ve reduced those metrics over time, we have also looked for other ways to measure progress. We’ve gone from a $50 billion company in revenue to almost a $100 billion company, so clearly the volume moving through the supply chain is increasing year over year. We started looking at different metrics to make sure that increasing productivity wasn’t having a bad effect on safety. For example, how many cartons do we produce between injuries? And looking in different ways really showed whether or not we were improving as fast as we thought we were. I am happy to say we are safer now
What we figured out pretty early on is that we needed to build our facilities around an end-to-end view, meaning from vendor to customer. From the time product leaves the vendor to the time it gets to the customer, and even the reverse logistics process when a customer does a return and gives it back to us, we have complete visibility throughout. Our senior leaders supported having AP look at loss from an end-to-end perspective.
even with the increased product flow and productivity.
EDITOR: Often one of the measurables in supply chain is something you mentioned earlier, which is accuracy to the store. Often the stores side of the house may claim that you all in supply chain are not nearly as accurate as you tell us that you are. How do you manage that relationship with the stores and ensure that you are delivering what you say you’re delivering?
COMBS: I think that’s probably the most universal issue that supply chain has in retail. First of all, we make sure that we have an open feedback loop with our store partners. For every trailer that gets to the store, we have a feedback loop electronically that allows them to rate how we’re doing on that truck and give us any feedback. The process includes a mechanism for us to respond to that. Our AP team owns the audit process and the teams that conduct the audits, which gives our store partners a peace of mind that it is an unbiased effort.
The other thing we do is welcome our store partners to come into our locations at any time. We have district and retail meetings where they can come in and watch our process, see what we’re up against, and give us insight into how they think differently. And vice versa—we send groups of people from the supply chain into the stores. Sometimes it’s training for our people, and sometimes it’s the other way around where we’re trying to educate or train new store or district associates that might need some help. I think that kind of partnership has really helped.
Another thing that’s important to call out is the fact that I report to Kathleen Eaton, our vice president of asset protection, who reports to the store operations team. My supply-chain team leaders know that I’m reporting up through store operations, which means I always have a keen focus on how we’re impacting our customers or stores. I give them that direct feedback all the time, and they are very open to that perspective. It really helps solve problems when your relationships span end to end and not just in the supply-chain silo.
EDITOR: Since you’ve had a great deal of store experience in your background and you know the value of that experience, do you make a habit of moving people from the store side into supply chain, and vice versa?
COMBS: We have probably a dozen managers from AP within distribution centers who have come from the store side. I even have a couple of district AP store managers who are now working in our supply chain and have provided amazing value to both sides of the equation. And then there are other people on my team who are pursuing careers down the road that will get them into the store operations piece. This type of cross-pollination has been key to the success of my team and is a pillar of
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I think that Millennials might possibly change the world for the better. I’m not as pessimistic as other people looking at this new generation. I see things in them that really make me proud. They love their work-life balance, and they see the big picture there. Everybody loves hard work, and they’ll work hard, but they also appreciate friendship and compassion because usually a lot of their relationships have been strong.
Home Depot talent management. We have leaders on my team who can lead in many different areas of the company should they wish to do so.
EDITOR: In the past, the supply chain was sometimes a place where store people who weren’t making the cut got farmed out. But that’s changed in the last decade. Do you see supply chain as a place for career growth today?
COMBS: Absolutely. I think people who are really looking at the landscape realize that logistics, supply chain, and order fulfillment are where a lot of career growth starts, not only in AP but also in any part of the process. From 2009 to 2015, Home Depot grew from a $500 million online business to $5 billion. So it’s definitely a great career path, and it’s somewhere you can grow your knowledge base as well.
EDITOR: If somebody in LP wants to learn more about the supply-chain side, can you give any advice on where to look for information?
COMBS: Right here in Atlanta, Georgia Tech has a great program. Home Depot has been involved with some of the research there. Auburn University is the other leader, and they turn out great training material that you can get online. There is also a supply-chain management industry group called the Council of Supply-Chain Management Professionals (CSCMP), which has tons of online training you can do.
EDITOR: What accomplishments are you and your team most proud of over the last several years?
COMBS: First off, we have an amazing team, a diverse team. I couldn’t be prouder. If I were to move on, there are fifteen to twenty people who are ready to step up into an AP senior manager role. Any of my senior managers could easily step into my role. So the team is the thing I am most proud of.
On the technical side, I would say that the shrink-exposure dashboard that we built early on in our development is amazing. I give our manager of loss prevention a ton of credit for this. We basically look at every single thing that comes into the supply chain and everything that goes out. On a weekly basis we can look at a building and predict what their shrink or loss rate would be at any given time. And that has allowed us to drive down shrink for several years even as our size has doubled. That has probably been the biggest thing my team has delivered, not just the technical development, but embedding this into our operations culture.
EDITOR: From the store side of the business, the buzzword over the last several years is analytics. What types of analytics are critical to your business?
COMBS: The biggest one we’re looking at now is more the end-to-end exposure program. That is looking at the omni-channel side, or the interconnected side—just making sure that as our interconnected business grows, we’re not growing the loss with that. We have to continually evolve that as the business evolves.
Most of our injuries are ergonomic related, so we built a comprehensive program with the help of a company called Safety in Motion. The program is all about teaching people how to do things the right way from an ergonomic standpoint. It doesn’t teach you never to do something; rather it teaches you how to do things in a less stressful way in order to prevent repetitive-motion injuries.
EDITOR: You’ve been involved with the Loss Prevention Research Council for a long time. Tell us a little about the supply-chain working group at the LPRC, what that means, and what you hope to gain from that partnership.
COMBS: I think that for anybody who works in supply chain on the fulfillment side, it’s great to get involved. It’s a great way of sharing information. There have been multiple times when we will work on an investigation and call peers and find out they’re working the same thing with the same group. We share information and are able to make a better case. So just having contacts in other companies and learning how they’re investigating or how they’re solving problems is a great benefit.
EDITOR: What are your thoughts about where the industry is headed in the future?
COMBS: One thing that comes to mind that I find myself saying that’s different from a lot of other people is that I think that Millennials might possibly change the world for the better. I’m not as pessimistic as other people looking at this new generation. I see things in them that really make me proud. They love their work-life balance, and they see the big picture there. Everybody loves hard work, and they’ll work hard, but they also appreciate friendship and compassion because usually a lot of their relationships have been strong. They’re close to their parents. They’re close to their friends from high school and college. It just seems like they’re much more social and committed to keeping that going than maybe my generation was. Much like how our retail world and customers’ needs are drastically changing, our employees and what motivates them is very different. We better change and adapt to that quickly, or we will be left behind.
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