Supply Chain Gold
Steve Gold, a Managing Director with Alvarez & Marsal and former Chief Supply Chain Officer of PepsiCo, graciously took the time to speak exclusively with Supply Chain Digital on his thoughts on the logistics world as we move deeper into 2012.
Q: Talk to me and my readers about what you specifically did with Pepsi’s supply chain
A: “I was responsible for transforming the entire supply chain at PepsiCo, which included brands like Frito-Lay, Quaker Oats, Gatorade and others. Most of what I did was based around leveraging our scale to take out cost while enhancing our go-to-market strategy with major customers.”
Q: What’s your argument for why supply chain is a top issue for corporate management in 2012?
A: “I’m not an economist, but everyone is predicting flat GDP this year, so the question is really on growth. If GDP is flat and we have a high unemployment rate, the consumer doesn’t have any more money to spend on goods and services. That gives everybody top-line pressure, because they have to grow sales and grow revenue.
“On the flip side of that, you’re going to see a lot of input inflation. Chinese workers’ pay raises are coming through now, and China is seeing major inflation. Those kinds of issues have economists predicting our financial situation to be pretty inflationary. The consumer may not have any room to raise prices, so everyone is going to get squeezed in the middle. At the end of the day, supply chain is going to be looked upon by large companies to reduce those costs and to find new ways to accomplish that.”
Q: What are some of the ways you’re advising customers on cutting supply chain expenses?
A: “There was a time where you could beat up your supplier and get lower rates for transportation or services or whatever just by negotiating better. A lot of companies have picked that fruit, so you’re going to see much more creative supply chain solutions that a lot of our clients weren’t prepared for.
“At PepsiCo, we made plastic bottles. If you go and buy bottled water today, you’ll see the bottle is extremely thin, and the reason for that is the only way left to take cost out was to make the bottle lighter. You’re going to see other corollary business and supply chain strategies that take cost out of the equation more. Whether it’s in heavy manufacturing, sweaters or goods and services, there’s going to have to be a totally different mindset on the logistics process.”
Q: Does a renewed sense of supply chain innovation have to be a focus moving forward?
“Totally. This function has rested on its laurels for a long time, and unfortunately, many supply chain leaders don’t think they have the permission to be creative in their role. They could have a huge input on the model, but right now they’re lacking the ability to really try and be creative.
No one has forced supply chain leaders on how to make this happen. When we did this at PepsiCo, I thought we were pretty sophisticated. A lot of companies don’t behave like that in a supply chain function. There are a lot of leaders that haven’t forced the supply chain to think differently and be creative, and that must change (this year).”