[Transcript] Leveraged Supply Chains – Episode 3: Dustin Rutledge (Major Tool & Machine)

Andrew Stroup (00:06)
Welcome to Leveraged Supply Chains, the show where modern operators protect margin and out execute with data-driven processes. I'm Andrew Stroop, and today we're with Dustin Rutledge, supplier quality engineer at Major Tool and Machine, part of the PercentMAC family. Major Tool builds large format, close tolerance parts for some of the most demanding programs out there. Today isn't a software story. It's a manufacturing one. How supplier quality  and procurement coordination actually work at this scale and where delays and documentation gaps get expensive fast. We first met Dustin and his team during their evaluation of ways to modernize supply communication and quality workflows. We'll touch on that briefly, but the focus is Dustin's playbook. What's hard, what's working and what he'd do next. Dustin, welcome to the podcast. Give us the 30 second overview of major tool and your role.

Dustin Rutledge (00:59)
Yeah, thanks for having me, Andrew. My name is Dustin Rutledge and I'm a supplier quality engineer here at Major Tool Machine. Major is a custom manufacturer and we're part of a family of precision machining and fabrication companies that we operate under the Precinmac umbrella. is comprised of eight diverse companies that are specialized in manufacturing medium and high complexity parts. So I spent my early years in the army before going to school for engineering. Started my engineering career at Major Tool in 2015 as an intern, then a project engineer. left Major in 2018 to work for Raytheon as a senior mechanical engineer. During my time there, I found myself managing all of our outside supply base during a transition period for the company. That experience really got me involved in supply chain and with that new experience, I returned to Major in 2022 in my current role.

Andrew Stroup (01:43)
I love that. Well, first off, thank you for your service. it's quite the journey. I'm very curious, what do you think was one of the biggest insights you've learned supplier quality that most people outside the role miss?

Dustin Rutledge (01:54)
Yeah, I think coming from a bit of an engineering background, really getting suppliers involved in the upfront planning is one of really critical aspects of it. It really drives their involvement and kind of ownership in the process. So I would say really getting involved with your supply base and upfront planning portions before you're actually asking them to, produce conforming parts.

Andrew Stroup (02:11)
On the supplier quality front, any recent near misses or big failures you're willing to share? What changed because of it?

Dustin Rutledge (02:19)
Yeah, we actually recently had a PO that was issued to the contact that was in our ERP system as a contact record When the PO wasn't acknowledged within the established timeframes within leverage There was a notification that was sent to the buyer to intervene So this was really a big gap that we had in our process before adopting leverage So we really had no mechanism in place to to track or notify anyone if know, appeal wasn't acknowledged. So having that mechanism in place really lets us be more proactive instead of reactive when it comes to identifying and addressing those issues.

Andrew Stroup (02:51)
I would love for you to like paint a recent program, like part count tolerances, documentation loads, supplier mix, like where, where did the wheels wobble most as you thought about. Trying to tackle some of these issues with new tooling and approaches and processes on the supplier.

Dustin Rutledge (03:05)
Yeah, so mean, one of the big drivers between seeking out a platform like leverage was really to automate a lot of the manual activities that the buyers were spending the bulk of their time on. I mentioned the near miss with the acknowledgments. So acknowledgments and follow ups or something that were entirely manual. And at times they were very reactive since we implemented leverage. We can set automated follow ups. We can track the acknowledgments for the entire team from one user interface. So it's really streamlined an entire process that was entirely manual and managed by multiple different people and everybody's got their own approach when it comes to managing those dates and that data.

Andrew Stroup (03:40)
I know that you have no small count of suppliers and subsequently amount of POs that you're issuing, which can make it a very nightmare in many categories. know, amongst those different areas of where it created issues and you're looking to solve them with something like leverage, what created the most drag for you or the buyers? Whether it's confirmations, promise date, accuracy, price changes, dot completeness. I'm curious on how you prioritize those, also roughly how many even emails or PDFs on a busy week were coming through in that current, that before state.

Dustin Rutledge (04:14)
Yeah, I mean, to give you kind of an idea, I mean, in a busy week, I could see one buyer issuing over a hundred purchase orders. And when we look at all of the data that's included in that one purchase order, so we've got multiple dates, prices, all of these things that have to be manually input into the ERP by the buyer. So leverage again, really fills the gap when it comes to data management. So this is something that really consumed a significant portion of the buyer's time. Every change was manually entered into the ERP. So now leverage provides a single location for all the reviews. So suppliers are able to propose changes that are written directly back to the ERP, removing all of that manual intervention and really freeing up the buyers to focus on the more technical aspects.

