“It’s all around people, process and technology”

Frank McKay, Jabil’s chief supply chain and procurement officer, reflects on the last two years in supply chain management

A good friend of mine was a star high school football player who went on to become the CEO of a medical device manufacturer. Once, at an industry event, he was seated next to the Pittsburgh Steelers’ defensive coordinator, who was getting ready for two-a-day practices. As a lifelong football fan, this was a treat, and with training camp right around the corner, my friend asked: “When you go to camp, what’s your focus?”

My friend expected to hear something about a new defensive strategy. Instead, he was told “The first week of camp, we always start with the 3-point stance. You can’t run a good defense without a solid 3-point stance.”

The lesson my friend took away was that despite all the talk about innovative defense formations, at the end of the day, everything comes back to the basics. They’re not new, but they’re essential to success.

Earlier this month, I had the chance to speak with Frank McKay, chief supply chain and procurement officer, at Jabil. As I’m sure you know, Jabil is an advanced manufacturing solutions provider for a diverse set of end markets and a provider of supply chain orchestration on a global basis. The company made over $33.5 billion in net revenue in its most recent fiscal year.

When I asked McKay to describe the last two years at Jabil, he said two things that caught my attention. The first was: “It’s been extraordinary. I don’t think anybody has been as challenged in their careers as we have as a supply chain and procurement function.” As an aside, he added that there’s probably nothing new in that observation that I hadn’t heard before.

The second was this: “As we reflect back, it’s all around people, process and technology.” He went on to say that Jabil was “doubling down on” on all three areas.

Now, you could argue that there’s nothing new there either. We’ve been talking about people, process and technology as the foundation of the supply chain for longer than I’ve been the editor of Supply Chain Management Review. And yet, like the coach’s focus on the first thing you learn on the first day of Pop Warner football, mastering those fundamentals is essential in good times and in the challenging environments we now find ourselves. Think of them as the 3-point stance of supply chain management. Just because they’re not new doesn’t mean that we do them well.

First, a little about McKay. He has been with Jabil for 25 years. Originally from Scotland, he began his career in Jabil’s European operations and came to the US in the late 1990’s. He has been in procurement roles ever since. Along the way, there were 5 years in Singapore, where he ran supply chain and procurement in the Asia region, before he moved to Florida in 2010. He became the CPO 4 years ago, and in 2021 added CSCO to his title.

His responsibilities include direct procurement of the supply that goes into customer products and indirect procurement of the goods and services that support growth. Logistics and compliance report to McKay, as does the customer-facing side of the business which develops solutions, including supply chain management solutions, for Jabil’s customers. His organization includes about 2,000 people working in 100 facilities spread across 30 countries. He’s responsible for roughly $30 billion in spend, including $24 billion on direct and $6 billion on indirect with literally tens of thousands of suppliers. Supply chain serves 450 customers in 9 end markets, including automotive, aerospace & defense, healthcare and connected devices.

In my experience, the combination of CPO and CSCO is unique to the contract manufacturing space, but McKay argues that it is almost a necessity in that industry. Since so much of the business involves creating manufacturing and supply chain solutions for customers, “when we’re approaching our customers, it helps to have one voice and one message,” he says. “ And customers have one source of information. They don’t have to go to the procurement guy and the supply chain guy.”

Over most of the conversation, we talked in depth about Jabil’s approach to those three fundamentals of people, process and technology. “We’re doubling down on our talent, doubling down on processes that are agile enough that we can shift depending on shortages, tariffs or pricing, and we doubled down on technology. We’ve put in a clear roadmap on end-to-end technology, including artificial intelligence and machine learning. And, we have created a roadmap to automating decision-making.”

Competition for talent has been a reality in supply chain since well before COVID, and at all levels, from the shop floor to the corporate office. McKay says that when the pandemic began, that reality took on a heightened urgency just so everyone could keep operating. “If we were asking people to come to work, then we better have a safe place to come into,” he recalls. “So, we had an immediate focus on PPE.”

Since then, Jabil’s double down on technology has been interwoven with its talent strategy. One example is investments in technology to automate “systemic repetitive tasks,” like using robotic process automation, or RPA, to convert requests into purchase orders. “It was never about taking people out of the equation, but about allowing a buyer to be buyer, understanding their category, pricing and the competitive environment rather than spending half a day doing data entry.” McKay believes those improvements have attracted talent into the organization that value impactful work.

When it comes to retention, Jabil is developing growth paths for its employees. One example is the Accelerated Leadership Program, which provides 6-month stints in procurement and supply chain. Associates are moved around different areas of the organization, and around the globe where they can immerse themselves in different cultures. “It is an investment and it isn’t free,” McKay says, “but from a retention standpoint, we have not lost a single person” who went through the program.
   
Technology is also weaved through Jabil’s approach to resilience and agility. McKay notes that even before COVID, Jabil decided to standardize on SAP’s ERP and operating systems around the globe. Now, one of the first steps after the company makes an acquisition is to bring that new company into the Jabil SAP environment. When new software is added, such as supplier collaboration or new transportation capabilities, it goes into one stack accessible at all locations. “We want people to make decisions without going to 17 systems,” McKay says. “If we’re going to negotiate with a supplier, I know exactly what we spend, where we spend it, what contracts we have and the market share we have. We’re using technology to make more informed decisions.”

He adds: “The next disruption is around the corner. We don’t know what it will be, but we want to be sure we have a robust and sustainable system.”

Jabil is also investing in ESG, another area that impacts people, process and technology. McKay notes that it has moved from board level conversations down to management at the operational level. “Whether it’s Scope 1, 2 or 3 emissions, or a combination of all three, customers are asking us about our carbon neutral roadmap,” McKay says. “I’m not saying we’re ahead of the curve, but we are embracing it because we believe it is going to become table stakes. We are pushing sustainability in our operations and we are asking our suppliers to step up their efforts. It’s become part of the fabric of our daily discussions.”

To finish, I asked McKay for his advice to future leaders. He returned to where we began. “It’s a cliché, but there are three practical things you need to pay attention to: People, process and technology,” he says. “The expectation of customers has never been greater. You need talented people to deal with these challenges. You have to have process in place to optimize how you run your business. And, you have to embrace technology. And, you have to have a strategy with an ROI attached when you stand before your CEO or board.”   

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