Creating Supply Chain Harmony and Encouraging Innovation with Neil Ackerman
Neil Ackerman is the Head of Global Supply Chain Innovation Hubs in the Americas, Europe, Middle East, and Africa for Johnson & Johnson. He is an industry expert in supply chain fulfillment, integrated business planning, and marketplaces. Because of his extensive knowledge, he’s been featured in numerous best-selling books including, Amazon Unbound, Always Day One, Behemoth Amazon Rising, and AI in The Wild.
Before joining Johnson & Johnson, Neil worked in Israel as the Managing Director for global supply chain innovation in the Middle East and Africa. He also held various positions at Amazon, including as the Senior Manager for Business Development and Strategic Planning and the General Manager and Inventor of the Amazon Small and Light program. He holds 11 US patents with Amazon.com and has appeared in The Wall Street Journal, Forbes, and numerous international publications.
Here’s a glimpse of what you’ll learn:
What attracted Neil Ackerman to supply chain management
The state of supply chain at Amazon when Neil joined the company
How Neil helped solve friction points while at Amazon
The importance of concentrating on providing customer delight
Neil talks about the impact shortages and delays have had on the supply chain and what companies can do to solve those challenges
The dynamic between supply chain management and innovation
In this episode…
Recent disruptions in supply chain management have had a major impact on the production and provision of goods and services — and innovation hasn’t been left untouched, either. These issues have caused friction among manufacturers, suppliers, retailers, and customers. However, when handled well, such disruptions can help bring about better changes and great improvements in the way things are done.
In the case of Amazon, the company caused a lot of friction when it spearheaded online sales innovation and disrupted the normal supply chain in the market. However, it also brought about harmony by shifting the focus to delighting their customers. All of this applies to any kind of business, including dealerships, where the most successful dealers are those that are fully committed to delighting their customers.
In this episode of the InsideAuto Podcast, Aharon Horwitz is joined by Neil Ackerman, the Head of Global Supply Chain Innovation Hubs at Johnson & Johnson, to find out how creating harmony in a disrupted supply chain can lead to innovations and customer delight. Neil talks about common challenges faced by businesses due to delayed deliveries, the importance of partnerships, and how disruptions in the supply chain can impact innovation. Stay tuned.
Resources Mentioned in this episode
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Welcome to InsideAuto Podcast, where we feature everyone and anyone you'd want to talk to you in and out of the automotive industry.
Aharon Horwitz 0:15
Hello, everybody. This is Aharon Horwitz, co-host, usually with Ilana Shabtay, but today not of the InsideAuto Podcast, where we talk about everything automotive and interview top dealers, general managers, marketers, entrepreneurs thought leaders, inside and outside of automotive. As you know, we're kicking off a new season. We're super excited. I'm going to tell you in a minute about today's guests the perfect person to kick off this new season. But before we introduced Neil, this episode is sponsored by AutoLeadStar. The AutoLeadStar platform is built on a technology so powerful, it allows you to market, sell and service cars as you would in the real world at scale and online, making one to one matches between shoppers and inventory. AutoLeadStar is the only platform that is powered by scale, speed, and specificity to change the way dealers do marketing. Neil Ackerman, welcome. Thank you for joining us.
Neil Ackerman 1:08
Hey, everybody. Thanks for having me. Excited to be here. We're so excited to have Philadelphia today,
Aharon Horwitz 1:14
Calling in from Philadelphia, where, what happened yesterday, they would
Neil Ackerman 1:19
know what to beat the chiefs. And yeah, listeners may know that. I lived in Seattle, and I'm a big Seahawks fan. But my Seahawks won.
Aharon Horwitz 1:31
So I have to say, as a Browns fan, I feel free to make fun of Philly fans. But we, you know, long suffering here. So Neil, for those who do not know, and some of you actually may know, Neil, he really is the perfect man to be interviewing at this time, because Neil's specialty now in his role of Johnson & Johnson, where he is a senior executive working on global supply chain innovation, but also new initiatives and innovation. Prior to that when he was at Amazon, frankly, other roles at J&J. But at Amazon, where he was in that insane in those insane years where Amazon was figuring out how you actually ship everything and make everything and get everything everywhere. Neil, I don't know if he would share this. But I know he was involved in like 11 key patents that Amazon has. And much of the stuff that comes to your door is probably coming through one of the things that Neil invented. So he is the person who understands the person in the world, one of them who actually understand supply chains, global supply chains, and we want to just have an intelligent conversation, Neil, about what is going on. But before that, and this is true of every insight auto guests, we want to know about you. How did you come to where you are? And what was that journey that led you? I guess first to kind of what you were doing in Amazon. And then after that into J&J.
