 Welcome to MIT's Supply Chain Frontiers where we discover the future of global supply chain education, research, and innovation. Brought to you by the MIT Center for Transportation and Logistics, every episode features center researchers and staff who welcome experts from the field for in-depth conversations about business, education, and beyond. Today, CTL Executive Director and Freight Lab founder Chris Kaplis speaks with Michelle Livingstone, Vice President of Transportation at the Home Depot. Take it away, Chris. Hi, today I'm talking with Michelle Livingstone. For those who don't know, Home Depot was founded in 1978 and is the world's largest home improvement retailer with more than 2,200 stores across North America with revenues in excess of $110 billion. So, welcome to MIT, Michelle. Thank you, Chris. So, tell us a little bit about your role at Home Depot. Well, I have the pleasure and privilege of leading the transportation for Home Depot, and that includes making sure that whatever we buy from around the world, or domestically, finds its way into a distribution center or store, and we also help support customer deliveries as well. So, how much of that is split between the international, I imagine it's just inbound, international versus the domestic, the truckload and rail intermodal or any of that? Yeah, actually the domestic is our biggest expenditure, but certainly international continues to grow. But as far as the problems and to solve, does it follow the revenue or the spend or is it international more, take more time to manage than the domestic? Well, it really depends on the year. So, certainly in 2018, when the domestic transportation was a little more active, a lot of time and energy went toward that, but you throw in a Hanjin closure or a Merce cyber attack, or a port closure than suddenly international, although not the biggest expenditure, becomes the biggest headache for sure. Right, and something happening across the world, on the other side of the world, has an impact on you. That's got to be a challenge. So, it's a big job, and you've had it for a little over a decade now. Yes. Is that right? Yes. So, tell us how you got there. Actually, I'm one of those folks who graduated from Indiana University with a business degree and a concentration in transportation, and I've gone out to do exactly what I went to school for. Let me stop you. What made you pick transportation? Is this a master's specialization or was it undergrad? It was undergrad, and the reason that I chose transportation, it was because, first of all, my dad was in trucking for all of my life, and most of his, so it's amazing how much you pick up at the dinner table. So, never underestimate the conversations you have at home with your kids. And then secondly, at the time, there were not many women in transportation. And so, as I was looking at the salaries that graduating seniors were getting for finance and marketing and accounting and other disciplines, it turned out that the transportation graduates were making just as much. And coupled with the fact that there was a need for more women in the industry, and I knew a little something about it, it seemed like a great career decision, and I've never regretted it. Okay. So, you graduated, and was your father a trucker or was he in the industry doing other things? He worked for an LTL carrier, and then he went on and worked for a trucker carrier, and he did operations and sales. Wow. So, then tell us a little about the other companies you worked with prior to coming to Home Depot. I spent the bulk of my career at Kraft Foods, and that was a great experience. And then from there, I went to JCPenney, and I was vice president of transportation for JCPenney, and then CNS wholesale grocers called, and they were a customer of Kraft, so I was somewhat familiar with them. And they had an interesting vision at the time, and so I packed my bags and went to Keen, New Hampshire, and then Home Depot called actually 12 years ago, and it seemed, at that point in time, they were making a big investment in their supply chain, and it was warmer weather. And it both seemed like a good idea, so I came south. Yeah, I was going to say CNS is the only one above the Mason Dixon, right? You're only one up in the cold weather. So you've worked in both manufacturing and retail. What have you found that's similar in those industries, and what have you found that's different? Yeah, I mean, for the most part, you're moving product from point A to point B. Certainly in a manufacturing world, when you have an opportunity to shut down a manufacturing line, on time, that's really where I got my passion for on-time service, because that's a little different. But even the way that things have changed and how tightly we're scheduling trucks to match labor, even though ice cream may not melt, so to speak, as it does in the food world, that on-time component is just the same. So really, there's not much difference between retail and manufacturing. What drives the urgency then? Because for manufacturing, yeah, you're stopping a line. Is it the worry of stocking out? It's definitely our need to make sure that we remain in stock. We're always trying to watch our inventory levels, and so we want to replenish product quickly. We're also trying to align the arrival of a truck with store labor or DC labor as well, so that we're very efficient in that regard. So that's something that's gaining a lot of attention now, because a lot of companies don't do that well. It seems like the warehouse doesn't talk to the transportation, and so you have these tremendous detention times at facilities. We are very fortunate that we have a drop trailer model, and so that we don't experience detention within our own buildings, for the most part, where we occasionally encounter detention is from a vendor, but even through conversations with the vendor, we're typically able to address whatever creating those detention charges, either by changing or ordering day or time, or by going to a drop trailer scenario as well. So by going, is it almost exclusive drop trailer as much as possible? Yes. Does that limit the type of