Gus Pagonis’ supply chain philosophy was forged in the heat of battle. During the Desert Shield and Desert Storm campaigns, as General (‘Stormin’ Norman’) Schwarzkopf’s logistics commander, he was responsible for food, shelter, fuel, ammunition, transportation and contracting throughout the entire campaign.
But what does a three-star general do when Civvy Street beckons after 30 years in the US army? ‘Most generals end up going into consultancy. But I wanted to use my skill sets in a totally different area, to go somewhere where I had no credibility.’ Gus Pagonis became head of supply chain for US retail giant Sears Roebuck in 1993.
‘I did have some apprehension, but I had two things on my side. One was my book, ‘Moving Mountains’ (one of a very few titles on logistics to have reached the consciousness of the general public). And fortunately, I knew I could do the job.’
The military, he believes does not always get enough credit in the outside world for its achievements and abilities. ‘All most people knew about military generals was what they saw in the movies. Some people thought I was going to make them march about!’
Actually, what a military background does best is to inspire clear thinking. Military supply chains are simple, comprehensible and resilient, because they have to be. Unlike those in civilian life, they face the added problem of the enemy trying to tear them apart.
In an age of endless conferences, incomprehensible flow-charts and complex management structures, Pagonis is a breath of fresh air. Basically, you can sum up his supply chain management philosophy in two or three sentences: Always have a single point of contact; don’t let projects ramble on and, finally, define which part of the supply chain you can control, define your targets – and stick to them.
Take that single point of contact, a recurring theme in Pagonis’ supply chain philosophy. One person needs to have responsibility for all aspects of the supply chain. It needn’t necessarily be a director. It could be an ‘action officer’.
It’s also very important to define your supply chain accurately. ‘One of the problems is that everyone defines it differently. In some organisations, it seems to have taken on elements of manufacturing or logistics.’
By contrast, Pagonis is clear where his responsibilities begin and end. ‘I’m responsible for pick-up, shipping through the DC to the store, and the reverse logistics. I don’t own the replenishment portion, for instance. In that role I’m the supply chain co-ordinator.’
‘Don’t try and control what you shouldn’t. Many people try to.’ Transport and warehousing, yes. Merchandising, no. Note the difference between control and co-ordination. ‘Otherwise, if you’re not careful it could all become unmanageable.’
Another important element is to establish a ‘balanced scorecard’ to measure performance. Supply chain folk have developed all sorts of KPIs and ‘dashboards’ but it is important first of all to ensure that you are measuring the right thing. ‘Average figures can be misleading. And you must establish quantifiable objectives – for example all deliveries on time, or within a two-hour window.’
Where discipline counts
Some discipline is necessary in setting and measuring standards. There is, for instance, a natural tendency to go for the soft option and set a standard of, say, 95 per cent on time. But what if the 5 per cent that are not on time are all concentrated at certain periods – evenings or weekends, for example? That 95 per cent on-time performance may disguise a very serious problem at those times.
‘When I was in the military, I ran my supply chain in exactly the way I’ve outlined. I don’t have people working on the wrong stuff. A leader in any company must articulate what they want, but it’s not micro-management – it’s simple orders, clearly understood and a clear chain of command.’
One tendency of management in civilian enterprises that Pagonis has noticed is a tendency for top management to come up with very elaborate strategies that they then usually fail to communicate to the guys on the ground. ‘A trait of all great leaders is that they can say clearly what they want accomplished.’ Without that clear guidance from the top, the people lower down can become frustrated.
Army career spanning three decades, ending up as a three-star general in 1993 before moving into civilian supply chain. During this time, Pagonis divided his time between logistics and the infantry, ‘keeping in touch with the customer.’ (Even today, he requires all his staff to put in time in stores and DCs.)
Best known for his part in Stormin’ Norman’s Gulf War campaign in the early 1990s.
Author of ‘Moving Mountains: Lessons in leadership and logistics from the Gulf War’. It is the blockbuster of the supply chain industry and one of the few popular books on the subject.
