Paper Full to Paperless Supply Chains with Ken Potts

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In this episode:

Ken Potts, Director of Global Pricing at C.H. Robinson, joins Host Brian Glick, CEO of Chain.io, to discuss:

• Operating supply chains with paperless processes
• The importance of technology in supporting global pricing initiatives
• How the pandemic accelerated the need for cohesive pricing
• The role of AI and technology in freight forwarding

Ken emphasizes the importance of adaptability in facing challenges like the Suez Canal situation, changing ocean carrier alliances, and global events. Discover how C.H. Robinson is leveraging technology and human expertise to stay ahead in a rapidly changing landscape.

Tune in here:

Episode Transcript

Brian Glick  00:04

Welcome to supply chain connections. I'm Brian Glick, founder and CEO at Chain.io. On this episode, we're going to speak with Ken Potts. Ken is the Director of Global Pricing at C.H. Robinson, and one of the more interesting things that we'll talk about is how that came to be and how he was able to carve out a job that didn't exist before. So hope you enjoy the episode. We're gonna really dig into the people side of the business and the numbers and the tech and how that all comes together. So without further ado, here's the episode.

Brian Glick  00:40

Ken, welcome to the show.

Ken Potts  00:42

Thanks, Brian, great to be here.

Brian Glick  00:43

So why don't we start with the basics. Tell me how you got into the industry and why you decided to stay.

Ken Potts  00:50

Well, I fell into this industry a bit backwards and by accident. I'm a mediocre High School drummer who grew up in a freight family. Dad was a freight forwarder and still isin fact. My mom's a retiree of a big transportation company that likes the color brown. So freight kind of permeated our family quite a bit. And when I was in high school, I did things like filing and, believe it or not, cutting customs entries, which wasn't nearly as big a job back then as it is now. Then, while I went to school for music, I just kept working in the freight forwarding industry in summers, holiday breaks. In fact, at one point when I was at college, I had a fax machine where I would receive faxes of warehouse on hands, and I would Telnet into a mainframe and key the data into the warehouse system. So I sort of kept freight forwarding going throughout my education, and when I graduated from school, decided to make it a full time job, and you know, really, the reason I stayed with it is because I get to talk to awesome people all over the world every day. I love the connection that this industry has to people outside of your comfort zone, your norm, your home base, and that's really what keeps me going every day.

Brian Glick  01:59

So we will let people Google on their own. If you don't know what either A. a fax machine or B. Telnet is, that's everyone's homework. That's right. Hopefully more people know what a fax machine is than telnet. I happen to know what both of them are, which actually gets me to an interesting, so explain your job at C.H. Robinson today. What do you do?

Ken Potts  02:21

So today, I lead our global pricing organization, which ranges from the technology that we either buy or build in order to support our global pricing organization, but also the execution of pricing strategy around the network. And so we have a pricing organization of somewhere around 200 people around the world, ranging from spot quote transactions all the way up to the large, complicated, global RFQs that the enterprise shippers send to their transportation providers as part of their annual or quarterly procurement event. And my team around the world is responsible for responding to all of those bids quote requests, as well as steering our product and commercial teams on pricing strategies.

Brian Glick  03:05

So you've been with Robinson just over 14 years, and you didn't start as the Director of Global Pricing. So where did you start? And then I think it's very interesting to understand how you ended up, where, like, how that transition happened.

