Hosts: Mike Ogle and Rodney Apple of SupplyChainCareers.com

In This Episode:

Kate Vitasek, known widely for her work on the Vested business model for collaborative relationships, and an executive education faculty member at the University of Tennessee, shares her supply chain career journey, starting as a teenager working at a grocery store, then the store’s warehouse, to becoming a supply chain graduate and going to work for Proctor & Gamble, Accenture, and Microsoft. She talks with us about the value of having experience on both the buyer and supplier sides and how that influenced the development of the Vested collaborative model. Kate shares her thoughts on business relationships, the great value of soft skills on top of hard skills, how to adopt a more innovative mindset, the value of career surfing, and how continuously growing your network leads to innovation and continued career growth and success.

Kate Vitasek Bio:

Kate Vitasek is an international authority for her award-winning research and Vested® business model for highly collaborative relationships. Vitasek, a Faculty member at the University of Tennessee. has been lauded by World Trade Magazine as one of the “Fabulous 50+1” most influential people impacting global commerce. Her work has led to 6 books, including: Vested Outsourcing: Five Rules That Will Transform Outsourcing, Vested: How P&G, McDonald’s and Microsoft Are Redefining Winning in Business Relationships and Getting to We: Negotiating Agreements for Highly Collaborative Relationships Vitasek has also been featured on CNN International, Bloomberg, NPR, and on Fox Business News.
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Transcript:

Well, just by happenstance, when I was 16 years old, I actually worked for Kroger and transferred from the store to the warehouse. And so, my junior and senior year of high school, I actually worked in the warehouse as a clerk and was right in the middle of warehousing. I was on the night shift because I was the shipping clerk, getting the boxes ready to go to the store. And so been around warehouses since I was a teenager. And then I went to the University of Tennessee and of course they have a supply chain and logistics degree back then it was called logistics and marketing. And I chose the marketing path, but marketing and logistics were hand in hand, the same department. So, I was exposed to logistics and we even had to take a class no matter what you are taking in the college of business. Everyone had to go through a logistics class. I thought this is really kind of cool. 

So, my graduate degree, I decided to get a supply chain degree, so undergraduate in marketing and a graduate in degree in supply chain.

Early on after my marketing degree, I worked for Proctor and Gamble. And even though I was in marketing, it also has a huge impact on supply chain. My very first job was actually working in grocery retail operations and going into the stores and making sure the shelves were prominently displaying the P and G products. Something was out of stock. So weirdly enough, marketing-related back to supply chain and getting product into the stores. And after getting my graduate degree in supply chain, that’s really what I knew I wanted to do actually is one of the hardest decisions I had was to not continue at P and G, but to really shift into supply chain and my first kind of real job in supply chain was at Accenture, right out of graduate school. Getting my MBA and we did supply chain strategy back then they called it logistics strategy. What an amazing job, you know, you go from this project to this project, to this project, and you can see all the different problems that people have in their supply chain and get a chance to work on them. 

So, it was really fun to have that diversity. Consulting’s not for everyone, but if you do get an opportunity to do consulting and you’re not sure what aspects of supply chain it was a blast. And that led me to Microsoft, where I had done a supply chain fulfillment strategy, actually not a full supply chain, but fulfillment operations. Gosh, we don’t have a manual for our software. In Singapore and it was called disk and docs. Back in the day you had a diskette and a doc, you know, the manual and your dog would eat your disc. And so, we were brought in as Accenture to look at this disc and doc problem. It was actually one of the top 10 problems of Microsoft. My dog ate my disk. You wouldn’t think about that, right? And so, we got to work on this and develop a worldwide fulfillment strategy. There were, 70 some odd languages, all these countries getting a spare part of a manual because somebody was stuck and didn’t know DOS. Was quite a challenge in a fun, fun project to work on.  