Neil Ackerman 2:54
You know, like, like every good supply chain, it started out slow. I had to figure out a journey because if the app right, I had to figure out, you know how to get there. But I would say that in the end, I really wanted to focus on initiatives and companies that were global, and would influence the world in a great way. And I quickly realized that one of the most important parts of a corporation is their supply chain. And knowing that this is part of a revenue generating machine that you're now seeing come to fruition. This is why I decided to, you know, do that career. I would say this, this is a long answer. But to get to the short of it. It's about having great friends, good family, working hard, making it happen. So this is why I'm here today. I enjoy the years and living I moved 11 times. I just came back from living overseas in Israel. And now I'm back. So can't wait to have this conversation. And thanks for having me.
Aharon Horwitz 4:10
So Neil, let me ask you this before we get to kind of automotive and what our listeners probably are thinking about when you came to Amazon, did you was this was the supply chain under control meaning was it organized at that time? Or was it still happening? company together? And to what extent did you understand I guess from more of maybe your previous background, but also academically? To what extent did you understand supply chains when you walked in the doors and Amazon? Or is that a learning process for you?
Neil Ackerman 4:40
Look, to be honest. Yes, I did have the academic background. You know, some of you will know some of the schools MIT, UVA, University of Richmond, etc. But that is just in the textbook. And the truth is that at the time at that time, Amazon was of course, invention, it was inventing things. And there was a lot of friction in the supply chain and getting things delivered. And, you know, the opposite of friction is, you know, you see it when you know it, and it's called harmony. And really what Amazon broad at that time was harmony, harmony to these, the lives of consumers harmony, two suppliers that did it the way that this new way of doing it online was. And when you bring harmony, what does that lead to? It leads to customer satisfaction, consumer smiles and delight. So when you reduce friction, and you bring harmony, you cause delight. And and that's really the story. So today, no, at all? No. Did anyone know at all? No. But we did know that you got to reduce friction to bring harmony and close to life. And so Yes, you are right, at some of the most important pieces was understanding, not just how to ship a T shirt. But you know, how do you ship an item that's $10. And under five ounces, at a time, it was almost impossible, because of the shipping was very expensive was like, you know, six, seven bucks. And, you know, how do you ship big and bulky items? And most your listeners know how difficult that is? And how do you do this all at scale at a price point that works? And the real answer was that you had to spend what they call a flywheel faster and faster, you had to get more items through the system to get the you know, the transmission moving, get the clutch going into, you know, get that car. So to get that thing driving. And so what we ended up doing was, we realized very quickly, that you'll never do it, by having a limited selection at high prices. And not a lot of convenience you had to do, you had to do it all on a formula. So the formula that I've learned and still do in all the industries I've played with since is consumers, dealers, wholesalers, they don't wake up in the morning and say, I want to pay more. They say I want to pay less, they don't wake up in the morning and say, I have a great idea, I'm going to limit selection. Because that's not going to work. People want more choices. And they don't wake up in the morning and say I want this to take four weeks to get they want it when they want it. And so if you drive a flywheel by lowering prices, giving great selection, and always being very convenient, you're going to improve harmony, and increased delight. And this is how I think about business. And I've done that end to end for, you know, 25 plus years in the supply chain world. And that's that's that's my focus.
Aharon Horwitz 8:02
Let me ask you want to give us maybe one example where you, just because it's the type of stuff that many of us don't see, right? I assume you were rolling around in all sorts of places that many people don't get to try to understand how things are produced at their source. But what's an example maybe in any of the places that you've been of a friction point that you were able to smooth out? And you can be as specific or general as you want. But I'm just curious, I think that'd be that'd be an interesting insight for, for our listeners.