Ken Potts  03:20

Yeah, you know, I started at C.H. Robinson in the Chicago office. And I think anyone in a freight forwarding operation that really wants to make a career out of it needs to be in an operation, you need to move freight. It's a really crucial part of what we do. It is what we do, but it's a crucial understanding to be successful in any role. Before Robinson, I had worked for a forwarder in a couple of different capacities. But as I mentioned, growing up, I was out on the warehouse, building air freight consolidations on the floor, doing filing, cutting bills of lighting, etc. So I joined C.H. Robinson in the Chicago office, and I was responsible for transforming the operation in Chicago from a paper full process to a paperless process. I had done that with my previous employer, using some visibility tools on the internal technology applications, and made a pitch to Robinson to make that happen in Chicago, with the goal then of starting to make that happen around the world. And for the first few years, I spent time in Chicago, but also working with our operations around the globe, thinking differently about our operations process, primarily making it a paperless process. I was very involved in building out our proprietary technology. Most of our technology at Robinson is built in house, and I was rather involved with that. And so at the time, Robinson was going through the Agile evolution, and I became the first what was known as product owner, which is still known as product owner, but in Robinson, this was a new thing. And product owners in the Agile world really are business people. You have to understand the business first and have enough technical acumen to kind of survive discussions with the engineers. But I became the first product owner for CH Robinson global forwarding in the technology space. And I was steering our technology through not only some of the customer applications that we were trying to build, but the largest project was integrating Phoenix International into the C.H. Robinson technology space. So I spent a couple of years anywhere from China, India, Europe, going all over the world, retiring legacy systems, and integrating our companies together. And as that was sort of coming to an end that project, and we were getting ready for the next evolution of our technology spend and development, an opportunity came up to lead our entity in South Asia. And my heart is always in the business, I was starting to sort of feel disconnected from the business and the customer a bit and so I pitched and took an opportunity as the managing director of C.H. Robinson India, led our operation in India and Sri Lanka for just under two years, while we went through some leadership transition, re-architected the commercial organization, got experience leading a finance arm of the business, orchestrating an HR function all the way down to the business operations, procurement, etc. And as I hired my successor in India, I was coming back to the US, and had a bit of a blank slate. And one of the beautiful things about C.H. Robinson, if I can put a pitch in for the company, is that if you have a goal, you can make a job happen. There are no job titles that we fit into. Typically, as you're looking to make a career at Robinson or grow your career with Robinson, you can make opportunities happen. And so working with the leadership team and forwarding, we saw a need for pricing, which really sits at the heart of operations, commercial and product, to take pricing out of the hands of 3000 people around the company and create a more cohesive pricing organization. Little did we know we were about to experience a funny little thing called the COVID pandemic that blew up the need to have, you know, a very organized response to the volatility that we experienced. So it was a combination of fortune and good planning that led us into a pretty fortuitous period managing through the COVID pandemic in a fairly organized way.

Brian Glick  07:06

So I would imagine that hitting the pandemic in the process of doing that probably accelerated the change management, right? Well, you know, it was a pretty decent hammer to be able to use in doing that change management. But kind of talk to me about, this topic is always fascinated me, because I've actually seen a couple of failed global pricing initiatives where first site goes, everybody's happy, this, that and the other, and then you get to Country X, and everything falls apart because you just can't get those 3000 people to let go of their email with the customer or their spreadsheet or their whatever. Like, yeah, what was the human part of this like?

Ken Potts  07:50

Well, the only thing more emotional than technology integrations is pricing. People want to hold on.

Brian Glick  07:57

My bonus is based on my local margin. Yes

Ken Potts  08:01

Yeah, there's margin, there's bonus. And to be honest, I've never met two freight forwarders that agree that that's the right price. Everyone thinks they can beat that penny per kilo or that extra price, you know. And so the pandemic, I would say, both accelerated, but also, to some extent, slowed down some of our goals. It accelerated the need very much. The Change Management slowed down a bit because we had originally started in the people full environment. We had people in offices. We were sharing ideas and collaborating and building out networks in these offices, and suddenly we’re sort of thrust into that remote environment like everyone else. So we sort of hit the pause button briefly while we figured everything out. And, you know, realized that it was going to take a little while to get back to where we are today. And so we tapped the brakes a little bit at the beginning, but really was accelerated when you started to see the ocean market, the demand pick up in the earlier part of 2021, and so as we were going through that, yes, you're spot on that in some of these technology integrations and projects, there's a lot of momentum. There's sort of that honeymoon period where everyone's excited, it's new, we're happy. And you learn things as you go around the world. Now, one of the things about pricing, first of all, for us, it's still a journey. We're still working through that in some areas around the world, and I don't see that the definition of done is very fluid in this space, and so we're going to continue iterating through this as we move through this journey. But as you go around the world, I think what we really tried to hold true in our talent planning is that we have a lot more in common than we have things that separate us. So we talk about things like local market norms and what's unique in Milan may not apply to someone in Bangalore, India or something like that. And instead of focusing on what makes us different, we try to focus on what makes us the same or what makes us similar. And when you have that mindset going through a change management initiative, or at least in the pricing space, what we decided to do through that change management initiative is focusing on those things that make us similar. Help us agree more than we spend more time on what we agree on in the process and in the technology than what we disagree on. That helps things, at least in my experience, move along a little faster.

Brian Glick  10:17

So I'm going to say as an east coaster that was the most Midwestern answer you could have ever given to that question. And I kind of want to tap on that for a second, like, how much of that approach is unique to the culture of the company, or the culture of the people in the project? Like, where does that? Because I've certainly worked for forwarders where it's no, what we're going to do is the CFO said we're doing this, and now you are all going to get in line and everyone shut up, get on the bus, right? Like that is also a change management approach, right? So how do you guys, like, where does that come from?