Well, I eventually went to work for Microsoft and began to work on a lot of their marketing operations, and how they would actually outsource. And that really got me to where I’m at now without really thinking about outsourcing and supply chain and the work that we do in Vested Outsourcing at the University of Tennessee. My early learnings came from Microsoft as being on the buyer side and trying to figure out how do I work with all the suppliers around the world that I have to outsource to, because I don’t have the core competency. 

Well, as buyers and I’ve definitely been on the buy-side working for Microsoft, outsourcing some of their largest outsourcing initiatives. I’ve been on the supply side. Right. So being the receiving end. And I think one of the things that we do as buyers is we don’t let go. You hire the supplier as the expert, think about it. You’ve outsourced because it’s not a core competency yet you turn around and tell that supplier who it is their core competency, how to do the work. And it’s very frustrating. If you were going to go to have a great meal, and does the chef wants you to bring the menu? You’re going to them for their expertise. We say we want these great 3PL relationships and as buyers and suppliers, we’re showing up buying and selling commodities. And we don’t know how to put the relationship first and solve problems through our relationship, through our governance and even the incentives. So our contracts are full of perverse incentives. You don’t hit the fill rate, you get a penalty, right? So, if I want to hire you for a job, do I go well, I’d really like you for this job, but you get a 3% year over year salary reduction. And if you don’t do exactly what’s in your hundred-page statement of work and hit your 42 metrics, you’re going to get a penalty. No one wants to do that. And so, our personal life, we would never do some of these things, yet as buyers and suppliers, we violate all of these known good social norms that we would have. And funny enough, the best relationships actually foster the relationship. They put that relationship first.  

In our HBR article this past year, we wrote about formal relational contracts. And if we can contract to get the relationship, all the soft stuff, right then the hard stuff follows it. As long as you’ve got someone who’s competent. Now that brings us to the point of hard skills and soft skills because they are different. And in a vested relationship, you’ve got to have the hard skills of the capabilities, but it’s the soft skills that get people out of whack and create friction in the relationships. 

I’m not saying that we shouldn’t put those things front and center, we should, right. We should ship on time and we should ship in full. However, we don’t stop and think about the root cause analysis. So, it’s not that you shouldn’t be focusing on those metrics. You absolutely should. It’s that we need to have the soft skills to say, well, what’s the root cause analysis. All too often, we just go in automatically assume something is the supplier’s fault. When in reality, sometimes the buyer had a bad input or it was something out of control. So instead of fixing the root cause or working together to reduce these risks, we put all the pressure on the supplier and that puts friction on the relationship. And we aren’t really optimizing and building these great collaborative relationships, solving the underlying problems. We get stuck on transactions. This shipment, this score on this shipment, the red scorecard, the penalty, and it’s a race to the bottom instead of what’s the root cause analysis and fixing the root cause.   

Well, that’s a great question. You have to have the hard skills to get the job. If I’m a 3PL you have to have the hard skills in order to get the contract. And so to me, when you’re hiring someone for hard skills, you have to look for the raw education, the experience have they, do they have their battle wounds. So, have they actually done things like that? Or are you willing to take an investment and train them in that piece? That’s okay too. My job, actually, when I look back on my career, it’s really interesting that people took a chance on me. I’d never done consulting before. And so, if you can take someone, who’s got some raw, positive, great energy, willingness to learn, you can teach them some of the hard skills. And so they kind of go hand in hand, but I do find that as people advance in their careers it’s the soft skills that trip them up. My neighbor, for example, wanted someone that was an MBA that had an engineering background, but she wanted someone who really got the bigger picture and she reached out to me. She goes, I just can’t find someone that really gets to connect the dots. And I said, well, why don’t you try a supply chain person that has an engineering background, that has been an engineer as an undergraduate. And she hired a supply chain professional. And she said, one of the things she really loved about it was his soft skills and his ability to sit and listen and connect the dots.  

