"The way to control costs and invest in risk management is to optimize the stuff you can control." — Blake Tablak
Supply chain priorities used to split neatly between cost reduction in stable parts of the network and resilience where things were turbulent. In a recent Trax conversation, Blake Tablak, CEO of Trax Technologies, explained why leaders no longer get to choose between the two and what it takes to deliver both at once.
Inside the Conversation
Blake covers how organizations can control costs while still investing in flexibility and risk management, and why traditional RFPs on their own aren't getting it done. He also discusses what recent disruptions have taught companies about visibility and agility, which capabilities matter most for a more resilient supply chain and how leaders can move from constant firefighting toward proactive planning.
Resources
Full Transcript
[00:02] Host: Hi, everyone, and welcome to the Trax channel. Today I am here with Blake Tablak. I always try to say your name before we go live just to make sure, and then I always mess it up. I think there are too many questions in my brain for you today.
[00:21] Blake Tablak: Anything close is great. I've told people how to spell my name and they still misspell it while I'm telling them.
[00:21] Host: Welcome to the Trax channel. We have the CEO of Trax with us.
[00:38] Host: So today we're talking about "From Cost Cutting to Resilience: How Supply Chain Priorities Are Changing," which we kind of talked about before we went live. Things are rapidly changing every day. We're seeing it everywhere. Supply chains have traditionally been built around efficiency and cost reduction. Why are companies now shifting their focus toward resilience?
[00:57] Blake Tablak: I would argue you have to do both. It used to be, I think, that you could talk about resilience in certain areas of your supply chain, knowing there was some turbulence in certain areas or it was more difficult, and then in other areas where it was much more locked down, you could think about cost reduction. I don't think you have that luxury anymore. In fact, all the logistics operations leaders that I meet with, all the supply chain leaders that I meet with, you have to do both. They have this weight hanging around their neck of cost cutting. And then you have this other thing of, "And by the way, product's got to get there on time."
[01:32] Host: Yeah.
[01:32] Blake Tablak: Product needs to get there on time, in good shape. We can't recognize and generate revenue without that. So I don't think you're allowed to do one or the other anymore. You've got to get really creative. You and I were just talking about decision-making prior to going live. This is where that framework of data, experience, remainder being risk becomes really, really important. Listen, nobody saved their way into the Fortune 500. So resilience is probably going to take precedence at times to make sure the product gets to market, but it can't be at all costs, because it's punitive when you miss on margin as a public company.
[02:15] Host: Absolutely. How can organizations balance the need to control costs while also investing in flexibility and risk management?
[02:15] Blake Tablak: I think the first thing is really getting a good understanding of what's happening in the environment. We just did a big presentation. We have an application called Intelligent Operations, and it's an agent that goes out and analyzes all the information coming in off of bills of lading and invoices, et cetera, then comes back and says, "Here are inefficiencies in your operation." It uses what's called the Trax graph, which is this idea that we know so much about packaging, we know so much about service levels, we know so much about everything, and so we put that together. We then combine it with what's called the customer graph, which is customer contracts or SLAs that you've got to be compliant with, or types of service, et cetera. So, customer-specific context. You marry those two things together and it gives you some good data back.
[03:05] Blake Tablak: One of the things that we were looking at was part of a risk analysis that shows you freight cost versus accessorials, and where accessorials are climbing versus freight. It's pretty interesting. The company went out and did a bunch of RFPs to try and lower overall freight cost, which is a great way to do it. You go out, get some competition, get some better bids, et cetera. They ended up spending more cost per kilogram. Basically, what had happened is the accessorials had gone up. Now, some of those are fuel, but there were other ones. There were duplicative security charges, because not everything comes through your freight auditor. So there's maybe a separate group that was doing security, and yet the carriers themselves were charging for that as well.
[03:48] Blake Tablak: So it's pretty interesting seeing some of these things. You put a battery onto a pallet with a bunch of plastic inert objects, and all of a sudden you get a hazardous materials charge for the whole pallet. The way to control costs and invest in risk management is to optimize the stuff you can control, and that has to come through really good visibility and data. Short of that, you're going to have a really hard time, because all the money that you're saving from improving efficiency in those less efficient operations is going to go into resilience or into cost savings. Just going out and doing traditional RFPs and everything else, it's not getting it done. So you've really got to find a way to get the product there on time, and at the same time, you have to find a way to improve your operations overall. The only way to do that is through really good live visibility of data.
[04:36] Host: Absolutely. We kind of touched on this at the beginning. What lessons have recent global disruptions taught companies about the importance of supply chain visibility and agility?
