Supply Chain in the C-Suite: Driving Growth Without Boundaries

For our very first in-person episode, we sat down with two guests from Advanced Drainage Systems to discuss how supply chain has become strategic for their business and how DHL Supply Chain was able to support their needs so they could focus on their core business.​

      Special guests: ​

           Scott Barbour, CEO, Advanced Drainage Systems​

           Pat Coyle, Vice President of Supply Chain, Advanced Drainage Systems ​

           Mark Kunar, Executive Vice President, DHL Supply Chain 

Transcript

Speaker 1: 0:09

Welcome to all business, no boundaries, a collection of supply chain stories by DHL supply chain, the north American leader in contract logistics. I'm your host will Haywood. This is a place for in-depth discussions on the supply chain challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. Let's dive in today's episode is supply chain and the C-suite driving growth without boundaries. My guests are Scott Barber, CEO of advanced drainage systems, pat Coyle, vice president of supply chain also at ADSL and mark, our executive vice president at DHL supply chain. Welcome to you all. Thanks for being here as well. So we have a couple of firsts today.

Speaker 2: 0:49

The first first is that we have a CEO of a publicly listed company as a guest. So that's the first time in 12 or 13 episodes. So thank you, Scott, for joining us. And the second is we've come out of the cave and our face-to-face in-person our first, uh, all business, no boundaries podcast in the same room. So thanks for having us out to the ADSL headquarters today. And I look forward to the discussion. So first I'd just like to have you introduce yourselves, give a little bit of a synopsis of your career and your role in the companies that you serve today. So, Scott, can you kick us off please? Thanks will. And a welcome, it's good to have you all here for these couple of first. My name's Scott Barber, I'm the president and CEO at advanced drainage systems, commonly called ADSL. Uh, I've been here about three and a half years in this role. I came after a long career at Emerson electric. I was there, uh, just about 27 years. My background is really in products and operations long, a career there in product management, engineering, running plants, lots of planning activities in that. And I was primarily during that career in, in Sydney, Ohio, you know, just west of here, I was Copeland, also lived in Hong Kong, running the Copeland operation in Asia then came back and moved to Columbus and ran a pretty good size of business group there and then came from there to ADSL three and a half years ago. Great. Thanks pat. Over

Speaker 3: 2:16

To you. Yeah, I've been with, uh, with ADSL for two and a half years now. I'm responsible for the supply chain of logistics customer service and in the planning organization, which is your traditional supply planning and demand planning. I came from Goodyear tire and rubber company. I spent about 13 years with that group doing about the same job with them and, uh, came over here to really focus in on our customer experience and improving our customer service trips, customer service levels. Great. Thanks and mark. Thanks. Well, I'm mark Coonara. I've been with DHL for about 25 years now. So I've only had one other employer. That's pretty rare ethics.in there. We've probably done similar in that context. Uh, worked for Pricewaterhouse before then with DHL. I've had various roles from commercial finance roles to operations. I actually met pat when I was the vice president of operations for our Goodyear tire and river account. And today I work with the business in our strategy, marketing transportation, and a couple of our business units, including our engineering and manufacturing group, which is kind of where ADSL falls. Great,