Neil Ackerman 8:33
It sure. So one, one that's a lot of fun, is every time someone gets it an envelope from Amazon, let's just say. And, and by the way, most items that Amazon, you won't be believe it. But most 70% or more of items are under $15. Frankly, they're under like $12. But Wow. And those items. They come to you and you get them now, you know, sometimes the same day, sometimes the next day. But the biggest friction was how do you get these little cheap items to people at a cost effective manner when they want to. And this was the beginning of really the march towards consumables. And getting that to Pete to the folks and this is before grocery and all that infrastructure. And the answer was to partnership, the way Amazon was able to partner not just with their sellers and their suppliers, but also on the other side, which is the US Postal Service at the time, and even the transportation between the postal service. So an example would be they would get an order, we would pack the item at a fulfillment center that was customed to the small items for a small light fulfillment center. And then instead of injecting them at that point, we would drive it to the injection at the postal service. So that would reduce touches. And when you reduce touches, you reduce miles you reduce cost structure. And therefore, this is a very high level, but therefore we were able to get these items for a profit to you know, 10s of millions of consumers. And this was the beginning of what is now a monsterous program for small like delivery across the infrastructure now global. I mean, that's one of the patents that I worked on. So that's an example of being creative, working with different stakeholders end to end, and then coming up with something that people don't think will happen. You know, another one that I'm thinking about now for the future is what will drone delivery be like? You know, this is how these big ideas start. Will there be drone delivery? Yep. Where will it be? Probably the suburbs to start. Are there big enough suburbs? Yep. 80 million homes in America that are ready in the suburbs? Why would people want it? Well, I'm living here now and I don't like paying $90 for a hamburger to come to my house because I gotta pay 499 to you know doordash and then they got to give them a $5 tip and then I have to you know, buy it at a premium and then the store has to charge me but what if a drone could do it for less than a buck? I probably do it right so there's always going to be invention and you know and curiosity involved but it comes back to the theme around right? reduce friction bring harmony get to light and that's what I do.
Aharon Horwitz 11:48
I love that formula. It's I think influences that that a concept of customer delight is very powerful when you think about it in the context of any challenge that you're looking at and and if you make that your guiding star it tends to drive you places as we've talked about before
Neil Ackerman 12:08
Sure. Yeah even and even the dealers that are listen to you now look I'm a consumer by by cars, I got plenty of them. But you know, in the end, what dealers do I keep going back to the ones that connect with me. Yep, the ones that give me a fair price there the selection of the car one or they could find a car one in a timely manner. Right? And they're convenient they make it easy to service so they make it easy for me to get it or they can they can get me I can get them on the phone quickly. You know, this is what people count you don't want to be a dare I say the Comcast of customer service you want to be the Amazon of customer service.
Aharon Horwitz 12:57
Yeah, and so this is where I think it all starts from so let me segue into I guess the topic of everyone i mean i before preparing for this conversation with you I went through a bunch of headline articles you know and here's like some of the ones I saw like the you know the world is short of everything get used to it New York Times um you know, the world's top bankers see supply chain problems. Inflation signs run ahead markets work but I'm taking global supply chains takes time the best one I saw how the world ran out of everything, right? So there's this unbelievable moment we're in which I assume is unprecedented. You'll tell me it just seems like everything's hard to find, you know, you go to a store and they have only a certain amount of thing that you you order something it's going to take longer than you ever imagined. We see it in the auto industry where I mean inventory is just taking so long to show up at stores we have stores that have groups that have 10,000 cars in the lab that have like 800 and this is unbelievable to see that scene and I've seen it Yeah, and you know dealers on the one hand like a lot of stuff is now pre sold and they're doing orders and stuff like that. But I just think fundamentally and then you see the stories in those amazing maps that they show of all the ships at sea and so I just wonder like
Neil Ackerman 14:14
I have I haven't live right here right in front of you.
Aharon Horwitz 14:16
Yeah. I mean you you know you're plugged into one of probably what J&J is one of the biggest companies in the world the top 510 I don't know it's it's a massive conglomerate that that sees supply data from all over. But ignoring that, right? Just give us the understanding of like, what's happening like, why is there this shortage? Why is it taking so long to reboot? And and when does it start to turn the corner if at all?
