QAnd how did that go?
A Well, nine years later, we’ve made wholesale changes that have lowered our costs of distribution and
improved customer service. We have improved the flow of
orders in our warehouse, and we’ve improved our cycle
times and cutoff times. We have gone paperless and moved
to automated wave management. We went from a pick-and-pass model that took about three hours to fill an order to a
dynamic-start model with centralized consolidation that
has cut that time to about 40 minutes. We have added a lot
of operational capacity, so we have room for growth.
Engineered standards and labor management is the second
part of it, and then we will move on to Lean.
QWhat have you learned through that process?
A Change management is critical. You have to pick the right team and start with one beta site. Since nothing
was broken, we had a lot on the line. It was critical that we
maintain a high level of customer service throughout the
changes.
QHave you found that making those incremental changes is as rewarding as building a supply chain
from scratch?
A I have done expansions in the past and also built from scratch. But I fancy myself a fix-it guy. What juices me
is the operations side.
My job has evolved over the years to include areas like
engineering, logistics, health and safety, purchasing, and
product management. I think it’s important to align the
supply chain under one leadership structure. Our transactions affect all aspects of the business. But it all falls back on
my team.
QWhat advice would you give someone who’s just entering the logistics or supply chain management
profession?
A I would say to keep an open mind. There are a lot of interesting parts to the supply chain. Some you will
gravitate to more than others. But you can find yourself easily pigeon-holed in one position. I had the opportunity to
see a lot of aspects, and it was good for me to get a well-rounded view of the supply chain.
Derek Leathers
IN SOME RESPECTS, DEREK J. LEATHERS
has the classic freight transportation background: The chief operating officer of
Werner Enterprises and president of Werner
Global Logistics was born in Texas, lives and
works in Omaha, Neb., and has spent years
in the truckload industry.
But Leathers is not your typical trucking
executive. For one thing, he holds a degree
in economics from Princeton University. For
another, he boasts nearly two decades of
international experience: Leathers has led the launch of
logistics products in several countries and guided Werner’s
expansion into Asia. His experience includes advising two
U.S. ambassadors to Mexico, serving on the American
Trucking Associations’ Cross-Border Advisory Committee
for North America, and becoming one of the first foreign
members of CANACAR, Mexico’s national trucking association. Prior to joining Werner in 1999, he was vice president
of Schneider National’s Mexico operation.
QThe last 18 months have been very tough on the trucking industry. How has Werner, which has the
added pressure that comes with being a publicly traded
company, come through the recession, and what steps did
you take to weather the storm?
A We came through the recession exceptionally well, in our view. We are still debt-free and have more than
$700 million of equity.
We did it by focusing on our core values.
We’ve been known as a conservative, consistent
company for decades. When the recession
began, we were the first trucking company to
publicly address the slowing economy by
reducing the size of our fleet. That was not an
easy decision to make, but it was the right one.
We’ve also held ongoing and very open all-employee meetings to keep them informed of
where we’re at. And of course, we’ve asked all of
our associates to focus on cost control like never before. That’s
been successful enough that we were able to take out more
than $75 million in 2009 throughout the entire network.
We’ve really diversified our portfolio. We have believed
for many years that a diversified portfolio would do better
in a downturn, so we’ve gotten involved in more cross-border and international business, and diversified away from
just truckload and into areas like forwarding, intermodal,
and logistics. Each of them goes into a downturn at a different time and comes out at a slightly different time.
That operational change started taking place about 10
years ago. It served us very well when we were in an actual
downturn. Because we were not growing or spending capital, we decided to take [capital] and invest heavily in systems and infrastructure. I would say the idea was to build
the systems that will be necessary for the next 20 years. It’s
been a successful strategy for us.
