Bob Trebilcock: Welcome to The Rebound where we'll explore the issues facing supply chain managers as our industry gets back up and running in a post-COVID world. This podcast is hosted by Abe Eshkenazi, CEO of the Association for Supply Chain Management, and Bob Trebilcock Editorial Director of Supply Chain Management Review. Remember that Abe and Bob welcome your comments. Now to today's episode. Hello, and welcome to today's episode of The Rebound: Looking for Talent in all the Right Places, how Essendant is revolutionizing recruitment. I'm Bob Trebilcock.
Abe Eshkenazi: I'm Abe Eshkenazi.
Bob: Joining us today is Tim Engstrom. Tim is the Senior Vice President of Supply Chain at Essendant, a leading wholesale distributor. Tim, welcome.
Tim Engstrom: Thank you. Excited to be here today.
Bob: We're thrilled to have you. This is a topic that is near and dear to both my and Abe's hearts. If you think back to the 1980s, if you're that old, there was a song on the radio looking for love in all the wrong places. Today, we're going to put a supply chain twist on that with looking for talent in all the right places. When I talk to supply chain managers, they tell me that in the short term, the job pool for supply chain workers, especially the line is back to pre-COVID levels. That sounds good until you think about it because pre-COVID, it wasn't so great.
When we look into the future, it's just a fact that there aren't going to be enough individuals to keep operations running at current levels, let alone if we experience growth. Demographics is the destiny, but what if we thought differently about supply chain talent? What if we began looking to the pools of talent that are currently under-representative in the workforce, all the right places? That's what we're going to talk to Tim about. Tim, to kick this off, tell us briefly first about your role at Essendant, and more importantly, how you got interested in what you call alternative hiring because I don't think it started in your current role.
Tim: Correct. My current role at Essendant, I'm Senior VP of Supply Chain, which basically oversees all components of the supply chain from inventory procurement all the way through orders out to the end customers and everything in between. My journey from an alternative hiring perspective, God, it started back in 2008 when I received a video from Randy Lewis at Walgreens of the great work that they were employing within Walgreens in opening up their South Carolina facility in Anderson.
What that did was it sparked an idea to see what could we do when I was back at OfficeMax to implement a similar type of program. We tried a couple of different things. My career advanced, I ended up being able to join Walgreens at some point and leading their US distribution and inheriting the great work that Randy did within their facilities in Anderson, South Carolina and up in Hartford, Connecticut.
From there, it really tapped into the capabilities and really understanding what this alternative workforce, and I call it alternative because you're tapping into alternative pools of great candidates. Really from there, it was an opportunity to see how you can partner with folks, give them an opportunity and just the phenomenal passion that folks have. What I learned most is when you can tap into someone's passion, they can do unbelievable things. That really started the journey of an interest to see how can I take advantage of this and bring that into various aspects of the supply chain?
Abe: Tim, let's dig in a little bit deeper here. The term alternative hiring probably is a little bit foreign to a lot of our listeners here. In other words, give us a sense of who falls into that category and why alternative hiring? What's the premise there?
Tim: For me, it's you have traditional pools and ways to go in and bring in talent in the supply chain. What I wanted to do is create an environment and openness to tap into alternative pools. Those alternative pools included, folks with disabilities, so cognitive and physical, second chance hiring, veterans hiring. Then also, how could you tap into high schools in other types of apprenticeship type of components? I didn't want to just go down one avenue, I wanted to tap into multiple avenues and leverage it. That's why we call it alternative hiring.
Bob: Tim, when I introduced you have two roles. I didn't talk about the fact that you wear an academic hat as an adjunct at Elmhurst College. In that capacity, I think you and your students have developed an alternative hiring roadmap that could apply to any company. Can you walk us through the various milestones along the way? Just tell us about the roadmap and what it entails.
Tim: Yes, absolutely. This really came out of my work at Walgreens. The model at Walgreens, they call it a Transitional Work Group. They built a mock DC (distribution center) within the DC. What they did was they took the different picking modules and work within a normal warehouse that was more automated and they built that mock facility within the building. They went out and partnered with local agencies around that facility and developed a 14 to 16 week program where someone could come in and they can learn the skill set, learn the endurance and build their confidence before they were moved into the workforce.
Again, we would host tours and other companies interested in this same type of initiative, they would come and visit the facility. The majority of the folks that were visiting commented that, "Hey, this is great, but we don't have the capital or the space to go and build a DC within a DC just to support this type of initiative," which kind of sparked a thought for me. I mentor, I've been teaching at Elmhurst University for 19 years now, and each year in the program, we have a capstone project and we sparked an idea was to take one of the groups and their capstone was to develop a alternative hiring handbook.