Ken Potts  10:52

Well, I think it's built into the company culture that we're a collaborative culture. We're a Midwest company in our origins. C.H. Robinson founded as a produce wholesaler in the Midwest of the United States. And that really led to two parts of our culture that are still near and dear to our hearts today. One is that Midwestern collaborative spirit, and the second is that our origins being in produce and wholesale means that every single thing that we do, even if we're shipping a package of nuts and bolts are treated with the urgency of a perishable commodity, and so we try to balance those two things by making sure we're operating with a sense of urgency, but also being very collaborative, sensitive and empathetic to the other viewpoints that are out there. So there is an element of the company culture that plays a big part in that in all of the projects that we have, but it's also a matter of striking a balance. And I think similarly to what do we have in common compared to what sets us apart, it's what are those things we're going to hold as non-negotiables that we're just not going to debate? And you establish that very early in the initiative, and then that leaves room for really smart people to have good debates. I think that part of it's the company culture, part of it might just be our leadership team, and part of it might even be myself, but I think that the group is smarter than any individual, and there certainly are areas around the world where you have to take a much more hierarchical approach to decision making, and so you just find a way to balance that as best as you can, as you're going through these, But from a total company perspective, we very much favor that collaborative approach to the change management, which doesn't mean it moves as quickly as you might want sometimes.

Brian Glick  12:30

But you may get a better adoption rate at the end.

Ken Potts  12:34

So we typically see a favorable long term adoption rate. That's right.

Brian Glick  12:37

Since we're on the people topic, you and I had had a quick chat earlier about AI. And you know, pricing is actually a particularly, let's call it attractive market for bringing lots of tech, because there's lots of numbers, right? But this is a human component to anyone who's ever actually been out on a sales call knows there's a human component to selling free, right? That's right, not just the price, that's right. How do you think about introducing tech and AI and all of this anywhere in the business, and what that means when it relates to people in the human touch that comes in this industry?

Ken Potts  13:11

That's a great question. And I think like any trade, there's a tool for each job, and using the right tool for the job leads to the best outcome, and I think that AI is a tool that presents a lot of opportunity and will continue to grow and adapt, and we'll continue to see how it fits into our overall business model, both speaking on behalf of Robinson, but also as an industry, but I'm often skeptical of a tool that will appear to solve all of our problems. And I remember, gosh, it might have been maybe even greater than 10 years ago, when blockchain was going to put forwarding out of business. Blockchain is a very important tool. It's one more tool in the tool belt for certain applications, but it certainly didn't put forwarding out of business. And so I think that when you're choosing what tools to adopt, you should really try to understand the problem before saying that a tool is going to fix that problem. And for example, in the pricing space, when we're talking about what types of automations can help present faster pricing, or can help avoid yield erosion, or all the different things that we consider. Where AI presents the most opportunity is actually nothing to do with the numbers. It has a lot more to do with how we grab the information, pricing. People spend a lot of time reading emails, reading documents and processing information before you even get to working on that number. And so AI presents a really great opportunity there. When it comes to formulating the numbers, we tend to find that more traditional machine learning models or other automation matching type tools tend to bring more value to the pricing space, but to pivot a second away from the tools and more towards the human element. I do think that as it relates to the business as a whole, and particularly in the account management customer relations space, the human touch has to continue to be the expectation, not the exception. And you'll hear things. You'll hear fears about AI removing some of the human touch from what we do. And to some extent, that's true. A chatbot that can tell you where your shipment is located around the world is a really good use of a large language model. Bringing alternatives to the table, anticipating how expiring free trade agreements can impact a particular vertical supply chain are a really great use of an account management's time or a product person's time. And so that human touch has to be there. And I think we have to continue to challenge ourselves to find the right use of people, just like we have to find the right use of technology and various technology tools.

Brian Glick  15:46

One of the things that I've noticed that's different in the international freight space versus the trucking space is that trucking spaces have load boards, right, and things have and I've been fascinated for the last 20 some odd years at watching the passenger side of airlines become more and more of a price game and less and less of a service game. And you know, for all the, you know, complaining that we do as consumers, we sort of created the airlines that we fly on today by going on Expedia 15 years ago and just picking the cheapest seat, right, and not even allowing the airlines to present any kind of differentiation. I still think freight forwarding, on the international side, at least there's a lot of differentiation. But on the trucking side, as someone who doesn't spend a lot of time there, it seems like it is driving towards that like, high commoditization because of the kind of the load board effect. Am I right? Wrong? Is that, is that inevitable? Like, how do you show that value?

