Nurturing Supply Chain Relationships with Gerry Angeli

Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network Podcast. I'm excited to introduce you to our guest today, Gerry Angeli. Gerry has been a manufacturing and supply chain executive for over 35 years, including CEO-level experience. He's had the opportunity to work all over the planet on products, ranging from high volume consumers to very custom high value-added durable goods. Gerry, welcome to the show.

Gerry Angeli: Lisa, it's great to be here. I appreciate you extending the invitation to be on the podcast.

Lisa Ryan: Absolutely. Please share with us your background and what led you to do what you're doing.

Gerry Angeli: Well, it all started way back when I left college, and I remember the line in the interview that got me into my first job. Coming out of engineering school, the interviewer asked me what I would like. I said, look, if you're looking for a world-class designer, that's not me. But if you're looking for somebody who knows how to troubleshoot things analytically and fix stuff, and work on items associated with quality and reliability. So he stopped me when he said I get 1000 of the first kind.

I get one a year of you when can you come to visit the shop and that's how it started so from then until and in the early days, people called me a factory rat. I was always in the factory, so that's how I got started in manufacturing and the supply chain. It's a virtuous profession to make things and get them out there. So throughout my career, I've been up and down the supply chain. From customer service, on the one end to procurement, on the other, it's treated me well.

Lisa Ryan: Being in the supply chain these days is just a little tricky. So, what are some of the things you're seeing that your experience or seeing happening in the industry? What are some of the ideas that you have to reestablish business continuity?

Gerry Angeli: Well, that's the greatest place to start. I get very vocal about what I see going on at times, and much of it has its roots back in the 1980s when just-in-time and zero inventory production started. I'll hold that thought for a second because those were all good things to do. When I came to Florida, I was recruited by a company down here in Hollywood. Shortly after that, I got an operations executive. They had manufacturing locations in various parts of the planet. They had just moved the company from another State to South Florida when I got here. As I entered, the boss said to me, "I need you to stick your nose in something for me. Everybody warned me that there are hurricanes here, and you got to have a plan if you're in manufacturing, whether it's here or anyplace else, to recover from a weather event."

We didn't call it business continuity. Back then, it was disaster recovery. I stuck my nose into the topics. As I got involved with it, naturally, the first thing is power, the second thing is water. All learning associated with recovering from a hurricane or a flood or a tsunami doesn't matter. It is episodic. You learn what to do.

 Next time because of what's happened to you this time. So, there's no manual written. There's no checklist. There's no place you can go to say what is it the way I have to do. Can I run down this list and be safe? No. You've got to build your knowledge. And so we began doing that, and the more I got involved with it, we went through a couple of storms, where you're down for a week or two.

You begin you build an encyclopedia dictionary of what to do. You'll resonate with this. One of the things that I learned early on is they always talk about power and water. Stay away from the down electrical lines. You gotta take care of the folks.

They were getting ready for it, preparing for the coming storm, what happened during the storm, and what happened after the storm. The first thing you do is take care of the people. You ensure that they have enough time to get their affairs in order. That sounds a little dark, but it's true. They want to take care of their house; they want to ensure that their assets are safe, just like you do with manufacturing. The second thing is communication, consistently over-driving what's going on. Why is it happening? What's happening to you? When are we close? When are we opening all of that stuff? You have to take care of yourself first because that fosters a sense of belonging and the people. If they know or appreciate that you're taking care of them, they'll take care of you. You need your workforce with you.

Lisa Ryan: Absolutely. What did this company do before you? Did they just fly by the seat of their pants then one day decide that they needed a process? Because Florida has always had storms.

Gerry Angeli: Well, they remember they had just moved here to they came from apart, so we had snow days. That's no process for a day, and that was about it. You dig out from under your go back to work. But here, there's a great deal of uncertainty, but the point is this is the learnings that accrued from the topic of disaster recovery. Align themselves very well with the modern version called business continuity, and in the business, continuity lives the supply chain.

Take the analysis of what you need to ensure that your supply of materials, the critical ones, to the nuts, bolts, screws, and plastic bags are tended. The biggest mistake that I see happening now is the supply chain. First, we suffered from just in time. We want everything to get here. Just in time, though, that's fine, but not all the time. There are certain things that you need a three- or four-week supply of. During hurricane season, you might not be able to get them. You must make provision for you can call it stockless production. But what are you doing to keep yourself running? If something happens to you or somebody else in Jacksonville, for example, have a storm up there, and not here, but you still can't get stuff.

The second thing is, like for like. You're A-class items in your inventory. That's the uniquely your stuff - the materials that make your products your products. The things the expensive stuff come from maybe one or two places on the planet. The relationship you have with those suppliers should be different from your relationship with people who sell you the C and D items. One of the things that we learned to do is that for the objects 20 years, items make up the critical pieces you need in your processes.