Neil Ackerman 14:46
Yeah, so for the listeners, I mean, this really has, this has nothing to do with J&J. This is everything to do with our conversation today about supply chain and What is it fundamentally, you know for now, in the end, I'm going to tell everyone, I am not, I do not have the golden answer. Okay, I do not know everything about this and no one does. First the first thing. So if you want to take away a big one here, no one has exclusivity on good ideas. No one, everyone and all their ideas count as we work through what some folks are calling, you know, we're out of stock on everything. So let's, I would say that, let's just take a step back and give some context. First. There's a lot of social media, and there's a lot of influence from this. And it may not always be the case, we're not out of stock on everything. Okay. The supermarkets still have plenty of food. Yes, from time to time, for some strange, very odd reason, they run out of toilet paper, which, which we all know is people apparently need 1000s of rolls in their house, which is stunningly stupid. But overall, you do have to admit that, in general, we still have what we need. Now, with that set our electronics weaker? Yep, yeah. Is it true that maybe you can't get lettuce at Wendy's? For your salad? Yeah, you know, maybe. Is it difficult to get cars? Well, yes, but more difficult to get the chips that go in the car than it is right? And because so what are you learning? What's what is in common? Well, what it is, is, when you have multiple parts, or widgets, coming from multiple places, unfortunately, you need 100% of those parts to build your item, right? So when it's a simple thing, like this paper pad, you know, there's not many pieces and parts, right? But and they can come from many places. I mean, it's pulp, it's what's water, it's it's machines, I've seen them from Mexico to Russia, they're the same. But when it comes to things, complicated, chips, cars, pieces, parts, ah, now we're starting to carve out where the complications are. Now, assuming that we all agree that cars or electronics don't just come from everywhere, and assuming that we all agree that there's more parts and pieces to develop them. The real question then for us to answer is what needs to happen. To get out of this dilemma. We have an economic problem that, you know, I'm not going to get into on this call his books written about this, about how the countries are integrated. And I'm certainly not going to get into the politics of every Leo, I want you to do that. So it's instead of doing on that segment, instead of doing that, why don't we just do this? Companies need to think of a few approaches. And this is what I tell all the companies that I work with. The first one is, let's make sure we don't have only one pipe for supply. So how do we get out of it? We learned from this lesson and we begin thinking about other pipes to supply items that we need. Maybe not just in Asia, maybe not just in South America, what are the other pipes? And what are those cost structures, you know, pros and cons to the pipe, just the way it's going to be? Sometimes we'll have to pay a little more. If the pipe clogs somewhere else. This is no different than any other industry. The second thing I think we will have to take a look at is are we being innovative enough on what we're doing? Are we digitizing enough? Are we aggressive enough with being on the cutting edge? Or are we going to be basically intercepted by someone else by something that was more creative? That was more delightful for consumers that had less friction, less parts there? I say? Are there other ways of putting things together? That is maybe not as traditional as what we're used to.
And then the third part I always tell folks is are you sure that you're the most global workforce you can be? What are your rules around, engaging with people? How do they work with Where do they work? Because what you find is it's not just parts, right? What's a big part of a supply chain? labor? Are you sure you have all the right labor? To trucks need to be driven by people in the truck? or could they be remote control? driven? As everything needs to be delivered in the traditional way? other other ways to do it? Are you sure you need a container ship? Are you sure air is too expensive? Did you really price it? When you aggregate last mile? Did you aggregate it? Or did you only contract with three or four less mile couriers when there's 7000 of them in the United States? So I always tell folks to look at those things. And begin, start mapping all these pieces. And what you'll find is the answers aren't what you may have thought, you'll learn that on your last mile, you were only contracting with two or three suppliers, you'll learn that on your labor, you actually don't even know where these people are, or what they're doing, or the metrics behind it. Are you in setting them right to be at work? Maybe you need to pay more, but at least people get something? Yes, your prices would go up? But how much? Are you sure that your pricing is really, you know, could you give room in the margin? You'll be surprised? And then and so these are the different types of things I think about. And I know a lot of other companies are thinking about this, including the diversity the location of supply management,
Aharon Horwitz 21:43
because very strong insight into kind of what's going on right now. And companies all over, I have a question for you our big, because of how smoothly the global supply chains function for the past 2030 years, at least, it feels that way as a as a lay observer, right?
Neil Ackerman 22:02
Well as an American and American side. And if you're in Western Europe, yeah, it felt that way. So
Aharon Horwitz 22:08
So let me ask you has Do you think that that the availability of parts of solutions, has that stifled or sort of slowed innovation? There wasn't a need for it? Are things overly complex? Are you know, did we get too creative in how we pulled together? All those parts? Do we really need all those parts? Do you think that that actually had an impact on? You know, how we built stuff and thought about stuff? And what possibilities were available to us? Meaning, if you couldn't, if you couldn't rely on something, you'd have to innovate around it? Right?
