Supply Chain track “ah-ha” moment: We’re going about this all wrong.
Over the two jam packed days of well-executed content in the Supply Chain track of HARDI's Focus Conference, there was one moment during the presentation from Bryan Sharkey with Southwest Airlines that I thought, “everyone should be hearing this, and I mean EVERYONE.” I wished that at that moment I had the power to teleport our executive team, our sales team, and even our customers to hear his presentation.
Here was a logistics and operations expert, with the most profitable airline in the history of aviation, which just so happens to also be the highest rated airline for customer satisfaction, telling us their secret sauce: it’s not always about the lowest price.
A budget airline telling us it’s not all about price? Comical, I know. But it made total sense and even this multi-billion-dollar company only figured it out just a few years ago.
They learned the hard way that driving down supplier cost of goods had a direct effect on driving up their transportation, labor, and storage costs. Now, this does not mean they let their suppliers completely dictate the price. Southwest began to look at the big picture to understand everything that cost them money and then took the best approach to lower those costs. Whether it was paying more for cut limes from their distributor, to save the labor cost of $42/hr union wages for someone in house to cut them, or rearranging their warehouse and trucks to save time loading planes, they made sure that every decision was done to lower overall cost.
In addition, they never made a decision that would sacrifice the customer experience. For example, they could have stopped selling limes altogether, or used lime juice packets, but customers did not like that, so they found a way to provide the best experience with the most economical approach.
This message should resonate with any distributor. Continue to look at the big picture to lower costs, but maintain or increase customer and employee satisfaction. For those of you who have flown Southwest, know they continue to hit the mark.
Claire Munch is the Director of Customer Service for Munch Supply and the Vice Chair of the Supply Chain Council.
The Supply Chain Council is one of many HARDI Councils dedicated to identifying and addressing challenges facing the HVAC industry and to providing knowledge-based solutions in the interest of advancing the science of wholesale distribution.
For the 2019 Focus Conference, this council was tasked with arranging content for the Supply Chain track. One presenter in this track was Bryan Sharkey, the Senior Director of Projects & Planning for Southwest Airlines.
If you are interested in joining the Supply Chain Council to have a say in the content provided at HARDI conferences or would like to network with peers in a similar job role as you, contact Supply Chain Council Liasion, Nick Benton.