carriers you can work with? Yes, it does limit the number of carriers that we can do business with, because not everyone has that capability of dropping trailers. So, but it works well for us, and it does give us the flexibility to do what we need to do. Right. So transportation has changed a lot in the 30 years. I mean, deregulation was now 40 years ago, so forget that, but it took about a decade for it to ripple through. What do you think has changed the most over the last, say, 20, 30 years in managing transportation? What stayed the same? Yeah, I think what's changed the most is really the technology, and it's all for the better. So the visibility that we have now to loads and transit is tremendous. The data that we can gather on our network or vendor network or carrier network is tremendous. So I'm really, really pleased about all the technology improvements that have occurred. And, you know, what really hasn't changed is that it still remains very much a relationship business. So even though the data is there and will drive to the right decisions, there's still a lot of relationship and people issues and opportunities that are just the same they were decades ago. It's funny because the availability of more data is like a double-edged sword, right, because it's great to have all this data, but then you have all this data and you don't know what to do with it and it's not always good. Have you found it's more of a benefit than a hassle now? Oh, it is definitely more of a benefit. Home Depot has made a significant investment in supply chain analytics in particular and analytics across the entire company. And it has just improved our, I would say our street cred. It used to be that we would get a complaint and it was always a transportation problem because we were the last in the supply chain to touch the load. Now, with our analytics, we were able to say that no, the vendor really didn't have the load available on time or something really did happen in transit and we just have better data to help folks focus on the right root cause. Right. And it's really been a blessing. That makes sense. That makes sense. So let's talk about your current role. What's the one or two or three things that keep you up at night the most? The good news is I'm sleeping very well in 2019 and 2020, so thank you for that. I think 2018 was a more challenging year for us and it was a good reminder that we really have to stay current on changing market conditions because transportation is cyclical and knowing when things are changing and being on top of that sooner is something that can certainly make one lose sleep. Something else that keeps me up at night, not that I have too many sleepless nights, but it's really making sure that the talent is correct, that we're leading and growing our associates and that we have the right people, as we say, on the right bus and the right seat at the right time. So it's really more of a people and leadership opportunity. Do you tend to try to promote from within and move people up or do you try to maybe inject external people in at different levels from other organizations? Primarily Home Depot is a company that promotes from within, but I was an example of someone that came in as a lateral as Vice President of Transportation. And we do have that on occasion, but primarily we have great talent and are able to promote from within. It's easier to keep the culture that way but sometimes it helps the culture to have someone external come in. So Home Depot is very passionate about the culture and we always say if you take care of your associates, they take care of your customers and the rest take care of itself. And that Home Depot orange culture is critical to our success. Orange culture. We bleed orange. So you said that one of the big things that you're trying to work on that keeps you up at night is talent management, essentially, making sure the right person's in the right role, developing the right people. And so what do you think of the top two or three skill sets that individuals as well as transportation need to have to be successful? I think the number one skill set is the ability to think end to end. You know, it's easy when you're just focusing on one component of a problem and optimizing on that one component, but you have to really understand and appreciate the impact from beginning to end. And so I think as our new supply chain leaders come in, that end to end thinking is going to be critical for success. How do you get them to think end to end? Because a lot of times it's fun. I love with the younger students because they don't think in the box. But once you start your career, you start focusing on being an expert at one thing. How do you break them out of that and look end to end? Do you have certain skills, a rotation program? What do you do? Well, certainly there's no doubt that job rotations are critical to success. And we always talk about our inventory planning and replenishment group being the quarterback of supply chain. They're the ones that are deciding what's going to ship from where and when. And so that knowledge is great to have. And we love to attract and retain folks from our inventory planning group for that reason. So I do think a lot of it is how you lay out those career opportunities. And I think it's also on how you pose the question as well. Because depending on how you ask the question, we'll get you a different answer. So I think, you know, as a senior leader, you have that opportunity to say, hey, let me help you understand. Let's go out and see this. What is the impact? Did you think about this? Case studies and real life helping folks to think about beyond their scope? Let me ask you a question about that we get this a lot here at MIT for students. They're soft skills and hard skills. And by soft skills, I mean the interpersonal working the corridors and being able to work on teams and everything. And then the hard skills, whether it's now it's becoming more important with data science, analytics and those kind of things. Where do you see the mix between those and which is easier to teach? That's a really good question. And prior to that lead