We called it Hope and to go and be able to implement a similar program without having to create that mock DC and be able to bring folks into an organization and train them and incorporate them within the facilities and the functions of the facility right into the normal operation, so that opens up the door for any business to be able to go down this journey.
Abe: Tim, thinking a little bit more about the roadmap in terms of Essendant and how you got started, I know that you're picking up a lot of the recommendations or a lot of the learnings from Walgreens, give us a sense, did you do a pilot program? Given that you've experienced it before with a full blown rollout on implementation?
Tim: When we built the Hope handbook, it looked great on paper and we got great reviews for that. I wanted to go in and test and make it valid and could we actually vet what we put in words into action. I was working for a small manufacturing company in Elk Grove Village called LA-CO Products. What we do is we took that handbook and said, "All right, now let's go implement it."
A key component of that was we went through and did a survey of all the employees within the operation. We went out and did an audit of the operation and looked at two things. One, in the area are the tasks that are within there, something that's-- activities that folks can come in and learn fairly easily, build their confidence, just like the Walgreens program, but in a live environment. Then as they do that, they're building their confidence to be able to do more within the operation.
The second piece of it, and probably the greatest learning we had, was you can develop a program, you can go and get partners, you can have folks that want to come in and work, but it's the internal infrastructure. Are the folks ready to support this? Do you have the right mechanisms within the operation to provide the best work environment for folks that are learning and building their confidence in this? We did twofold. We went out and looked at what were the tasks that we can go and incorporate this and start the journey there and not do it everywhere. Then within that, those areas that were identified, are the workers ready to go and embrace this type of initiative?
In those two scenarios, when we went and surveyed the workers, every one of them raised their hand and said, "Hey, I'm in for this. I know someone or I have a family member that fits within this category, and they have a hard time finding employment. I would be proud to be able to develop this." That really drove what was from words and the research and we put into action. We went from 0% of the workforce having a disability to 28% of the workforce having a disability within a 15 to 18 month period of time. It changed the culture within the operation. Folks wanted to know, they were proud of the work that we did. It was also it changed the environment where folks wanted to come into work every day and we saw less call-offs because of that.
Bob: Tim, I know that as you've gained experience with this, you've been collecting data. Can you tell us a little bit from what you've discovered how the alternative hiring pipeline compares to the traditional hire pipeline, some of the metrics, or how the performance of alternative hires compares to traditional hires?
Tim: Yes, so we, here at Essendant, we started in just one building. I have a network of buildings across the US and we didn't want to boil the ocean. We went through and looked at facilities and we picked Southern California. It's Perris, California is our facility. We did the same thing, we took the Hope handbook and applied it here at Essendant. In there, once we found partners, we had candidates come in and do a tour of the facility. Then we plugged them into the operations and the functions of the operations that made the most sense.
From that, we looked at that and did a snapshot of when we started to a year later. In that first year, we saw the overall turnover rate within the facility drop significantly. We went from a turnover rate of 44% for the overall operation, and we dropped it down to 28%. The other component, we looked at a hiring class of folks that came through the traditional pool of candidates versus the alternative pool of candidates and we measured the difference between the two.
In the pool of that, the traditional pool fit the normal of, hey, after a certain period of time, we had some turnover. We had where they had safety incidents or reported accident or the call-offs were falling right into the traditional workforce that we had. Then the other component was the productivity. If we compare that to the folks that came out of the alternative pools, we saw that turnover rate, instead of being 28%, it was 12%, so dramatically different. The productivity was more than double than the traditional pool, and they never called off from work, and we had zero safety incidents.
What was happening within that facility, and we started to roll it out across the country and seeing similar results is that not only did the folks that come in from the alternative pools make an impact from turnover and productivity, their excitement started to change the others around them to perform better.
Abe: Tim, really interestingly, the statistics here, and really impactful as supply chain professionals, we always go for root because. Have you guys started to dig down into some of the root causes of the benefits that you're receiving here? Some of it from the Hawthorne effect, like people are being watched, and so therefore they're much more mindful about their jobs. Give us a sense of what's been driving this, other than the great results that you've been having.
Tim: I got to go tell you, the biggest thing is we took the alternative hiring pool process, and we tied it into our continuous improvement operating model, and we're using a lean methodology. A key component of that lean methodology is we put in a tiered meeting infrastructure, and that tiered meeting infrastructure, we call it a Tier 1, which is a shift startup meeting, and in that meeting, we're celebrating the success from yesterday.