Ken Potts  16:51

Yeah, well, from a trucking perspective, it's true. There's sort of the concept of the load board, and I think it might give the appearance of commoditization. I think part of that has to do with just the sheer number of competitors that play in that space, whereas on the air and ocean side, you just simply have fewer carriers. Now you have many freight forwarders and many truck brokers. So when you start to think about, in the trucking space, if we're talking about how truck brokers continue to add value, because obviously the trucks are necessary to move freight, I think a lot of it has to do with the tools you bring to the table. You're seeing truck brokerage focus much more on the tools that can accelerate the customer and carrier experience than you do necessarily on other components. And then you also, I continue to believe that you bring value through your account management strategies, that if the customer wants to buy a commoditized truckload, then we have tools for that. We have tools to enable that. If the customer wants a partnership and wants to build a supply chain solution that includes everything ranging from Route guide management all the way to information services using market data, hedging the spot market, all of these different strategies, drop trailer programs, all the different things you can do. You can either build a logistics department inside your organization to manage all of those functions, which requires a talent strategy, requires having a career path for that person, costs money, or you can work with a partner that can serve as an extension to your supply chain and bring some of those different options. And I think for different shippers, either one of those options or the wide range of things in between can be viable options for what their business goals are. As a transportation company, we tend to believe that we can bring talent and unique products to the marketplace that an independent shipper may or may not be able to based on their size, scale and investment capabilities.

Brian Glick  18:47

So one of the things that has been in my head last couple of years, so we sell our software to both shippers and forwarders, and one of the interesting dynamics that I noticed sometimes with the shippers is that the the ones where they're doing a great deal of the work in house, do not think of themselves the way I think of them, because I always think of them as an independent company within their organization. That is the freight forwarder that has one customer, essentially right where they Yeah, they are a service entity within their company, but that freight forwarder, almost by definition, unless you are Amazon or Walmart, has less resources than a third party forwarder will have, because they're not aggregating value across a lot of stuff. So I don't even know if there's a question in here, but like I very much, buy into this idea that you know you have to make a decision of who your freight forwarder is going to be. It may be someone who has your badge, or it may be somebody who has a different badge hanging off their belt. But you are going to have a freight forwarder either way.

Ken Potts  19:49

I agree. Yeah, the capability is there, just like the capability of filing a tax return is there you can have an accounting department to file your tax return. Or you can work with an accounting firm to file them on your behalf. Same thing can exist with logistics, freight forwarding, trucking, etc., is that somewhere you need to be able to harness that capability, either directly or indirectly. And I do think that there is something to be said for shared learning in the logistics space that an integrated partner can bring to that equation.

Brian Glick  20:23

As we moved into the cloud as an industry, which I think that argument is probably over at this point, and the cloud has won. But I remember kind of making the same thing about electricity, like you can if it's 1896 build your own electrical plant to power your factory, and at some point, the electrical supply becomes stable and cost effective enough that it's stupid, except for in very rare circumstances, astronomically stupid, if you're opening a coffee shop to also build a power plant next to your coffee shop, it'd be a poor capital decision, right? And I think that that's often kind of a thing that gets lost on people with that, just like you said, like the, I could do this, but should I do this?

Ken Potts  21:08

Yeah, how much investment do you want? I think it comes back to that investment question. I think there are parallels in the logistics technology space with organizations, that if we go back 15 years or so, the big initiative was to build these monolithic systems that did everything. So if you were building a house bill system, you were also building a general ledger to go with that and all of the cascading things that go with it. Whereas really, the journey in technology has been to build tools that specialize in a particular function and make them interoperable, loosely coupled with each other, so that they can talk. And I think Chain.io plays a really big role in part of that evolution and journey over the last decade, because if you have an architecture that supports it, systems can talk with one another without the burden of building a large, monolithic enterprise class software suite that does everything.

Brian Glick  22:01

So I'm gonna shift gears for a second, just as I know you wanted to talk a little bit about talent and attracting talent, and I don't have a good segue to that topic. So we're just gonna make a really hard joke right now. So tell me your thoughts. You know, as someone who fell backwards into this, and you know, I also fell into it, how do we bring people into it of their own free will.

