Sometimes you think your problem is one thing, but it’s really another. The frequent supply chain lament heard by consultants at Tompkins International – “We need a bigger warehouse” – frequently is determined through the consultants’ careful investigation of their client’s operations to be inaccurate.
“We’ll look at the inventory and say, ‘You don’t need a bigger warehouse – you need less inventory,’” founder and CEO Jim Tompkins says. “Let us show you the impact of what that can do to your business.”
For more than 35 years, Tompkins has provided supply chain consulting worldwide through operations planning, design and implementation. Tompkins himself has written or contributed to more than 30 books and has a blog and podcast in which he shares industry observations and methods.
When companies seek the services of Tompkins International, they either think they know what needs to be done or they ask for Tompkins’ advice on the assistance they need. Tompkins specialists are dispatched to the company to review its operations and produce a summary sheet of what the Tompkins’ consultants think needs to be done.
After the consultants meet with the potential client at the end of their visit to review the summary sheet and confirm the client’s interest in continuing with Tompkins’ assistance, the sales team prepares a proposal. That is reviewed by Tompkins’ quality and approval teams, who make suggestions.
At the end of this process, a final proposal is sent to the client and a partner in charge is designated to present Tompkins’ proposal to the client. “We follow up, and hopefully within a short period of time – weeks, hopefully – the client makes a decision, the partner in charge gets the staffing he needs, and then we go to work,” Tompkins summarizes.
He says 93.8 percent of the company’s revenue comes from past clients, some of whom Tompkins International has worked with on as many as 10 projects.
A Trusted Advisor
Tompkins International determines its prices for a project on a spreadsheet that estimates the time needed to complete the project and computes the hourly rates of the employees needed for the job. It then compares that cost against the expected savings the client should experience.
“We want to bring back to our client five-plus times the cost,” Tompkins says. “We’ve all seen other consultant firms where they charge you a dollar to save 15 cents. I don’t think that’s a good policy, and those guys wonder why they don’t get called back.”
Tompkins sees that as short-term business thinking. “The objective is to become the trusted advisor – that’s really important, because I want that 93.8 number – I want that to continue,” he emphasizes. “Every time they have a supply chain problem, I want them to call us. So I will call a spade a spade.” This sometimes means turning down work for various reasons, such as if the client rejects Tompkins’ recommendations, doesn’t want to spend the funds Tompkins deems necessary to solve the client’s problem or if the client’s problems relate to something other than the supply chain.
In 2002, Tompkins International acquired a consortium that gathered information about transportation. Tompkins quickly added obtaining benchmarking and best practices knowledge about all aspects of the supply chain to the consortium’s mission. More than 350 retail, manufacturing and wholesale/distribution companies participate in gathering a repository of more than 10,000 data points.
“It is not-for-profit and it hasn’t made a profit,” Tompkins emphasizes. “It is our way of really understanding what’s going on in the marketplace, and to understand that people will only give us information if they get something back. So people who participate in the surveys get the same knowledge we get. By us having the heartbeat of the marketplace, it makes us better consultants, and we don’t have to pay to do that. It’s a breakeven proposition.”
Tompkins considers himself fortunate to have had what he calls “the dumb luck” of picking the supply chain to concentrate on 30 years ago and now being in a discipline that is “hotter than hot.”
“What companies have done is understand that the global economy is real and that it isn’t going away,” Tompkins explains. “Given we’ve got a global economy, we’re going to have a lot of complexity, and those complexities require some relatively complex solutions. The overall banner for those solutions is called supply chain.
“The greatest opportunity to make a huge difference in how a company performs is supply chain,” Tompkins insists. “If you save a CEO $50 million in operating cost, he’s really excited. If you save him $50 million in inventory, he’s going to buy you dinner. You don’t pay taxes on it – that goes right to the bottom line. If I save somebody $50 million in operating expenses, half is paid to the government.”
He disagrees with the notion that the only goal of the supply chain is to reduce cost, calling it “totally wrong. The supply chain is here to reduce cost and increase revenue. So we really need to grasp both roles of the supply chain. Of course I want to reduce cost, but I also want to increase revenue, and that’s an important part.”