And that’s one thing I really love about the University of Tennessee. We’re really good at working on the soft skills, even back in the day when I graduated, we gave presentations, we pretended like we were a company, and we would go and present to the executives. We had four big projects, and we go to a bank and try to get a bank loan, real scenario. Here’s the business, go get a bank loan. How’s your presentation skills, how’s your teaming skills, and working together. And so, teaming and presentation skills are being coupled with analytic skills. And I think that’s fantastic for some of the universities who’ve embraced soft skills as well as hard skills and not all of them have. A lot of them are just about this class, but more and more, I think you see people realize that the soft skills are important and are a huge key to your success. 

  And I know me personally, those are some of the things that got me the most promoted. I will tell you. I was probably not the smartest student. There were a lots of people who were way smarter than I was, but being able to work in a team and being able to navigate, getting stuff done, that goes a long way. 

I think there’s two pieces of advice. One I learned right away and one, I didn’t learn right away. I learned it after, and it was through experience, but at the University of Tennessee, we had a course called executive in residence, and it was both at the undergraduate and graduate level. And each week an executive would come in and share their experience, different topics. And one of the executives. And I honestly don’t even know who it was, but this tip has changed, literally everything about what I do is follow this tip. He said, everything you do is either a pilot or a draft because it gives you permission to not be perfect. And I thought wrote that down and I use that from day one. Here’s a draft. What do you think? So, when you’re talking to your peers, if you got it wrong, it was a draft. If you’re implementing something, the first phase is a pilot. And by having that permission to not be perfect, but to try things, you don’t have to be the status quo, call it a draft. Here’s a draft of some ideas I have. It’s just some ideas. They may be far-fetched, but it gives you permission to challenge the status quo. And that’s really what we’re trying to do in supply chain. Isn’t it? Is get better, faster, cheaper. And if we don’t challenge the status quo, we’re never going to get there. 

And so young people need to come out and realize they’re not just a button, a seat, but they should bring their brain power. And feel good about challenging it, but you don’t want to challenge people who’ve been in the job 20 or 30 years, right? Well, I’m just a young guy, but I’ve got some good ideas. I have got some drafts of some ideas. What do you think? It gives you permission to not be perfect and to try out new things and that’s going to get a lot of attention. As a young person coming out and going into their job and using that positive, youthful energy and all that knowledge, those hard skills that you learned in college. 

Now, my second tip, I actually kind of learned along the way, and that was career surfing. I had worked at Proctor and Gamble and then Accenture and they had a very clear career path. I was on the path at P and G and I decided, for me, if I want to get to be a vice president, and this was one of my goals, by the way, I love telling people, come up with your goal. What’s your Mount Everest. Look at someone that you admire. You’ll pick out someone you admire and then go pull their resume, their LinkedIn career and go back and see, well, how did they get there? And what I noticed is that people didn’t have a career path, they career surfed. So, I learned some things at P and G and then I switched, I learned some consulting skills, then I went to work for Microsoft to do implementation. 

And so, I actually funny enough in junior high. It was a true story. Was in a math class and I didn’t like math too much. It was algebra. And I thought, well, what do I want to be when I grow up? And I definitely don’t want to use algebra. I want to be a vice president of a company and I want to make $40,000. I thought if I’m a vice-president and I make $40,000, that’s it. I mean, I’m like loving life. And so even coming out of college, I said, I want to be a vice president now. I changed my expectations on the salary, just a tiny bit, but I still said being a vice president of a major company. That’s cool. And then I worked for P and G and I thought, wow, that’s going to take me a long time. 

And, do I like that career path? Or is there a way that I can career surf and go think about the skills that I needed? What skills did I need to be a vice-president? And I thought, well, I like some of these skills. I loved my job but why did I leave? I left because it was an opportunity to get some skills that I couldn’t have in my existing career path. Going from consulting to implementing strategy, developing supply chain strategy, to implementing strategy. I needed those. If I was ever going to be a vice president, you need to have both. So what skills do you need for that end game? So think about your end game and reverse engineer, the skills and the company that you work with may not have those skills. You may have to career surf and even do a lateral. When I worked for Microsoft, I actually went backwards. I made less money. Who ever thought, you’d take a job, making less money, but I thought I’d have less money, but I’m going to do something that is tremendously impactful to my career and my skills and it paid dividends. No questions asked. It was absolutely worth going backwards. One step backwards to take three steps forward.  