As the company president, I thought I made sure that I had a line with the company's president, where they came from pyramid level to pyramid level. President, the President, Vice President, the Vice Presidents, and because, because if you relegate the entire supply chain. I have nothing against the purchasing department, don't get me wrong. You have no firepower.

The regular folks talking to the common folk can't get you to need something when you need it. You can't get you to deliver something when you need it, and here's the critical learning. If you do that process all the time, whether or not there's a storm or a disruption of any kind, it becomes a matter of routine.

To call the president of the other company and say how things are going, you must have quarterly meetings about your A-items. The costs go up. The prices go down. Materials come in short supply. You have those dialogues routinely. When a storm happens, you can't get diesel fuel for the generator. If you call the president of that company that day when the other thousand people call that guy that day, you're just another pain.

You must nurture those relationships in the supply chain all along. Let me give you an excellent example of that. I had a friend who had a business that made sub-assemblies for us down here in Fort Lauderdale. His company was up in Tallahassee, and he had the same problem. They get hit with storms. One day we talked, and he asked me about business continuity because he knew that that was a big question. He says, "what happens if there's a storm in Tallahassee. I can't get you the product you need. I said what the truth of the matter is, I can make yourself, make this assembly that you're driving to.

I'll put the parts on a truck before the storm hits. You send them down here, and I could do the same thing. If the storm hits here, I can send my stuff up there, and you could make the products. A handshake came of a discussion about keeping the supply chain continuous for those critical parts during a disruption caused by weather. You have to think through that stuff you have to work on or not all the time. You have to think about those disruptions, and the same thing applies. We had another example where a truck full of assembly was in an accident. It caught on fire, and we lost two months of production and didn't know it.

You know, it was the, wow, where's the truck. So you go on a magical mystery tour trying to figure out what happened to your parts. But the same things that you learn in business continuity for a storm apply there. Then the last thing I'll talk about is the competence of managing for continuity, whether it was when the pandemic hit and things started to shut down. Because the factory shut down, supplies were short because nobody was working. But then we began to run out of materials because the places where the raw materials were scarce, the disturbance, this time, no money planned for this disruption to last this long. Even in all the planning that we did, the most prolonged time that we planned for was a month. Because you figure anything that would happen short of, you know, getting a fire that burns you to the ground, you'll come back to life within a month. Several things have changed that now. One is cyber security. That's a disaster that's man-made. Somebody attacks you dropped your operation to its knees because of ransomware or just because they do nasty things.

Provisions for cyber-attacks in the supply chain all businesses have to plan for.

Lisa Ryan: A look at some of the things in Florida. There will be storms, and there are parts from August to November or whenever hurricane season is that you can plan to have that. Three or four extra weeks a truck is a one catching on fire is a one-time event. But how would you prepare for things like the pandemic? We have this backup at the LA ports, where people wait months and months to get their supplies. Is there anything that we could have done or that we could have? We could be doing better when the unexpected happens like it's been for the last two years.

Gerry Angeli: That's a fascinating question, Lisa. It's one that I wish I had five bucks every time somebody asked me a question in the last three months. When there's a disruption, three things happen all the time. The first thing is prices go up. They never go down. If there's a drought in Brazil, prices go up tomorrow. They go up. They don't go down. Prices go up when there's a disruption.

 Supply uncertainty increases. Whether the tsunami in Japan took up the ice back in, I don't think it was 2010 supply uncertainty increases. Everybody who uses those supplies starts to grab at whatever that thing is, and shortages and allocations happen. It never goes the other way. I worked in the Far East and lived there as part of my career. I can tell you that the ports of LA and Long Beach are always the ones that get congested. They're the ones that always have the lineup of freighters and bankers lined up waiting to unload. Not Seattle, not Miami, Long Beach, and Los Angeles. Now, someone somewhere should be thinking about that saying in the event of his disruption, why don't we send the boats someplace else to load and unload. As simple as that, that one infuriated me. People get on TV and say, oh me, oh my, what are we going to do. Do you mean nobody thought of that?

One of the things that we used to do when I was over there is call up my customers and say where you want me to send this stuff because LA and Long Beach will get back up. The other alternative is to put it on an airplane costs you a little more. You have to decide and risk analysis that says what's worse, spending a little more money or not having it. That's indecision and risk analysis, analysis but it's always the same porch. Make provision for that when there's a disruption. Those ports get disrupted. They get the lines. Then there's a Eureka someplace in the news. Why don't we send it through the Panama Canal and bring it to get it to Miami or someplace on the east coast? It costs more good example of that was the freighter that got stuck in the Suez Canal.

Well yeah, after it happened, everybody said, oh me again, oh me oh my, what are we going to do? The boat was stuck for a week, so the worst that could happen is we'll be down for a week now that's not the way it works, folks. It's a chain. When that boat gets stuck, all the other ships passing through that canal have this all the other vessels have to sit and wait.