in, I was going to say that the balancing the need between data and people is really the key to success. Because the data will drive you to one answer potentially, but again, you have to think about what is the impact on people. And I would say I am more of a people person. So I would say learning the analytics is more challenging. I think if you're analytics learning the people skills, definitely is more challenging. But both can be learned. So I think there are many ways to learn those skills and part of it is just jumping in and doing it in the other parts. The formal study and job training. Which is easier to get a trucker to learn math or a mathematician to learn trucking? Yeah, both are definitely challenging for it without a doubt. Which is why teams are good. You're so dodging the question. You need to have a mix of talent on your team. Yeah. So what's the one skill that you wish you had early in your career? Well, I tell you the one thing I wish I would have known then that I know now is organization savvy and leadership savvy. And I'll tell you what I learned much later in life than I probably should have is that I thought if I worked really hard and provided great results that promotional opportunities were going to fall from the sky and I would be in great demand. What I didn't understand then that I understand now is a concept called Pi. So Pi is performance, image and exposure. Exposure. So performance is a given. You have to be able to do your job effectively. But what the components I was missing as I didn't realize they needed to be much more exposed. I need more exposure to senior leaders. I didn't understand the value of having a mentor. I didn't understand what a sponsor was. All of those corporate things that when you enter the real work world come to life later and I really wish somebody had told me these things sooner because I think I could have been very pleased with how my career is unfolded but I think I could have been more effective earlier if I would have been aware of some of these softer skills that you don't necessarily get taught in school. The exposure piece, yeah, you don't. And if you're naturally not an extrovert, if you're an introvert it doesn't come naturally to you and some people just put themselves in the way. Do you think that's one of the challenges that women in general face that they don't go for that exposure or do you think it's regardless of gender? I think it is probably more prevalent for women. I think they think that if they work really hard the results are going to speak for themselves but what they fail to understand in men as well is that if you're not known then the chances of you getting that next opportunity are slim whether it's being selected for the best project or being given an opportunity to have a conversation with a senior executive or whatever. If you're not known, you will not be selected for that. So now you're on the other side. You can see why the exposure is so important because you've got how many people indirectly or directly report to you at Home Depot? My department's got 135 people in it. You can't see them all every day so if they don't expose the onuses on them to do it but do you try to look for those people of the strong performance that aren't doing the exposure? I do because I do recognize that and certainly we do have a number of folks that are introverted, very analytical and it's hard for them and so we have to provide those opportunities and so a lot of times I'll select the least likely person to lead a committee for instance on Voice of the Associate so go help us figure out how we can be a better department and go work with others and put them in that role and kind of grant them that opportunity because it's a lot easier a lot of times to meet someone when you say hey I'm on the special project, I mean I talked to you about this as opposed to hey I'm walking down the hallway. How do you deal with the idea that someone that it's okay to fail but that you need to improve because a lot of times they do it, I've had people that do it once and then they never want to do it again. That is a hard one because none of us want to be a failure, we all want to exceed but part of that is also just continuing to build confidence in small steps and it really is just reinforcing that hey not everything's going to be a homerun but what did we learn from it so that's really important and I know at Home Depot some groups actually have a good try award in recognition to say hey you worked really hard on this project, it didn't develop the way we wanted it to but it wasn't from lack of effort so good try. I know I forget the name of the company, it was in Silicon Valley and they had a fail wall and it was filled with sticky pads and it was a thing of pride if you failed but if you got a fail you fail fast and then you learn from it and like the CEO had a big fail like we shouldn't have gone into that country and I thought that was interesting interesting culture because here at academia we don't like to fail it's called a failing grade enough right so but that's an interesting thing how you get that culture experiment and you're not always going to come out on top. Yes. Well Michelle thank you for being here any last words of advice or that you want to partake on the podcast? Yes I would just like to say there is a great career for students in supply chain, there is a great need for that in the business world and I am really optimistic that we'll be able to attract more women into this supply chain field in particular and hopefully every CEO will at some point in time have supply chain in their background. That's great because when we were in school supply chain didn't exist so in a very short very short period of time it's become a major profession so thank you again for coming Michelle, appreciate it. Thank you. Alright everyone thank you for listening I hope you enjoyed this edition of the MIT supply chain frontiers my name is Arthur Grau communications officer for the center I invite you to visit us anytime at ctl.mit.edu or search for MIT supply chain frontiers and your favorite listening platform. Until next time