Speaker 2: 3:22

Thanks. So on ADSL, it is a publicly listed company, but I don't think it's a retail consumer brand and, and all that well known. So Scott, I wondered if you might tell us a little bit about who advanced drainage systems is customers you serve, where you operate a little bit of the history of the company? Well, we are a publicly listed company or ticker symbol on the New York stock exchange is WMS water management solutions. We've been public, I think for about six years, about 2 billion in revenue, a billion market cap. It seemed pretty good growth. We are really very focused in the stormwater management space and the on-site septic space really are a manufacturer, but we also have this very large logistics and distribution component. We have a private fleet and that's what pat was really kind of brought in. And we're darn glad he's here to help us manage that because early on, I, I really saw that it was a very different business from the manufacturing piece of it. So we really look at it as is kind of two different operations today. And, you know, we've, we've done a lot to reposition the company, how we present ourselves, you know, we have this great sustainability story, we manage water, a precious resource. We do this with this very high content of recycled material. We do this, you know, increasingly operating our fleet in an efficient and sustainable manner. So we're kind of lucky, you know, this sustainability thing came on quite quickly and we were able to really just package what we do and how we do business around that message. And, uh, it's been amazing kind of the uptake we've gotten on that particularly over the last couple of months where we've really moved that part of our story, which was developing over those first couple of years, I was here and we moved into the front of the deck and attracted several new investors and lots of new attention. We're, we're not a retail name, but in that storm water management or water management portion of the economy or the building products were really highly relevant and quite proud of that. We're well known for what we do almost iconic and what we do. And we do a lot of really cool things for our customers, not only in terms of our products, but in, in terms of what I call that service component of our value proposition, which is incredibly important to us. Okay. And what types of customers do you typically serve? Do you have sort of categories of them? I'm sure. Anytime you're about 50% of the business roughly is non-residential. So if you are building a center, which you all are very familiar with, or you're building any type of site development, we're kind of the first guys on the ground. That's when our products go in. So anything over, let's say five acres has a fair amount of regulation around it, on how that storm water is managed. So it rains, there's an impervious surface, a roof, a parking lot. There's a fairly well-known set of regulations on how you get that water off that site and back into the watershed and, you know, clean, you know, at the right pace. So things don't flood and, and that's, that's important because, uh, I think it leads to a higher quality of life. Part of our sustainability positioning, no one likes to live in a place that floods, if your basement floods or your street floods and really our products and the design work we do with engineering firms and contractors really leads to all that being done well, good portion of the business is residential about 35%. Now, I think a lot of that is the onsite septic that infiltrator our other division does. On the ADSL side. We also sell a lot of pipe when you do residential developments. So ADSL is very involved at the front end when dirt's being moved for a new residential development infiltrator in their onsite septic products is at the backend as a, as a home is being completed. And we've seen a nice uptick in that business. As people have been moving to the suburbs or maybe very rapidly growing areas, just outside of a metropolitan area, we call them micro pelotons where maybe the municipal sewage plant isn't keeping up and someone would need a leach field to, to complete their home. And then 10% of the businesses agriculture that's where we started was an agricultural field drainage row crops, corn and soybeans, very nice business for us, super high service content in that business being on time, being able to schedule the planning activities that that pat talked about. Uh, and then we have an international component primarily in Canada, uh, in Mexico. We're basically a north American company. Great, thanks. That's helpful. So pat, maybe turning to the supply chain agenda and kind of how we wound up together here today. And before today, can you talk a little bit about when you came into the business sort of what your objectives were overall, how you got to know mark and us at DHL supply chain and sort of where you are on that journey?

Speaker 3: 8:25

Okay. Yeah. So, you know, mark said, we learned a lot of years ago, you know, when I came into ADSL, Scott mentioned the suite, we have the fleet is really designed as a strategic advantage for us. It delivers to our trade customers. It goes to job sites. It goes to agricultural fields and that's a really big part of our service component to our customers. And then we have what I consider non-core pieces of our business that doesn't really fit into our traditional fleet and what it's able to do. And a lot of that was part of our retail proposition and our retail customers. When I came in, I noticed that a lot of our resources were being dedicated to this retail component and it was taking away from our trade customers. And so we worked with the HL, do come up with a new idea, a new way to be able to service those customers in a better way. But we're in the middle of that journey of opening up distribution centers and traditional boxes. We have one in the Northeast and one in the Southeast right now, and we're planning on more across the United States to be able to service those customers. And it's not just about, you know, moving product in there and getting them out. It's really about increasing the density of loads or customers being more efficient and then transferring that efficiency back to our traditional fleet that we have and being able to service more customers and being able to serve them better.

Speaker 2: 9:45

Great. And the fleet size is approximately what

Speaker 3: 9:48

We have about 500 units in our power units and about 2000 trailers within our fleet. And our fleet is very unique because it's all customized equipment. We have a specialized trailers to haul pipe, but we have a lot of flatbeds and drop decks that we use to service our customers. We have specialized equipment to go into agricultural fields to service those customers. So this is very unique fleet that we have. Yeah. Interesting.

Speaker 2: 10:14

I mentioned earlier that we started to kind of separate out our activities, what I call the four walls of manufacturing in its unique set of challenges and managerial objectives versus the fleet and impact was really very important in that because the more we separated that the more opportunities we saw. So while he kind of undersold that retail being in there in kind of being run on that private fleet, it was really what I would call jamming up our ability to use that trade fleet as it was designed. And, and we really took a very different approach and thinking about that, how do you get that retail out and put it where it belongs from an equipment from a density? You know, what were there, how many stores in Northeast 700 or something like that, that we were servicing other, that private fleet. It was kinda messy to tell you the truth. And our equipment was being used increasingly particularly during certain periods of time to service that and not great density, lots of stops. You know, we were trying all kinds of things to manage that, and it really was tough. So we kind of pulled that out, put these into these centers in the Northeast, in the Southeast and our not only did our delivery performance go up. So the retail customers that went up for our trade customers too, which was, you know, a big objective of the program.