Investment.  

It is, right. And so, people have to think about their career as an investment, not just the school and getting a graduate degree and the money that you pay out in investment, in all those skills. So, think about where you want to be. And think about it surfing, unlike a career ladder, you know, people use this career ladder, you take a step, you take a step. It’s very linear and surfing is you get up, you have some fun and you fall down and then you go find another wave. And you get up and you have some fun and then you fall down. You’re really looking at your career as a series of things that give you both hard and soft skills.

Ask. It’s real simple. Just go up to someone you admire and ask you think they’re going to turn you down. Chances are no. So just ask. I was assigned a mentor at Proctor and Gamble actually, so they have a very formal mentor program, and it was wonderful. Loved it. It was very easy to go up and ask all those stupid questions and those non-politically correct questions and without judgment. And so, I definitely think you should get a mentor within your company. But maybe also externally to your company. Every once in a while, I’ll have somebody come up and ask, and by the way, you can ask I’m full. I take on mentors. Right now, I’m full with the folks that I mentor, but I have some people that I have mentored for over probably close to 20 years now. And I love seeing them grow in their career. It’s fun to be a mentor and see how people grow and change. And they are applying skills to make them a better person, a better manager, a better supply chain leader. You get a lot out from both being a mentee and being a mentor.  

Oh, gosh, that’s a really fantastic question. A lot going on there. But I think analytics. We started to use analytics as early as the 1990s, when I was getting my MBA, actually, even before that, when I worked for Proctor and gamble, one of the jobs that I had was to look at analyzing toilet paper and toothpaste. Doing 500 graphs on the toilet paper category at a grocery retailer. Golly, gee, if you put an end cap, which is precious real estate in a grocery store and you happen to put the toothbrush right next to it. There’s a lot of profitability in a toothbrush, but you’re not making much money on Crest. Right. So how do you optimize the retail shelf for that category. And that was something that P and G pioneered. And I had a great mentor who taught me the ropes on optimizing the retail spend of your customer, super fun. Highly boring, 500 graphs on toilet paper. But today, analytics. The technology everyday gets better and better, better. Right? It is absolutely stunning to see the technology differences that you have today versus when I came out of school. So, embrace analytics. I would definitely say, embrace the digital world. 

How cool is this that you can, during a pandemic, still have businesses operate. And many companies aren’t even having any employees come on site. We have our essential workers obviously, but I do Zoom calls all day long and we haven’t missed a beat in our work teaching vested outsourcing. We had a deal, BP, for example, just signed a deal with Jones Lang LaSalle for global facilities management and corporate real estate optimization. They did every bit, every single bit of that was done virtually. Many of the people on the team had never met you. They pick their supplier, they did a complete outsourcing deal and they will transition 100% virtually embrace it. How cool is that you can be so global today, far more than you’d ever seen in the past where you were constrained by travel. We’ve always had conference calls and different things. But today I think the pandemic has let people realize how easy it is to be global and to bring globalization to your supply chain.

Read and collaborate. Our work at the University of Tennessee on vested actually started with collaboration. We looked out and said, who all is the best at understanding these kinds of performance-based contracts. So even while I was at the University of Tennessee, I reached out and collaborated with Dr. Karl Manrodt, who, at the time was at Georgia Southern, really well-known for performance metrics, supply chain metrics. So I said, we’re going to look at how to measure supply chain success and some of these supply chain outsourcing deals. Who do I want on my team? I’m partnered with a gentleman out of the University of Oklahoma law school, he was a government contracting lawyer. You’re doing contracts, gotta bring in a lawyer, and worked with someone else who was at Penn State from a military perspective, and so collaborate. Because when you’re bringing together people with diverse backgrounds, you can learn a ton. So, embrace diversity. Bring on people who aren’t like yourself, because you can learn a lot from them.  

