DC Velocity - July 2010

people take on leadership roles who have not had leadership roles before; you see individuals grow and develop beyond where you thought they could go. That’s the single biggest reward you receive as a leader as you do these transformations.

QIf you could offer one piece of advice to someone looking to jump-start their career in distribution or supply chain management, what would it be?

A My advice would be to be a great businessperson first and then apply that business knowledge to the supply chain discipline. I believe that the best supply chain people are those who are great business people. Back when it was called “logistics” and not “supply chain,” we were seen as warehouse guys who moved boxes from point A to point B. But things have really changed over the years, and now supply chain is seen as an integral contributor far beyond the four walls of the DC.

Lee Hales

DURING THREE DECADES OF CONSULTing, Lee Hales has witnessed the gradual shift of American business away from manufacturing and toward a service-based economy first hand. Hales, who is now president of High Performance Concepts Inc. and its industrial engineering division, Richard Muther & Associates, says that in 1980, 80 percent of the Muther business was manufacturing based, 20 percent warehousing and logistics. “That has flipped,” he says.

Hales’ early experience in the distribution and logistics side of operations prepared him for that slow but crucial evolution. Early on in his career, he managed distribution centers for National Supply, then a leading supplier of oil field equipment and today part of National Oilwell Varco. He also managed purchasing, transportation, and information systems in the company’s distribution division.

Hales has written or co-written several texts, journal articles, and video courses on such topics as facilities planning, manufacturing, and automation. His latest work, Simplified Systematic Network Planning, was co-written with Shekar Natarajan, one of DC VELOCITY’S 2009 Rainmakers.

QYou are deeply involved in supply chain education. Why is that so important to you? A Our company rests on three pillars: consulting, train- ing, and research. Training has been an essential and major part of our business the whole time. What I’m really proud of is the number of people we’ve been able to teach our systematic planning methods. These practical procedures are used around the world. They bridge the gap between quantitative academic training based on algorithms and the everyday needs of planners in industry. No matter how much education or training you receive, logistics is a field in which you still need significant on-the-job experience to become wise.

Q

What do you consider to be the major developments in supply chain management over the past 30 years?

A Certainly the scope is broader. In the ’70s, the big thing was being a materials manager. Then we put warehousing, materials management, and maybe purchasing into one organization. That evolved into logistics, and then, transportation—inbound and outbound—was welded onto materials management. We took on a supply chain focus.

Factories are still managed in a separate chain of command. Everything else surrounding the factory, going to it and from it, previously did not have that degree of integration. … Perceptive companies are putting a heavy dose of IT under the supply chain, not as a utility but as an essential part of the function.

QYou’ve worked around the world. What do you see as the major challenges and opportunities in the era of globalization for businesses, and how does supply chain management fit into that?

A More of the supply chain action is going to be offshore. Your components are going to be made offshore. Hopefully, you’ll also be serving major markets offshore. The good news for Americans is that everyone speaks English. You can get by almost anywhere in the world. But that is not the best way to approach it. If you look forward, you should learn some Chinese and expect to travel overseas. You will need to know geography, taxation, and currency exchange rates, and also understand and respect cultural differences. You also need to become knowledgeable about global trade management. There’s a whole body of knowledge about what it takes to move shipments around the world. Supply chain managers who know these subjects will be critical to their companies’ success and on a path to executive management.

What I wrestle with and what our clients face are issues in sourcing; investing in manufacturing locations and distribution points; deciding which ports to use and where to locate relative to ports; and how long a choice may make sense as costs and taxes change, and currency values fluctuate. This is one of the most stimulating careers you can find. If you like to see the world and like intellectual challenges and problem solving, this is a great career.