Andrew Stroup (04:54)
Absolutely, I love hearing that. Well, let's talk about in that transition then that evaluation or down select process. When you were evaluating modernization options, what were your top criteria, whether it be security, audit, integration, usability by supplier, speed to value? Curious your rigor and rack and stack of that down select.

Dustin Rutledge (05:17)
So I'd say our primary goal when approaching the modernization effort was to really utilize the technology that was available to streamline and automate an otherwise manual PO process. So as we got further down the evaluation process, things like ERP compatibility, user interface, and the ability to customize became really important criteria for us. And Leverage really filled a lot of those gaps and have been great to work with, especially when it comes to the customization portion.

Andrew Stroup (05:43)
100%. I'm thankful for our partnership so far and definitely right on being able to iterate quickly with you and the team. When you were doing the down select and you're kind of talking about this a little bit on the scorecard and trials, success criteria, customization of those pieces, any surprising deal breakers you found while testing or in the evaluation process?

Dustin Rutledge (06:03)
Yeah, I mean, there were definitely some very different aspects of the platforms that we looked at. So the down-select process really boiled down to costs, value and functionality, and then compatibility with the type of work that we do. So surprisingly, the pricing models from the various PO management platforms varied significantly. So the worst of which was one that was based on total spend, regardless of the quantity of data that was being managed. The leverage team came out on top and all the categories that we were measuring by, again, have been great to work with. Pricing model is very reasonable for what's being accomplished.

Andrew Stroup (06:38)
Yeah, it's great. Well, you know, the inverse of that in the down select obviously was, you know, finding a tooling that would take things off the plate on this workflow and automate it. But obviously that as we've learned in supply chain, that's not, it's not a silver bullet. And so I'm curious where you still require the human loop review in that process of the tooling that ultimately you put in place.

Dustin Rutledge (07:01)
the human error is always going to be in the loop. So any changes that are proposed by the suppliers obviously need to be evaluated for acceptance. So the human intervention can also be required when automated messages aren't being responded to. So like we mentioned earlier, when contact information changes and maybe hasn't been communicated to us, so this may require the buyer to reach out directly to resolve whatever the issue might be.

Andrew Stroup (07:23)
Yeah, totally. Well, that's great. I would love to talk a little bit more now post implementation. moving down the pipeline of you've made this selection, we've got things implemented and now we're looking at impact. And I know that we spent a lot of time upfront with you calculating what the impact was. The internal model that when you built it out and we helped validate there shows around 16 hours a week per buyer, which is let's call it like 180,000 a year across your buyer team saved by implementing a tool like this. Curious which tasks disappeared first to drive

Dustin Rutledge (07:58)
really a lot of the data entry is what immediate tasks kind of disappeared really the email communication would have to happen between the buyer and the supplier. Then we would have to go into the ERP, update the system, re-acknowledge or reissue the purchase order with a change. So all of that data entry really consumed a ton of time. when we look at that extrapolated out across the volume of POs that we're cutting, it really does have a significant impact.

Andrew Stroup (08:20)
on a similar front and a different metric of impact for an on-time delivery What moved first and by how much you know my notes show about you 70,000 a year just an avoided late-line impact curious your thoughts about how you guys framed it

Dustin Rutledge (08:36)
So again, that's one of them that's a little bit difficult to quantify, but we have seen a measurable increase in on time delivery. I think we're 1.5 % better than we were last year to this point year to date.

Andrew Stroup (08:47)
That's great. And then on the cost variance front and margin leakage, I had in my notes here that that's combined a mill and half a year of avoiding these specific problems or issues upfront by having this process in place and more automated and systematically structured. Any concrete examples of a discrepancy you caught early on that  helped drive towards those types of savings and avoidance.

Dustin Rutledge (09:13)
Yeah. So I mean, again, back to the acknowledgement portion of it. I mean, when we're issuing a purchase order and we don't know that it's been received or not, that component can be going into a deliverable component that's multiple millions of dollars. So a small thing being missed could stop an assembly from going out the door. So I would say that that variance being able to catch those things upfront would definitely help stop that.

Andrew Stroup (09:35)
No, absolutely. Well, look, have in my notes here that a supplier praised the low friction email first approach and said they would have declined if it required another login. And so why do you think that reaction is so common among suppliers that you've interfaced with both small and large?