It’s really great to have diversity and to look outside your field because you can see things that you don’t have an opportunity to see and read, absolutely read. I love doing a lot of research in the area of vested and relational contracts. It’s kind of like a star fish, right? You’ve got the body of a starfish and you just keep growing these legs. And it’s usually because someone says, Hey, have you ever thought about X. And so, then I’m like, Oh, that’s an interesting, kind of a starfish. You’ll grow another leg.  

And just the story of the books, I’ll tell you this as a fun story. So, we first started out, our first book was called vested outsourcing five roles that will transform outsourcing. Our second book was actually the vested outsourcing manual. And it’s because a couple people I’d heard, said, well, vested, the rules are really intuitive, but how would you write that into a contract? So, I started teaming with lawyers. Here’s how you write a contract that teaches these best practices. Then someone said, well, I don’t like to read, do you have a cliff notes? So, Karl and I wrote a little short, I’m not kidding we wrote a little cliff note book called the vested way. And it’s a super popular download. We put it online, it’s free. So, what a good way to get your idea to spread, just giving stuff away. The fourth book, actually again, came because someone said, well, Kate, do you realize that the reason why we don’t have vested deals is because we’re taught to negotiate and get to yes. Instead of getting more. So, our negotiation skills don’t support what you teach. And I said, well, let’s run a negotiation book. And this was a negotiation expert. So, we wrote a negotiation book. We teamed with a former chief procurement officer and wrote a book called strategic sourcing in the new economy today. That book is actually been adopted by over 40 universities. So super cool. And then our latest book is called contracting in the new economy and all of my co-authors are lawyers. It is designed for lawyers to help them understand that formal relational contracts absolutely are successful. And I think one of my favorite collaborations, beyond my wildest imagination, but myself and David Frydlinger, a Swedish attorney, teamed with Oliver Hart, Harvard University economist, so here you have a Harvard economist, Nobel prize winner, a Swedish attorney, and a supply chain person from the University of Tennessee coming together to write the principles of a concept of formal relational contracts for HBR. That is cool. So, embrace diversity, embrace globalization. The world today allows us to collaborate in ways that we’ve never seen before. The pandemic has brought down walls where before companies would be more hesitant. Well, I’ve got to have a face to face. We’re now all very efficient at doing zoom meetings. 

I want to focus on the last part of that question. And it goes back to where we started almost, not quite the very first question, but I think one of the biggest barriers is that the more successful you are, the more you believe it’s your success that got you there. And in reality, It’s the people around you who gets you there. And if I had one piece of advice or one pet peeve, is when people are really successful, they don’t recognize and celebrate the people around them and they try to tell the people around them how to do their job. Oh, I need you to fill this role and here’s the job versus I have this problem. You’re really smart and amazing. And I’m hiring you because you’re smart and amazing. Go figure it out and giving them a little bit of autonomy. Now bounded autonomy. So, don’t get me wrong. Right. It’s kind of like in vested outsourcing. It’s not that we don’t want to focus on fill rates, right? It’s that we hired the expert, and we need to embrace them as the expert to drive some of those changes and get out of their way. 

And all too often, we actually, the better we are, the worse we are at being managers. And it’s not true for everyone. Many leaders absolutely get that, get the right people on the bus and give them big, hairy, audacious goals to go figure something out instead of get the right people on the bus, tell them how to do the job and be an anal-retentive micromanager. Nobody wants that job.  

A little communication certainly helps along the way in those bounding aspects and innovate. So, you know, communicate and innovate. And if that all works, then we’re probably happy.  