Speaker 3: 11:36

We talked a lot about the fleet side of this. There's also a component of our, within our yards, which are our distribution centers that we have within our factories. They got way more efficient as well. And if you think about what they were designed for, it's for sick pipes are big, long pipe. It's not really made for those small lows that we delivered to stores. So it was difficult for operators to be able to load those trucks efficiently. And so moving that away from them, got those guys more productive, uh, and really helped us with that trade piece of it. So it's really two components of the warehousing piece. And then the transportation piece that we saw in efficiencies

Speaker 2: 12:13

After I was hired, I told our board, you know, after like three weeks, I was like, wow, you said this was kind of a simple manufacturing company. We're just making pipe. It's really quite complex. You know, not only that for wall manufacturing, but that logistics and transportation has a lot of different nooks and crannies to it that gave us opportunity, frankly, to not only do a better job for our customers, but do that more efficiently and is driven a lot of good performance. So I want to press on that a little bit, mark, from the DHL perspective, when we were introduced to this sort of unique set of circumstances and requirements, you know, what was our initial reaction? How did the team approach the solution? Yeah,

Speaker 3: 12:52

Actually the, the first opportunity that we worked with with ADSL was probably another one of those classic examples where they had a decentralized process of basically working on all the loads that the fleet couldn't handle. They were working through a brokerage type spot by network. And so our first kind of task was how do we take that from a decentralized network to a centralized network? How do we gain visibility to, to what we're spending? How do we gain visibility to how many loads that actually is per day, um, for each plan and then put it under a more traditional contracted carrier type network. So many of the sites were using individual brokers at each one of the sites. And as we continue to work through the program and actually over the last three years, we ran into this other thing called a capacity crunch in the transportation network. So even with that, we've changed our strategy to move more towards asset-based carriers. Now, many of these carriers are, as pat said, low deck carriers and flatbed carriers. So they are a unique bunch of carriers, but that was actually the first entry. And then pat described a little bit more around the retail. I

Speaker 2: 14:03

Wanted to kind of draw back on supply chain as a function in general. So we supply chain guys like to think about how important we are in the day-to-day world that we live in, but, you know, Scott with you having sort of a broader purview within ads, you know, how do you think about supply chain supporting the value that ads delivers? Where do you sort of see it and the hierarchy of the company or how the pieces fit together? I call them two primary levers in, in the company. I mean, we go to market, well, it was pretty high touch sale as a matter of fact, which is fairly highly engineered. So, which is a little surprising given the nature of the product. But then, you know, the other thing we do is, you know, manufacture and deliver, which is all in our supply chain. So probably 90% of the people in the company are either in the go-to market piece, are that supply chain piece. We've mentioned this service component, you know, several times. And that's super important to differentiate, to be competitive, to kind of great stickiness with your customers. So it's pretty high, very high on our agenda. In fact, I'd say, you know, almost all of our major strategies are in those two areas. You know, we're, we're doing things to develop products more rapidly and investing in our material, science and engineering too. But you know, we have to do those two things well, you know, go to market well, we've got to operate that supply chain. We have to execute in that, you know, kind of comes back to being part of a public company, you know, relatively new public company. You know, you really need to do what you say you're going to do. That's how you build credibility with the analysts that follow you or the investors that you've attracted in over time. You know, that that builds credibility. It builds some, I call it capital, you know, for you because things don't always go right. And when they don't go, right, you know, you need a bit of that. Now, fortunately for us, the last three and a half years, things have pretty much gone, right. But I say that because, you know, if you're doing what you say you're going to do, people can count on investors can count on you. Customers can count on you. It really begins a flywheel effect because you can layer other things on top of that. Other products, other services, other approaches, an acquisition, a new product in a, an investor the other day told me one of the things he liked about, you know, how we talk about the company and how we've performed is he sees a compounding effect in our performance. And that's pretty cool. I think I've worked a long time, many different businesses, and you work really hard to get to that point where you're getting that compounding or that flywheel effect. And the work we've been doing with DHL is, is part of that flywheel, you know, as we are able to execute better in the Northeast or the Southeast or new Miami, one of our newest activities, you know, that, that gives us then more that we can then go and do. That's how you grow. That's how you improve your profitability, your cashflow, you know, generate the, the options that you want to have to grow your business. Yeah. Great. Great. So I want to step back to sustainability and pat, just thinking about it purely from the, with the supply chain hat on, you know, how do you guys think about driving sustainability within the supply chain activities in your business? How do you measure that? You know, where are you in terms of what you, what you ultimately want to achieve?

