March 10th Interview: Sherri Inoa, Director Indirect Sourcing, ARCOP, Inc. (Arby's Supply Chain Cooperative)
Sherri was interviewed by Rakesh Kantharajappa, 1st year MBA student at TCU.
RK: Can you tell me a little about how you started in the supply chain field?
SI: My entry to the field began twenty years ago with a Kitchen Equipment Distributor and Manufacturer. I transitioned after a few years with that company to Arby’s as a purchasing coordinator with absolutely no purchasing background. I immediately liked the daily variation supply chain offers. I especially enjoyed – and still do - cultivating vendor relationships. This industry is deeply rooted in relationship-building.
RK: How does ARCOP operate?
SI: ARCOP is one of the oldest continuously-operating supply chains in the foodservice industry. We do not own or operate any warehouses or distribution centers. We partner with independent distribution suppliers who manage all Arby’s deliveries across the continental United States. Our direct procurement team’s objective is to obtain required specifications from our corporate Brand and source them from highly qualified and able suppliers and ensure on time, perfect deliveries. Our indirect procurement team works with internal departments and our franchise base to develop cost mitigation programs with highly vetted suppliers. The organization as a whole strives to maintain unbroken supply and ease any burden on the system with respect to assets and services to the best of our abilities.
RK: What area is your specialty within the supply chain?
SI: There are several niche areas within supply chain. This can include distribution, supply management, direct and indirect procurement. I specialize in the indirect sourcing side of the business. Indirect sourcing targets products and services that do not directly generate revenue and are not directly consumed by customers who visit our restaurants. In other words, it applies to everything that is not provided through our food, beverage and paper distribution centers. This includes: kitchen equipment, used cooking oil, CO2, HVAC, energy, smallwares, office supplies, parts, signage and menu boards, lighting, MRO, and drive-thru components, among many other categories.
RK: How do you select vendors for indirect sourcing?
SI: Unlike the direct procurement side of the supply chain, most of Indirect Sourcing’s programs and approved suppliers are not mandated. Our franchisees are independent business owners and our promotion of our programs is handled similar to B2B marketing. We cannot compel them to purchase our approved products or services. We convince them through savings and ease of utility the program provides. But, the independence of purchasing on our side of the supply chain does add an additional layer of difficulty to our negotiation process with potential suppliers as we cannot guarantee purchase volume over any particular period of time. Much of our negotiation centers on forecasting based on word of mouth interest and interviews our team performs ahead of vetting with members of our franchise base.
Vendors undergo a rigorous process to become approved to provide services to our system. Circumstances may include an RFP (Request for Proposals) process, testing of products or services in our restaurants (sometimes in conjunction with independent laboratory reviews), or an in-depth vetting and referral process from within the system. The referral process begins when a franchisee or our corporate Brand has had positive experiences with a particular supplier and asks ARCOP to vet the possibility of the supplier to serve the system as a whole.
RK: Do you tend to work with national or local suppliers?
SI: We primarily source products and services with national suppliers to simplify vendor management and oversight. The supply chain also strives to have multiple suppliers for each product and service to limit risk. Regional suppliers are utilized only in special circumstances – most notably repair and maintenance services – when the nature of a particular industry happens to be regional. Pest control, landscape services, and HVAC maintenance are a few examples.
RK: You mentioned that franchisees are independent business owners. What are some ways you communicate with them about your programs and encourage adoption of your programs?
SI: Our organization isn’t much different than other QSR chains in that respect. But creating that sense of community with such a varied franchise demographic is certainly challenging. We do have the advantage of having 100% U.S. franchise participation in our co-op. Our philosophy is that over-communicating is better than under-communicating. We give them multiple tools to gain exposure to what we are doing. That includes weekly reminders and announcements in the corporate newsletter, development of our own quarterly newsletter, producing multiple guides and catalogs for them to consume information specific to areas such as energy savings and building materials. We also maintain current data on our programs in our intranet. Testimonials and constant outreach – encouraging interpersonal communication – is also another critical area for communicating our programs and increasing participation.
RK: What prompts the development of new programs?
SI: Development of new programs is either an organic process or it’s a directive passed to us from our corporate Brand. If it is a corporate directive, it will be a food product or indirect asset (think Kitchen Equipment). Arby’s corporate teams develop specifications for equipment and food products and approach us to procure suppliers and products. Other programs grow out of continuous conversations occurring in the field, internally, through solicited conversations with our franchise base or our Board of Trustees. As the Brand continues to grow, new issues crop up and we immediately respond. Depending on the issue, it could be something in process with a steadily approaching deadline thus we have little time to ponder a solution. We try to proactively develop programs – anticipate changes coming due to industry evolution or internal corporate insight and have solutions readily at hand. But that isn’t always possible.
RK: How you do measure the success of your programs?
SI: Our other departments have their own sophisticated set of metrics that are fine tuned to track quality, shipments, delivery methods, etc. In Indirect Sourcing, since our programs cover everything from energy to kitchen equipment to technology, there isn’t a perfect litmus test that applies to all scenarios. We review our existing programs periodically throughout the year via sales and participation numbers provided by all of our suppliers. We also perform a number of formal business reviews with critical supplier partners to get ahead of potential issues, iron out any existing concerns, and exchange ideas for growth. We expect our suppliers to always keep innovation and superior customer service as a key driver in their relationship with us and consistently challenge them to go the extra mile and keep evolving. Interviews with our franchisees and testimonials are another key measure we use to stay out in front of our programs. Just initiating conversations, rooting out issues in their infancy, and not waiting until concerns have compounded is a significant customer service commitment we have to our franchisees.
RK: What do you think makes a successful supply chain professional?
SI: Preparation, creativity, both teamwork and individual project management ability, logistics, forethought, organization, analytics, self-motivation, and problem-solving are all critical drivers of success in this field. You must be versatile. Successful supply chain professionals do not wait for instructions every day from their managers – they create their daily tasks. Successful supply chain professionals are comfortable with change, the unexpected, and prefer variation and intricate challenges that don’t always have a clear path to resolution. They are excited and emboldened by the gray area. They expertly seek out answers before the questions are asked. In this field – problems will occur. That is a guarantee. Sometimes those problems will be multi-fold and may even cascade across several, if not all, of the departments within the supply chain. A failed supplier or miscalculated lead-time can create significant challenges for the distribution and supply management teams, for examples. Not to be cliché, but someone who can think outside the box, generate solutions on their own and with input across multiple teams will succeed. You must be a holistic thinker – avoid the “silo” way of thought processing.
RK: What advice do you have for someone just entering the field?
SI: Be excited and be open minded. This is a great field for providing a good work-life balance and daily fulfillment. But that only applies if you are someone who likes the varied nature of the job. I find it fulfilling to identify issues and work to resolve them in creative ways and across multiple specialty areas. I have learned so much in my twenty years in the field because our industry cross-pollinates with maintenance, construction, design, finance, marketing, food innovation, and more. You really gain well-rounded exposure to so many industries that I’m not sure you can really experience anywhere else. I can tell you about types of fryers that can yield more energy savings. I can tell you about certain trends in lighting technology. I can tell you about LEED building requirements. I can tell you about different types of pylon signs and why certain types are suited for specific renderings – and so on. You really have to try hard to be bored!
RK: What kinds of research from the executive study group of NRA and TCU would benefit you?
SI: I would like to benchmark what other concepts are doing. We have received some interfacing with other concepts in the past from our executive team’s participation in panels. We also receive insight from networking in the industry. But more benchmarking, best practices, and expert insight is always beneficial.