Dustin Rutledge (09:54)
Yeah, I mean, just like our suppliers, we're not their only customers. So I would imagine that they have lots of people that are asking them to use different interfaces like this. And it was really one of the big things in the down select process was we didn't want anyone to have to log into a new interface. So really building all of that functionality into the emails where there's no, there's no real reason for resistance. So you just click a button, it takes you to the page. You can accept everything with no changes or you can propose those changes. So we've really not seen much pushback due to that particular interaction style.

Andrew Stroup (10:24)
now that we've talked about the fact that, leverage has been in place, there is definitely impact.  Any example where these extra hours have changed and shifted that result in positive outcomes beyond even just the automation front.

Dustin Rutledge (10:36)
Yeah, I mean, we've actually been able to take way more of a strategic approach to sourcing when it comes to, you know, identifying single source ⁓ suppliers, a dual sourcing where we can, but allowing those buyers to have the time to really competitively bid things, not just going to incumbents because that's what we used last time, but really competitively bidding to the point to where we can offer the best value to our customers.

Andrew Stroup (10:59)
I love that specific thread because I think especially in today's market, the ability to have the luxury or latitude to have optionality in the pricing dynamics is spot on. transitioning away from a little bit more about downslip and tooling and those functions, I would love to, I think, dive a little bit more about your role and you and your hot takes on some things. In the role of quality and how you look at the world at major tool, what's the hardest part of your role in a complex high mix environment like major tool?

Dustin Rutledge (11:35)
would say the variety of requirements that we have for all of our different programs. So Major Tool is a custom manufacturer, so we do a fairly high mix of components across various industries, everything from nuclear to aerospace to defense. really being able to get your arms around all of the requirements for those industries and understand how they apply to the supply chain.

Andrew Stroup (11:54)
There's definitely no probably small list of unique requirements that come up to satisfy and get things across the finish line. If you had a magic wand for one signal you wish suppliers would always send, what is it and how would it change your day?

Dustin Rutledge (12:10)
Upfront communication. So I know even us as suppliers, we always think that we have time to recover when there are issues, but communicating those issues, regardless if there is time to recover or not, is something that I wish all our suppliers would do. That way no one's caught off guard at the end of the day if we're not successful.

Andrew Stroup (12:28)
Stepping even further back, what would you tell day one Dustin about managing suppliers, documentation, cross-functional alignment, quality?

Dustin Rutledge (12:38)
I'm looking at the state of technology now, would say definitely adopting more of the automated processes to manage these things. So the more manual tasks we have that we're spending time on, the more opportunity there is for error. So really being able to streamline that is something.

Andrew Stroup (12:53)
Absolutely, definitely being able to do a little planning upfront can go a significant impact downstream. One KPI to baseline this quarter for any manufacturer starting this journey and one pitfall to avoid and roll out.

Dustin Rutledge (13:06)
one KPI that I really like to track that I find a ton of value in is the amount of nonconformances per the PO line issued to a supplier. So that really gives me an idea of the amount of engagement that myself and my buyers are going to have to have with the supplier on a kind of overall.

Andrew Stroup (13:23)
so lightning round before we wrap up, So overrated versus underrated supplier portals.

Dustin Rutledge (13:29)
I think they're underrated. I think the supplier portals really offer a ton of opportunity for suppliers to communicate things, pricing changes, all these, and automatically have all that written back to the ERP. So getting supplier adoption for the portal, I think, strengthens the relationship.

Andrew Stroup (13:45)
No, absolutely. All right. Fair or PPAP rigor.

Dustin Rutledge (13:49)
Definitely PPAP and First Article, I think are great processes. It really solidifies the manufacturing process before you go into full production. So it helps eliminate errors.

Andrew Stroup (13:58)
Perfect single source versus multi source.

Dustin Rutledge (14:00)
Mode always multi-source when you can.

Andrew Stroup (14:02)
Yeah, domestic versus global sourcing.

Dustin Rutledge (14:04)
Definitely domestic.

Andrew Stroup (14:05)
One metric you wish everyone tracked religiously besides on time delivery.

Dustin Rutledge (14:10)
⁓ So kind of reference that same one not conformance is per PO line item. So from a quality perspective and supply chain, that's been a really valuable

Andrew Stroup (14:19)
Amazing. Well, that's a wrap on leveraged supply chain. Huge thanks to Dustin Rutledge and the major tool and machine team for opening the hood on supplier quality and procurement coordination at scale across the Precinmac family. If this was useful, tap subscribe and check out our other episodes with supply chain leaders across the industrial world. I'm Andrew Stroop. See you next time.