Speaker 3: 17:21

Yeah, so I think there's a couple elements to that, that question. I think the first one is, is around our fleet and our sustainability of our fleet Cape Safeway carrier here over the last 12 months. So that's a very big seat for us. It's a lot of work as you know, to get to that gave us a lot of what I call street credit or out our commitment to sustainability have done a lot of work around MPG around making sure that we're reaching our payloads and that we're focusing in on really good pieces of sustainability that we can go after. When I think about DHL and helping us in that journey. And it's really about around core versus non-core when we have these retail pieces and, uh, in our portfolio, it is very difficult for us to get good pamphlet. It's very difficult for us to sustain really good miles per gallon. And so giving that to DHL, to really optimize that through TMS or different mechanisms that you have really enabled us to really focus in on our fleet side of it. And that's been a really nice piece, uh, story there. Uh, and we'll continue to do that as we grow this program across the U S I'll also say on the common carrier side and mark, you mentioned a little bit about the control tower that we have set up. That's really giving all of our locations the time to be able to focus it on the sustainability piece, not only the sustainability from what we've described, but also driver safety and making sure that our drivers are effective in what they do, and they're getting the proper training to stay safe whenever they're delivering. Um, so I think a combination of all of that has really helped us with our, with our sustainability.

Speaker 2: 18:59

Yeah. Great. And mark, I know this is a hot topic within the supply chain industry, overall, maybe jumping off of what ADSL is doing, what are we seeing in other corners of the business?

Speaker 3: 19:10

Yeah, just, um, from an ads perspective, I think when we started doing the retail business, many of the retail loads were delivering two to three stops per truck, and we were at five and a half. And then through continuous improvement, I think we're around six now. So a lot of it was just kind of frame power, just working out, how are we going to stack these trucks to get there's a lot of air in these vehicles. So we focus a lot of time on getting the right equipment to service as well. So these are very light payloads. So we have to make sure that we're picking the right equipment when we go out and pick the right trucks and then on the control tower side as well. And we started to work through a process where we're evaluating all the Safeway carriers about giving visibility to ADSL that says, Hey, these are Safeway carriers. You know, this might be a nickel more than this carrier over here. This carrier has a much higher rating from a standpoint of their contribution towards a sustainable fleet. So we're working on both of those items. You know, one other thing that pat mentioned earlier was the fact that they were just using the wrong equipment to pick the product out in the yard. So they're using these big 10,000 pound diesel forklifts out in the yard, in the middle of all the elements. We've converted that all to an electric fleet, which is from a brown power standpoint is about an 81% improvement from a GreenPower, it's almost a hundred percent improvement on your sustainability and your carbon footprint. So that's been another nice area of focus for us as well. It's about getting the right piece of equipment to do the right task. And that's where we've really seen the gains.

Speaker 2: 20:46

Great. So Scott, just building on this, a couple of really nice tactical examples there, but there's a value creation lever. Sustainability has been sometimes more of a marketing thing than a, you know, real way to drive the P and L are you seeing that changing or have you seen that differently at ADL? We see it quite differently because before I got here, very important elements of sustainability were built into our P and L you know, and, and, uh, it's not only the service components, pat mentioned getting better miles per gallon, better load density, more, more efficiency using the right equipment, which all kind of takes down your greenhouse gas emissions. You know, that that's a natural, the other piece is this very high use of recycled material that we use about more than 50. I think it's 55% of the black pipe. We manufacture the high density, polyethylene pipe. We manufacturer uses recycled material. We're very large recycler ourselves, the second largest recycler in the country. So within that four walls of manufacturing, you know, there's a big recycling activity in there increasingly like we split out the logistics and transportation. We're splitting that out and looking at it separately because when you do that, all these things we've talked about today, we saw those when we kind of separated them out. And I think we'll see more opportunities there. So for us, it's a driver of our P and L it's what we've been doing for many, many years, frankly. We're just kind of trying to take the next steps and executing that game. And we're talking about it more and moving it to the front of our deck. And I think that's pretty good. I think we're lucky in that sense, as the sustainability has become such a topic among investors as become such a topic, uh, you know, in society really, we, we, we fit right into that. And the fact that we manage a precious resource water is kind of even better. It's not like we're a package goods guy, try to use more recycled we're we're doing this to really make the environment a better place. Yeah. So you think this is here to stay? Yeah, I do. I do. And I, this isn't walking back. Yeah. There's no way this is walking back. There's not only is it the right thing to do, but I think people increasingly like us at ads are finding it is a natural part of work in their P and L and in fact, even their balance sheet, because you're going to increase your investments in these areas as you can. Good. So it'll stay at the front of the deck, then it'll stay at the front of the day. Yeah. Good. Good. All right. Well, listen, thanks very much for hosting us today. And for joining us, we really appreciate your time appreciated that the discussion learning more about your business and a unique solution that DHL and ADSL have combined on from a supply chain standpoint. You're welcome. It was a first for us to our first podcast today. So thank you very much. Yes.

Speaker 3: 23:36

Thank you. All right. Thank you.

Speaker 1: 23:39

If you enjoyed the conversation today, please share it with a friend and rate us on apple podcasts. You can find online at dhl.com/all business, no boundaries and follow us on LinkedIn and Twitter at, at DHL supply chain. We'll see you next time.

Speaker 4: 24:10

[inaudible].