Failure is Not an Option: Questions and Answers with Brian Hancock
As the world's largest distributor of products to the world's largest restaurant company, Martin-Brower is under extreme pressure to deliver to McDonald's accurately, on time, every time. Inbound Logistics met with Brian Hancock, president, North America, for Martin-Brower, to discuss the unique supply chain supporting the Golden Arches.
When you enter a McDonald's, you never question whether it will have hamburgers, French fries, or anything else on the menu. It just does. Always.
That's because McDonald's has one of the most sophisticated supply chains in the quick service business. The Martin-Brower Company LLC, under the leadership of Brian Hancock, president, North America, delivers product to nearly all 15,000 McDonald's restaurants in North America.
By his own account, Hancock has had a "great" career in supply chain management. "I've been fortunate to work in very different types of supply chains," he says.
Hancock joined Martin-Brower as the president of U.S. operations in February 2011, and was promoted to his current role in April 2012. Before joining Martin-Brower, he spent six years as the vice president of supply chain for Whirlpool Corp. When Whirlpool purchased Maytag Corp. in 2006, he oversaw the consolidation of the two supply chains.
Prior to joining Whirlpool, Hancock spent nine years at Schneider National in Green Bay, Wis. He was vice president and general manager of Schneider Logistics, and held multiple roles including vice president of automotive, general manager, director of operations, and account controller. During this time, he also served as chairman of the General Motors Supply Chain Council.
Before joining Schneider, Hancock worked in various roles at Honeywell Corporation. He graduated with an accounting degree from Brigham Young University, and received an MBA from Virginia Commonwealth University. He serves on the advisory board of the Marriott School of Management at Brigham Young, and earned a CPA certification. Oh, he also speaks Portuguese.
In April 2012, Martin-Brower became the largest distributor for McDonald's worldwide—a result of its acquisition of certain assets of Keystone Foods' distribution businesses in North America and acquired interests in distribution and logistics businesses in Europe, the Middle East, and Asia Pacific from Marfrig Alimentos S.A. The acquisition involves distribution operations in the United States, England, France, Australia, New Zealand, South Korea, Bahrain, United Arab Emirates, Kuwait, and Qatar.
Prior to this acquisition, Martin-Brower was the largest distributor to McDonald's in the United States, Canada, Ireland, and Latin America. Headquartered in Rosemont, Ill., the distributor employs some 8,000 people worldwide, and operates more than 55 distribution centers around the world. More than 14,000 McDonald's restaurants in the United States count on Martin-Brower for everything they need to run their business and serve customers—from beef, to fries, to operating supplies.
Martin-Brower is a wholly-owned subsidiary of Reyes Holdings, a privately owned food and beverage distribution firm. In addition to McDonald's, Martin-Brower's operation serves companies such as Chipotle and Subway.
The Martin-Brower of today got its start in 1934 as the Brower Paper Company. In 1956, Brower merged with the Martin Paper Company, and purchased a controlling interest in the National Paper Napkin Manufacturing Company, becoming the Martin-Brower Paper Company. 1956 was a pivotal year for the company for another reason: Ray Kroc selected it to supply the paper products for his first restaurant in Des Plaines, Ill.
As McDonald's grew, so did Martin-Brower. Following a string of acquisitions and consolidations, the company changed its name to The Martin-Brower Company, dropping the word "paper" from its name to better reflect its diverse range of products and services.
In 1972, Martin-Brower was purchased by the Clorox Company. But the biggest news that year was the launch of the first customized distribution program to support the McDonald's "Total Supply" concept—in which a single distributor would supply the restaurants with frozen and dry goods, as well as paper products. This concept required Martin-Brower to operate from a McDonald's-exclusive location with McDonald's-exclusive rolling stock. The concept was launched in Baltimore.
Inbound Logistics recently met with Brian Hancock to discuss his company's business, what it's like to serve a customer as demanding as McDonald's, and other supply chain matters currently top of mind.
Q: What's the current state of the fast food restaurant industry, and how has it fared during the recent economic downturn?
A: Given current economics, consumers have limited dollars to spend on restaurant food, so they are more selective about quality and price. That bodes well for the McDonald's business model, because of its value menu. When consumers make the decision about where to eat based on value, McDonald's is where they go. As a result, McDonald's has seen a resurgence in the past five years, and our business has benefited from that.
McDonald's also does well when the economy is booming. People always like value.
Q: By all accounts, McDonald's is a demanding customer. What does it take to serve the company?
A: Our business with McDonald's is tied to its fundamental business philosophy. McDonald's founder Ray Kroc's approach to building his business was based on relationships. 'None of us is as good as all of us,' Kroc said.
This partnership philosophy helped build one of the most integrated, efficient, and innovative supply systems in the food service industry. McDonald's supplier relationships have flourished over the decades. In fact, many McDonald's suppliers operating today first started business with a handshake from Ray Kroc. Martin-Brower is one such company.
Our 'handshake' with McDonald's occurred 45 years ago. Being part of the McDonald's system means you act fairly, honestly, and always watch out for the system as a whole. The system is more important than you are.