[04:36] Blake Tablak: Everybody gets caught up in the big news. You have the Ukraine war, you've got Iran, you've got tariffs, and there are constantly other shocks going on. There was a strike in Canadian rail. So it's constant. I think there are a couple of things. One, it's taught companies that you have to be very aware of your surroundings and what you do. Canadian rail, we've talked about this before. Our customers didn't get caught up in it, because you went and logged into rate control and you could see how many times you used those rates and how many routes you're using. You can see all of the flow of goods and when you're using those things, and so "How do I reroute?" becomes a lot easier. It's not months of trying to dig through things. It's minutes. So I think what it's taught companies is the importance of really good information and really good data. And by the way, don't lose the experience. Volatility is just happening constantly.
[05:45] Blake Tablak: The University of Chicago puts on a great course. If you have a group of executives and you want them to really come together well, they have this course, and one of the classes that gets taught is called VUCA: volatility, uncertainty, conflict and something else. Anyway, it's really good at explaining that this stuff is constantly going on and you've got to be really comfortable living in it. So I think that's the second piece. It's taught companies that data is super important and intelligence is super important, and becoming comfortable in a volatile world is really important too.
[06:17] Host: Absolutely. So what capabilities should organizations prioritize today to create a more resilient supply chain for the future?
[06:17] Blake Tablak: Everybody says data, data, data, right? For sure, but intelligence is how I would couch that. You now have systems that can analyze really big data sets in very short periods of time. In order to do that, you still need the human intelligence. You still need the creativity, you still need the Q&A, you still need all the things to figure out whether that information is right. Making a good decision on bad data can be punitive. And there's a lot of hallucination in AI. There's still a lot of weird stuff that goes on. Most companies don't have an unlimited budget for running these analyses either. So I would just say, prioritize understanding where good data lives. The second thing is understanding how you create intelligence out of that data, and then keeping it up to date. Trax does a lot of this in our platform.
[07:12] Blake Tablak: So good news: if you're a customer and you're looking for information about how your logistics operation works, we've probably got it and we can surface it to you really quickly. If you don't have that, or you're using many freight auditors or many visibility platforms, then you need to prioritize the skill of turning that into intelligence internally.
[07:29] Host: Absolutely. So the last question is, how can leaders rethink their supply chain strategies to move from reactive problem solving to proactive planning?
[07:29] Blake Tablak: Whoever figures this out is going to get the Nobel Peace Prize.
[07:29] Host: Exactly.
[07:53] Blake Tablak: It's so funny. Most major operations have this sort of balance. Look, there are things you can't plan for, so you do need to have a reactive problem-solving muscle. You can't plan for everything, so you need that muscle. Now, if that's constantly what's going on and you're constantly battling that, the planning piece comes down to intelligence that you can muster through data. You should constantly be trying to optimize. When we presented Intelligent Operations and some of the outputs to some of our pharmaceutical clients, it talked about the difference between cold chain and non-cold chain, so here's what's easier to go deal with and here's the stuff that's harder to go deal with.
[08:21] Blake Tablak: Then you have all this context that fits underneath it, and at least you get to 99% of the decision right there, or 94%, and that makes planning easier. If it takes me months, or even weeks, to get this information into a state that's usable, sometimes you miss the window, and then you're just back to reactive problem solving.
[08:44] Blake Tablak: The other thing I would say is end-to-end process mapping. Really understanding it, doing internal audits. Nobody loves to be audited, but internal audits are great. Constantly look internally at the processes that you use for expense management, for spot quotes, you name it. I think they're wildly helpful. We do things for our clients like a current state assessment, and we have a business value assessment. If you're a Trax client, we do these for you.
[09:17] Blake Tablak: It's looking at an end-to-end process and basically saying, "Look, this segment here, if you did X, it basically collapses that segment, and now you have a much faster resolution time for anything that you're looking for." Half the time it doesn't result in any money to us. It literally is just, "Hey, we noticed this. The best in the world do this, and we think you should too." It doesn't take us to do that. You can do that internally. You can unleash an internal audit person or an internal process person and just have them go look end to end.
[09:46] Blake Tablak: So I think those two things, getting really good with data and intelligence, and then ultimately understanding your processes end to end and having an active process around that, will take you from constant firefighting into proactive planning.
[10:02] Host: Absolutely. And like you said, someone will win the Nobel Prize.
[10:02] Blake Tablak: Yeah, exactly right.
[10:02] Host: I'll be there in the audience thanking you.
[10:02] Blake Tablak: That's a big question. If you knew, you wouldn't be talking to me.
[10:18] Host: Well, it was so great to talk to you today, Blake, and we will talk again soon. Have a great weekend.
[10:18] Blake Tablak: Thank you. You too.
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