Ken Potts  22:23

Well, I think we have to do a better job of really talking about what the job actually includes. And if you're talking to someone at university and you're trying to attract a business major or a marketing major or something like that, and you say, well, you're going to spend the first two hours of your day filling out AES forms so you can clear your shipments out of US customs, and then you're going to cut some paperwork for you talk about kind of the nuts and bolts and mechanics of it. It doesn't sound like all that glamorous a job. And the truth of the matter is, there are elements of every job that are not the most glamorous thing in the world. However, we are in an industry that is globally connected, we get to talk with people and solve problems around the world. We're in an industry where at the desk level, even at the most hierarchical organizations in our industry, at the desk level, you have decision making authority that has a pretty profound impact on the financial return of your company the way you procure local trucking, for instance, at the desk level, can really impact you. You have independent autonomy and accountability to ensuring that you're complying on behalf of your customers with various government regulations, keeping their products moving around the world as an extension of their company. If you think about the role that we play, the entire world of trade is so connected to social and cultural movements around the world. Whether you're working on behalf of a shipper, that's a military contractor, you can see where things are starting to get positioned around the world. You're working for a retailer, you can see what trends are going to be hot trends here in the upcoming months on the shelves. I think that if we're able to tell that story about what our industry does, it suddenly becomes a bit more attractive to try to bring in continuous talent pool into the business. And we talk a lot about this industry being a people business, and in order to do that, we have to keep bringing in training and grooming and growing good people.

Brian Glick  24:20

I'll tell you one of the moments for me, say, the first couple of years in the business, I had a job at a customs broker, but I was an IT person. And this is a very common thing with technical people, right? Do you identify with the technology that you work with, or do you identify with the industry that you do it within? And I certainly was on the former of that. And then I remember being at the mall one day. And again, people who are younger can look up what malls were. Mall one day, and I'm walking down, and I see the Ralph Lauren store, and I see the Ann Taylor store, and I see the bath and body works and the Macy's. And I went, I can grab my phone right now, and look on what was a very small web browser on a very small phone at the time and find out how many containers each of those companies are moving through the software that I helped build. And that was like a connection to like, the world of like, Oh my God. All of these things happen, not exclusively because of me, but to some degree, because it was part of that, and that's a very, very cool feeling when you see it.

Ken Potts  25:25

It's great. And telling your story, we have individuals, you know, you do these training courses with the next generation of leaders, and they create their elevator pitch, and you hear the cool things that come out of these sessions. Some of our folks will stand up and say, I feed the world because they're working with retailers that are sending food around the world. You have others who say, I heal the world because they're working with medication providers shipping vaccines or surgical supplies and equipment all over the world, there is so much human value in what we do, and the human species depends so much on the global trade in the global supply chain that it can really if you step back and take sort of a 30,000 foot view of the industry, it's a really incredible business to join. It is a long game, and thinking about, again, attracting talent to the business, it's a long game. It takes a long time to learn the industry. And there are many days where it doesn't feel like that long game is going to play out, but I imagine there are many businesses like that, and being part of something big in the world is really valuable. And the best part of this business.

Brian Glick  26:29

What makes you excited for the future? What are you really pumped up about?

Ken Potts  26:34

So on the personal front, I have a senior in high school, so we're about to cross into that journey here in the next few months. So that excites me a lot. On the professional front, what excites me is just how we continue to adapt faster and faster to whatever the world throws at us. You can have the best planning in the world. And when the situation right now we have in the Suez Canal, you've got, obviously, everything that happened during COVID. We have a changing of ocean carrier alliances in Q1, you have a presidential election, you have all of these things, whatever the world throws at us, it requires us to stay on our toes. And what keeps me excited is that there is no shortage of change, which means there's no shortage of exciting new projects to dig into and to keep our team moving forward. And if I were sitting here every day, doing the same job for year after year after year. I don't think I'd be excited to come to work every day. And what I find exciting is that we get to keep reinventing ourselves, and we get to keep adapting to what the world throws at us to bring new solutions out there.

Brian Glick  27:33

That's a wonderful topic to wrap on. So Ken, thank you so much. This is a really enjoyable chat, and I appreciate you coming on.

Ken Potts  27:40

Thanks, Brian. It's been great to be here.

Brian Glick  27:44

Well, thanks again to Ken for sharing his story and those wonderful Midwestern values with us. Hope you enjoyed it. In the meantime, we'll obviously have links. If you don't know who C.H. Robinson is, you probably can find them on your own, but we'll get some links in there for you as well, and then make sure to be checking out the Chain.io blog and the LinkedIn presence. And if you haven't seen our announcement around our new analytics tools and our connections to things like Snowflake, make sure to take a look at that. One of the problems that we're hearing a lot from leaders on both the shipper and the freight forwarder side is they've got data and data lakes, and they've got stuff all over the place, and they don't know what to do with it. They don't know how to make sense of it. And instead of having not enough data, they've got too much data, but it's in the wrong structures, in the wrong places, and they can't get intelligence out of it. And we're committed as a company to making that easier. So if that sounds like you, get in touch. Until next time, I'm Brian Glick, founder and CEO at Chain.io.