Yeah. I mean, and like I said, you need the hard skills. You need to have be able to fill the job, but the soft skills where the magic comes in and it’s the soft skills to innovate and communicate, you nailed it. Piloting. Drafts. The courage to change, to challenge the status quo and to navigate the through communication. How do you really get that idea championed and those people who drive change, that’s the real leaders of the future.

Have fun and if you’re not having fun change jobs. You should always, always look at the culture of the organization you’re going to work for. You should be interviewing them. Right. And making sure that you’re a good fit, cultural fit is absolutely essential and have fun. And if you’re not having fun, go find a different job.

Turn the tables on the interviews and start asking people, what do they like about their job? What if they had three words to describe the culture, what would it look like? Are those the words that you like, if those aren’t words you like, then don’t go to work there. I started to do that when I work for a center, I really wanted to make sure I was going to be moving from the South to San Francisco, very different. And I’d interviewed actually with seven different consulting firms and had offers with six. And so, I kind of was in an opportunity that I got to pick. And so, I thought I want to pick the one that I’m gonna have the most fun and fit that, that I’m gonna feel like a valued team member. And so, I started to ask everyone I interviewed with I’d say, you know, they always ask at the end, you know, what questions do you have? And I would say describe a day in the life if I joined this company and then tell me three adjectives about why you like this company, what makes you choose this over another company? And you can learn a lot that way.  

That’s great advice. And too many people make the mistake of, Oh, I’ve got six companies interested in me, which one pays the most. 

Yeah. And go back to career surfing. I’m going to say which one’s going to enable you to have the most growth. Put pay aside. Like I said, I actually had a huge pay cut to go work for Microsoft, but I was able to take one step backwards in pay and three steps forward in skills. And that was really beneficial that allowed me to then move on to the next step. 

Well, I teach graduate and executive education. Lots of people at UT teach executive education, but I solely teach grownups. Supply chain is fun. Where else can you go and have lots of moving parts? And if you get stuck in one particular job, and you’re doing the same thing over and over and over again, you’re probably not using your skills and talents. And so really look at, how do you connect the dots? I’ve been a buyer, I’ve been a supplier, I’ve been a consultant by looking at the different angles of a problem. It makes me far better at being able to come up with a vested methodology. If I’d only been on the buyer or only been on the supplier, you can’t see the problem from all the right angles. So switch it up. So, don’t be afraid to switch it up and learn, soak it in, read, explore, talk to other people. So, invest in yourself and you’ll get dividends and return.

Great question, actually. And it’s one of the things I’m super proud of what we’ve done with the vested certified program. It really is about learning and doing so, people who come to our class, especially if they’re going through the whole certified architect program and taking the creating, invested agreement class, their homework is their contract. So, they’re coming as a team. So, the buyer and the supplier come together and their end game is creating a vested agreement, which means writing it down on paper, it’s a contract and then living into it. And one of the hardest things that we find is that the more successful you are, the harder it is to unlearn. So, if I, for example, get a procurement person and they’ve been a procurement person and a successful one for 20 years, they have a hard time with vested because vested is different. It’s a relational contract, not a transactional contract. They’ve only ever done traditional RFPs and traditional contracts.  

And so, there’s a wonderful video that we play in class. It’s called the backwards bicycle. You can Google it. I encourage you to do that actually, backwards bicycle. And it talks about it’s very hard to unlearn. So, the more you’re an expert at something, the harder it is to unlearn. And that’s what we find in executive education. The younger folks, we had a team, actually a deal team, and they had a fairly young person on the team and she goes, I don’t understand why you guys have a hard time with this because this isn’t this just the way it’s supposed to be. And so, it’s like, yes, it is. But these people have been doing the same job for a long time. And so, to teach an old dog new tricks, you have to unlearn, so wonderful video.  Unlearning is hard. And that’s why I encourage people to surround themselves with diversity to try new things because that’s how stuff gets done. If we didn’t ever try new things, we’d still be doing the same thing we’ve always done. You would never get progress and being flexible enough to change, willing to change. That’s how progress happens. 

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