We're setting the what's on tap for us today, but a key component within that is what we call the action item board. That action item board allows anyone within that area to either talk about it in the meeting or throughout the shift to put on the board what were any barriers that prevented them from doing their best work and it really fits well into any of the--
my learnings from the alternative hiring is they want to advocate for themselves, and they're trained to advocate for themselves, and we took that methodology and incorporated that into the daily operations within the buildings so everyone could benefit from it, from identifying any barrier that prevents us from performing our best work, and then going and working on it and removing it, and that's where we saw the greatest improvement that we're now-- We've rolled that out across the country, even pre-tapping into the alternative pools is how do we get that infrastructure in place because now it's supporting adding in alternative pools of candidates.
Bob: Tim, another component of this approach you've taken is, I think something you call a talent development ecosystem. Can you explain what that is?
Tim: Yes. As part of this, we have four key pillars within the supply chain, one of it is product availability, other ones inventory productivity, and cost productivity, but that fourth pillar is to build the bench, and that is at all levels across the organization, and as we're implementing our continuous improvement operating system, we're incorporating Kaizen events and promoting folks to participate in the continuous improvement. The folks that are participating in that are getting a taste for, "They want to do more," which then we've partnered with a school here in Illinois, Harper College, and we are folks that have the potential for supervisory roles.
We're sending them back to school, and we're funding it to get their-- It's called an apprenticeship program, but they get their associate's degree in supply chain. It's a two-year cohort program, and we're sending folks to go do that. We are also identifying internal folks that have the potential for leadership roles, and we created a ascending leader program, and we're sending them to internal classes, and then an internal capstone project.
Then folks that have leadership, senior leadership capabilities, we have partnered with Elmhurst University to incorporate them to go back to get their graduate degree in supply chain, and then they do a capstone project for Essendant, but with all of those components, what that's doing is we're showing a commitment to build the bench, but it is also allowing folks, we're building a skills flexibility matrix, which allows us to identify what are the skills in each of the different areas, who has experience with that, who is learning that, and then who can train others in that, and others where there's no background within that.
That's allowing us to do job rotation to develop all of the supply chain forward, and it creates opportunity across all of the different functions.
Abe: Tim, if I'm a supply chain leader, and I'm looking at opportunities, is it only in the DC, or are you able to extend it beyond just the DC?
Tim: We started in the DC, but we have expanded this outward into all functions within the supply chain.
Abe: I think that's fantastic. If I'm a supply chain leader, and I'm taking a look at this, what do I do to get started here? It sounds like a fantastic project. Are there champions that I need? Are there specific staff internally that need to be at the point on this? Give us a sense of how you started, and what your recommendation is for others to get started.
Tim: For my recommendation would be to go see. There's a lot of companies that have started to do this type of work, and they're actually very open to share their learnings with this because this makes it a better community for all, so go do some research on that. The other component is to really look for folks internally. They have a passion about this, and I've been lucky to have folks at the different companies that I worked at that say, "I have a passion. Can I be included in this?"
They're going on their learning journey, and really that part of that learning journey. Here at Essendant, I call it community management for the local lead building leaders, they're managing the community within the four walls and that's building that mechanism with the tiered meetings and the action item boards. Then we're providing them support to build the community outside. In every part of the US and counties, there's multiple not-for-profits that are looking for company partners to funnel their candidates in through a program like this. It's really finding good partners that will not just send you people, but they will help you understand the journey and job coach the folks as they're being onboarded into your organization. I would say if you're just starting from scratch, it's to take a step back and look internally in how well is your organization at the different layers at communicating work on a daily basis and how well do they advocate for themselves today to say, "Here's a barrier that's preventing us from doing our best work," and if you build that infrastructure internally, which helps your operational costs anyway, but if you're able to build that first, plugging in a alternative hiring program is actually fairly simple to do.
Abe: Tim, I think you've provided a great setup for organizations to evaluate how to address what we know is a significant gap both prior to pandemic and currently, and that is finding competent, capable supply chain talent. I think you found one more avenue that organizations can take a look at to find competent, capable individuals that are committed to the organization. I'm really impressed by the passion that Essendant has towards not only engaging these individuals, but providing opportunities for really meaningful work because I think that's what everybody is looking for. Thank you very much, Tim.
That is all the time that we have today. A special thanks to our guest, Tim Engstrom from Essendant. Thank you for joining today. We hope you'll be back for the next episode and for The Rebound, I'm Abe Eshkenazi.
Bob: I'm Bob Trebilcock.
Abe: All the best, everyone. Thanks.
Bob: The Rebound is a joint production of the Association for Supply Chain Management and Supply Chain Management Review. For more information, be sure to visit ascm.org and scmr.com. We hope you'll join us again.
