September 23, 2019
To lead the transformation of supply chains into the next decade, professionals must identify the opportunities and challenges facing their supply chain processes and consider the resulting impact on the organization, its products and services, and its interactions with suppliers, customers and partners. Drexel LeBow interviews supply chain executives to learn about their roles, their current initiatives and practices, and the future direction of their organizations.
Q. What are the key priorities and functions of your role as Group Director of Supply Chain at AmeriGas?
As the group director of supply chain, I was brought into the organization to help digitize our supply chain. To lead AmeriGas’s progress down a digital path that enhances our customers’ experience, there are four key areas that I am currently focused on:
- Customer Data
- Planning and Routing
- Last-mile Delivery
The opportunities within these areas are significant in terms of improving the accuracy of our customer data, moving our forecasting modeling into utilizing external data and machine-learning, automation of our productivity planning/driver routing and creating feedback loops within our last-mile delivery to continuously improve what we do. The four areas are interconnected and will support an improved customer experience while creating opportunities for structural cost reduction. In my role, I oversee the functional areas of supply chain that include demand planning, last-mile delivery auto-routing, supply chain engineering, and technology vetting/selection to support the four areas listed above.
Q. Can you briefly explain AmeriGas’ supply chain structure? What are the major parties, internal and external, involved?
AmeriGas is the largest propane distributor in the United States. We are more than double the size of the next largest competitor in a highly fragmented industry. A majority of the market is made up of small “mom and pop” operations. AmeriGas’s size allows us to maintain assured supply when demand is highest across the winter heating season. This creates a level of competitive advantage when customers do not want to worry about the rationed supply that smaller operators may experience. AmeriGas only distributes propane, so the supply chain structure is not too complex. We do have more than 600 manned locations and another 600+ satellite storage locations across all 50 states. Our corporate office is located in the Valley Forge area of Pennsylvania and the supply team is based in the Houston, Texas area because that is where a fair portion of the supply is produced and stored. Propane is delivered to our last-mile delivery locations in a couple of different ways, by transport truck utilizing an over-the-road driver to support delivery, by railcar and through a pipeline. The propane is delivered to our end customers by truck and orders are generated from SAP in three different ways – fixed schedule, forecasted usage, and customer “will call.” Typically, the customer type is determined based on customer preference. Since AmeriGas is so large, a majority of our supply chain is managed utilizing AmeriGas equipment with only a small amount of third-party support on the supply side – transport truck deliveries. The major parties are the producers of the propane, AmeriGas’ supply storage, our AmeriGas last-mile delivery locations, and our customers which consist of both residential and commercial.
Q. What are the best practices that the supply chain group maintains to ensure reliable and quality service to customers nationwide?
Our best practices are starting to evolve as we look to digitize our business. In many areas, we currently employ what we call a “best athlete” model, meaning that we have smart people that get trained up to ensure that we provide reliable supply at high service levels. The future vision that we expect to realize over the next 12-18 months is more leveraging of machine-learning and systems to remove the reliance on people, as well as the continuous learning curve that comes from people moving in and out of critical roles that support assured supply. These systems and automation will support all four of the areas I called out in an earlier question as the focus areas: Customer Data, Forecasting, Planning and Routing and Last-mile Delivery.
Q. What inspires or challenges you at your current position?
I am inspired by the people and the company culture of AmeriGas. The work environment is not political and the people I work with generally care about the company and have a passion for us doing well. The biggest challenge that I face today is managing changes in the field regarding moving from manual processes to automated systems. People can be resistant to the idea that a machine can do a better job than they can over time. This improvement includes creating a level of consistency that will adapt to changes more readily than a person can. This does not mean that AmeriGas does not need people. We still need the same smart people to support the business, but their support will change over time to be more forward-looking and less tactical, in many cases. I will also say that A.I. and machine-learning does not just magically happen. It takes time with human help to build the models to create a framework for machine-learning.
Q. What skills are important to have in order to build a successful career in supply chain management?
I see a person’s ability to remain agile in their thinking and having the ability to become a change-agent as critical to thriving in the future world of supply chain management. Consider the “Amazon effect” and how it has changed customer expectations. All supply chains must become better at being agile as customer wants and needs will continue to change at a much faster rate than what has been seen in the past. The companies that can make the leap to digital are more likely to survive, and those companies will be looking for critical thinkers that can support the fast-paced digital world that we now live in. I would also recommend obtaining a graduate-level education. A person can really sharpen their critical thinking skills through a master’s program in either business, supply chain or a related field of choice.