At one point in time, I kept watching over that one again for the same reason, because I was learning. It's unreal for us when it comes to learning. There were 400 ships on either side of that canal waiting for the one stuck to get unstuck so that they could move on. Now each of the boats in the channel stuck. I think it had something like 20,000 containers on it. Not only were the ships not loading and unloading, but they were also sitting there idling. The containers were all in the wrong place. They weren't being loaded or unloaded on the way back around the way to a customer. They were in the wrong place, and the cascade started to happen next.

Even though the boat was only stuck for a week and a half, technically, I guarantee you there'll be stuff that happens next month that someone will cite. The reason that happened is that both were stuck in the canal lesson. Well, it's the cascade. One thing starts to set up the next, and you run out of stuff. That's the work that's anathema to any manufacturing. So how did you run out, and what happened during the pandemic? We ran out of everything.

Lisa Ryan: Yeah, toilet paper.

Gerry Angeli: And that doesn't know the changes. That doesn't count the changes and demands that happened. So when people begin to, I don't want to say that's the wrong thing but make a run on a particular commodity. When and whether it is for paint.

Think of the things, make a list of the things that come to mind the pigments for paint, chlorine, for your pool. You cited toilet paper. Products all went short all went on allocation. You can't get it, and then, when I'm the prices went up, the price goes up. Delivery uncertainty goes up allocations result. You get a disruption. Those three things are going to happen guaranteed might only last the day. In our case, we're lucky to have yours.

Lisa Ryan: Right. Let's go back to the very beginning. It was interesting when you said out of all this disruption that's going on, including the pandemic and hurricanes, it comes down to people first and taking care of them. What have you seen as good examples of that or just some of your philosophies about creating that positive workplace and focusing on the employees? Employees are in short supply right now.

Gerry Angeli: If you view the human resource as part of the chain, the same things are happening. You're over in short on the same day. There's a whole host of reasons beyond this podcast's scope to talk about why people are doing that. In one of the CEO roundtables that I sit on, we discussed this topic all the time because it's changing the fabric of manufacturing quite dramatically. Working from home is terrific and virtual work is excellent, but you know, unless we turn manufacturing operations in the cottage industries, you gotta go to work in the building where everybody else's get done what you need to get done.

One of the most incredible things that I'd seen I saw in the forest, and I visited here when it happened there were people in the immediate amount in the primary mode when into a safety protocol. Make sure everything was super clean, the place smelled like Clorox and bleach, but there was no hesitancy on the part of the people who manage the operations to make sure they didn't do anything to worsen the situation. The place was clean and neat and tidy, and sanitary every day. What were those things they do from business continuity? When a storm happens, everybody has a job and a task. There are assignments made. Your job is this your job.

One of the best practices I saw is that several of my colleagues who run operations immediately split their shifts apart. So there was a time window when the first shift would stop and then spend an hour cleaning the place before the next shift got there, so that created a two-hour window where nothing was happening. So that one could tidy up, straighten up, sanitize, leave and the next one comes in. What does that do that instills a sense that again back to the folks they care enough to make sure that I have a sanitary place to work and it's visible the value is recognizable. They got to work, and the whole place smelled like Clorox. Whatever product you use to do the cleaning but it's a tangible example for the folks that somebody cares about them.

Lisa Ryan: Okay, probably if you put the numbers to it, they may have lost a little bit of production, but if they could save those people from leaving the company because they didn't feel safe, they didn't feel protected. With the great resignation going on, they could have been a big part of that and just left, so I'm it sounds like there was probably an evening out of the numbers. Where they didn't make as big of a loss as they could have by stopping production like that, what did they find?

Gerry Angeli ran it at 80% capacity, but it throttled back. It does. But at the same time, their demand throttled back as well. But the most significant benefit was the operation kept running, and one of the things that I used to say is that the rest of the world knows how to do this. Still, America doesn't because we never stop, never sit that, we never take a vacation we're always working.

Starting and stopping kills a manufacturing operation, unless you know how to start and stop unless you know how to wind down the operation and start the operation backup. This is what killed a plant is when you shut down a lead time. Four to eight weeks, unless you stop it.

Lisa Ryan: what's an IC.

Gerry Angeli: Integrated circuit.

Lisa Ryan: The other thing that.

Gerry Angeli: The thing that that that is also void at the moment because they can't get the raw materials and machines have been shut down for so long and then when you lose the human resource. That does it; you also lose a colleague of mine calls it the tribal knowledge. You could have all the processes procedures in the world written down and documented, and codified. But if you lose the person that knows how the whole thing goes together, you have just been disrupted in a big way.

So what it does, is it establishes a continuity through that time yeah, you're not doing the tech amateur is not running at 7000 pm. It's down at 4000 pm. You're still running. You do not forget how to do anything.

Lisa Ryan: So what do you so go back to what you just said with the starting and stopping kills a manufacturing plant. Unless you know how to do that, so in your