Martin-Brower is dedicated to three things: being the premier logistics service provider for restaurant chains around the world; creating an outstanding work environment for employees; and delivering unmatched value for customers while protecting their brands. Protecting our customers' brands is the most important thing we do.
We are responsible for delivering every single item to McDonald's restaurants. We are deeply engaged with every McDonald's supplier. We maintain significant relationships with beef, chicken, bun, French fry, and other suppliers.
Our facilities provide warehousing, transportation, and logistics services to restaurant owners, with each distribution center serving 250 to 700 restaurants. Our purchasing organization works with all McDonald's suppliers, and our customer service organization works directly with the restaurants.
Our delivery drivers play a critical role in our service. We move a high volume of items to the restaurants, so drivers handle huge deliveries. Our trucks run full—and, in most cases, a delivery literally 'packs' the restaurant. If customers drive up to a McDonald's and see a tractor-trailer on the lot, however, they may not stop. So we do not deliver during breakfast and lunch. We work around those peak hours.
Also, we constantly look at how fast our trucks can get on and off a restaurant lot. We make sure we have the right delivery equipment—for example, switching from roller and stand to delivery carts that wheel directly from the truck into the restaurant.
Most restaurants get two or three deliveries a week. We deliver to each store on a schedule. Drivers call from the road, so the store can schedule its people and get ready to take delivery. We've been able to reduce the time trucks sit in the lot by 10 to 20 percent as a result of these efforts.
Q: Managing a complex supply chain for McDonald's involves many variables. What keeps you up at night?
A: Worrying about food safety and protection, and supply chain disruptions. Next to employee safety, food safety and quality is the top issue we are concerned about. We and our customers are at the forefront of implementing the 2011 FDA Food Safety Modernization Act, which requires food traceability. Food terrorism, recalls—these are real issues we have to plan for.
The McDonald's brand stands for good quality food at a value price. It's our job to protect that brand—as we do for all our customers. Toward that end, our cleanliness, standard operating procedures, and food-handling processes have to be rigorous. McDonald's audits us every day. We might receive a phone call from its auditors 30 minutes before they show up at a facility. We can't let anything slip—even for one day.
Supply disruption is one of the biggest enemies we fight today. Preventing or managing disruption requires far more collaboration with suppliers and customers than ever before. If a problem is recurring, you can't call a customer for the first time in six months to tell them it's happening.
Contingency planning and response are critical. I've worked for many different supply chains, and in my opinion, McDonald's is among the best-prepared for contingencies.
Communities depend on McDonald's to always be up and running. That's their mission: to be the first business up after a disaster. So during the summer, for example, we plan our business around hurricanes and tornadoes. I have contact information for every employee; I know exactly what the emergency procedures are. We even have a portable restaurant that we can drive to a site and start serving the basics—burgers, fries, bottled water.
McDonald's is the most collaborative supply chain I've worked in. That makes it the most successful supply chain because every partner has to make money to make sure the system is always fair. In some supply chains, each partner is out for themselves—they don't care if others don't make money.
We turn our inventory every four days. We can move that fast because people trust each other. But as complexity and speed increase, risk rises. Because we move so fast, our contingency plans have to be that much better. Failure happens all over the world, every day. The companies with the best contingency plans and flexibility are winning. If Martin-Brower had a problem buying beef, not a single McDonald's customer in the world would know.
In today's world, companies cannot do business without being close to their customers. The best supply chain companies are extremely collaborative with both suppliers and customers. They have to be—there's not enough waste in the system to operate any other way. Working capital is managed much more tightly. In the past, when inventory sat around, companies could get away with not collaborating closely and covering up problems. They can't do that today.
No one ever questions whether McDonald's will have hamburgers. Failure is not an option. This isn't a space where you get to miss.
Q: Going forward, what other issues do you see shaping your business—and supply chains?
A: Sustainability is one big issue. Sustainable supply chains, fuel usage—we need to address and find solutions to these issues. Energy independence is possible if we stay the course and figure out how to use energy more effectively. We need to apply 'lean' thinking to the issue—we can't waste any energy, whether it's nuclear, fossil, or natural gas. We've got to find a way to use them all that allows supply chains to be more sustainable.
Sustainability is a priority for McDonald's. The company's goal is zero waste coming out of its restaurants. That means zero waste coming out of our facilities. How do we accomplish that? We are working on not only recycling, but also food loss, proper waste-management assurance, and packaging redesign. How do we find tractors that use alternative fuels, but have enough torque to haul a food truck? We spend a great deal of time grappling with these issues.
The McDonald's sustainability team is working on how to improve fleet miles per gallon, be more efficient in pick-pack-load inside facilities, and manage fuel usage around refrigerated equipment. Sustainability is critical to all our customers, and our progress in this area enhances their brands.
Q: If you had to quickly sum up supply chain management today, what would you say?
A: The supply chain industry is a dynamic business. It moves so fast, and offers so much career opportunity. I often say to people I work with, 'This is the slowest day for the rest of your life.'