Neil Ackerman 22:42
Right. So what is what does time naturally do with companies? It creates bureaucracy, you name any company that's 100 years old. And everyone will tell you that bureaucratic. So what happens is we build processes on top of processes. And, and you Everyone knows this, and anyone listening, they cannot deny. So yeah, of course, at first things were very efficient, right? And then we built another process, and then another legacy system. And before you know it, you got big corporations with 60 and 70 legacy systems. And no one knows where this stuff is. And then what happens, a startup gets created. And all of a sudden, they do well, and you guys can name all the companies on the s&p 500 and the Dow that have been disrupted, why would they not capable? No, they were capable. But there was inefficiency built in. People weren't delighted anymore. They weren't harmonious, there was a lot of friction. And so this opened it up for the startup to come in. And and where indeed, does this happen? Well, obviously, when startups were growing and growing, they were in the valley. Why weren't they in New York? Because New York was traditional. They were the way of doing it. The New York could have done it, but they didn't. The valley, you know, they were able to do it. And then another use case would be what about in all of Europe? Why is it mostly in Berlin, they were they had to innovate around themselves, to have an economy to grow the country. And then the of course, the big example that is, you know, nothing to do with, particularly with particularly with really anything except in this topic is Israel, and have nothing to do with the political environment. But what caused Israel to be startup nation and now scale up nation, same story. They had to innovate and grow their economy, and seal the friction and to get more delight and harmony. And so their economy was built for this kind of infrastructure. And there's lots of books on things that happened in Berlin. Tel Aviv in the valley. And they all have that in common. Yeah. So this is, this is what begins it. And then when the startup makes it, they make it big. And the people just grab onto it. And you don't have to look any further than the evidence on Wall Street to know that that's exactly what happens. Now, there are lots of unintended consequences within the supply chain. You know, once this disruption happens, I mean, you can imagine the demand goes up, the supply goes down, people don't know where to have their network established. And you're seeing this now with, you know, new cars being created electric vehicles, items that are being bought on YouTube. And you know, even brands, big big consumer brands get influenced by key opinion leaders on Instagram, and all of a sudden, they don't have enough inventory. So there's a lot of lessons to be learned in within the supply chain. And I hope that what people get from this session is to look in their own closet first. See the skeletons across, you know, labor, technology, placement of the network, the pipeline of their supply, and then go deeper and look at things such as, can I be disrupted? Who the startups in my space? Who the startups that aren't in my space, but maybe they should be. And then once you start realizing this, you realize you got to be on the cutting edge of innovation. And dealers are the same way. I remember when I was working at Amazon and Macy said, Amazon could never do fashion. Well, now, Amazon's the biggest fashion house. So could indices be disrupted? Absolutely. Can the car industry be disrupted? Absolutely. And so what does that look like? You know, 1020 years from now? Do you think your dealer will be doing exactly the same? And I would say, No way. And if I'm a betting person, which some of you are listening, no, I am I am involved in almost a dozen startups.
No, I would definitely bet against things being the same. And therefore, I would bet that you'll have at least 30 to 40% disruption of your current model 20 years should now mark that quote down. And in 20 years, you can call me and tell me if I was right. 35 to 40% destruction? What would that look like? consumers will have different ways of convenience to go buy vehicles, the price and the way pricing is negotiated, done will be different. And the selection we much more vast. And why? Because they'll be different modes of transportation. There'll be different ways of getting around. You know, I'm not sure what will happen to my hybrid that I currently have plugged in, in my in my garage. But I can tell you 20 years from now, they'll be more hybrids than less, there'll be more electric than less. There'll be drones in the sky delivering things. Things will change. And I believe that the dealers that can adjust and be on that edge will win.
Aharon Horwitz 28:23
Well, we're gonna have you back in 25 to 30 years. Or part two of this conversation, Neil,
Neil Ackerman 28:30
that means everyone that this was so bad that he doesn't want me for 25 years.
Aharon Horwitz 28:35
I did not say anything about in between. We could also have you then. But definitely in 25 years. I'm putting it on my Google account, which conveniently goes ahead. 20 years? Of course it does. Of course it does, of course. So this was very interesting. And we we learned a lot we really appreciated you, sharing with us kind of your insights. And also, I think, definitely for those who were thinking entrepreneurially or dealers were looking to think about their values. There was a lot to take away here, in particular about reducing friction, creating harmony and leaving the smiles and delight, a very poignant powerful point. So we'll leave with that. Neil, thank you very much for your time.
Neil Ackerman 29:18
Thanks for having me.
Aharon Horwitz 29:19
Yeah. And till next time, and definitely not 25 years away. Thanks for watching. Well, take care everybody. Bye bye.
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