Chad Zollman of TGW Logistics shares major milestones of his career, and the challenge of making business decisions as markets regularly shift.

 

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Danny:

– Well hello, and welcome to today’s IndustrialSage Executive Series. I am joined by Chad Zollman who is the chief sales officer at TGW Logistics. Chad, thank you so much for joining me today on the Executive Series.

Chad:

– Thank you, appreciate it.

Danny:

– I am excited to get into our conversation. So we were just talking before; you are in Grand Rapids, Michigan, and it’s very warm up there right now.

Chad:

– Yes, absolutely. It’s swimsuit weather for sure.

Danny:

– Excellent. Before we get into the first part which I love is getting into learning more about you personally, but for those who aren’t familiar with TGW, can you give me a little high-level of who you guys are and what you do?

Chad:

– Sure, so TGW is a global systems integrator for our customers. We focus on our core industries which would be fashion and apparel, grocery, and industrial and consumer goods. We actually design, implement, maintain highly automated fulfillment centers inside for various customers in various regions. And that’s not only in North America; like I said, we’re global. So what’s unique from a TGW standpoint, I think is we have manufacturing that sits in Austria and Germany, so we have, on top of your traditional conveyor, your automated storage and retrieval systems that we manufacture, we also have a robotics company as well. Palletizing, depalletizing, automated picking solutions, et cetera, all within our realm and sphere that we offer to our customers.

Danny:

– Excellent, well it sounds like quite a nice footprint. So the manufacturing and the integration side, you bring engineered solutions, bringing all that together.

Chad:

– That’s right.

Danny:

– Excellent. We’ll get more into that because I think there’s a little bit of interesting stuff going on with supply chain right now, and as we get into fulfillment and ecomm and retail and all these things. I’m suspecting you’ve been affected by this a little bit. I’m being a little facetious, obviously.

Chad:

– Right.

Danny:

– Let’s jump into you a little bit here. How did you start your journey? How did you get into this space?

Chad:

– Clearly through my college courses because I have an economics degree, but actually I came in through a family friend. He got me into the automotive supply chain area, so it was in the 3PL industry. I actually started in one of the initial lead logistics operations for General Motors in working for Ryder. That was more transportation-based, so really optimized transportation design and execution. Then that particular solution morphed into just-in-time delivery, and that’s where the warehousing portion came in. Really started working on, from a design perspective, warehouse layouts and effective solutions for just-in-time delivery, and then made my way through the 3PL industry.

I worked for another organization, CEVA, for about 19 years or almost 20 years in various capacities, but eventually that led me to where I am today with TGW because the more the supply chain industry evolved, while the 3PLs were providing excellent solutions and there’s a lot of benefit to operations excellence and lean practices, we had more and more customers asking for ways to reduce their headcount, so really looking into automation. And the more my team kept working on solutions for these large customers, the more we saw the need, the want, the desire to understand more about automation. That really led to the interest, from my standpoint, into the automation. TGW reached out to me, so it was perfect timing; worked out really well.

Danny:

– Excellent. When did you start at TGW?

Chad:

– Four years ago.

Danny:

– Okay. Alright, excellent, so 2018. I think I can do math. It’s one of the things I forgot with the pandemic. Alright, so I’m curious. You said economics degree, and then now you found yourself going into supply chain and operations excellence and all. You said you came in through a friend. I’m just curious; initially what did that look like for you? What specifically were you doing in that job, and then at what point were you like, hey, I kind of like this?

Chad:

– I started outside of an internship. I actually started managing in a warehouse, first shift operation for container sortation, so returnable containers for the automotive assembly plants. After about a year of that, I worked my way into the design team, so that was more transportation optimization, so essentially taking all the suppliers that you normally work with and building out your daily milk runs, your weekly milk runs, and then working through our team who at the time actually provided the transportation services as well as third parties who did truckload provision, longer hauls, and then the assembly plants themselves to coordinate the activities from a parts standpoint, inventory standpoint, et cetera.

So it really started, honestly, purely on the transportation side. And that evolved from a single plant to multiple plants and looking at synergies, et cetera. It was an interesting start, and the hook for me was just the logic. It just made a lot of sense, the concepts that the automotive industry was trying to apply, and really they were the frontrunners, I think, in the supply chain and really that lead logistics provision work. Being able to see its impact on the plants themselves to transportation budget, quite frankly, and then as it worked its way into more of the just-in-time delivery into warehousing solutions, you could just really see the benefit. You could really understand it. It just made a lot of sense, and I always enjoyed it.

Honestly when I moved away from Ryder into CEVA, it was more on the sales side initially and design, but I got to see more and more customers. Suddenly you see similar problems across customers, across industries, and every problem was new, but at the same time you had the confidence to really work with a customer to solve it, and I think that was the hook. You felt that you brought value to the table, and you felt like there was a high amount of demand for what you were providing. I really enjoyed that aspect.

Danny:

– That’s awesome, yeah. That’s an interesting transition over from more operationally, engineering, over to sales. What did that look like in terms of being approached; hey, we think this would be a good opportunity for you to sell this? Well wait; I don’t know. What was that for you?

Chad:

– My initial transition from Ryder to, at the time it was TNT Logistics but eventually made its way over to CEVA that’s known today was just on the design side. Then a few years in after leading their design team, I was asked to commit to the dark side and move into sales.

Danny:

– You said it, not me.

Chad:

– Honestly, it’s an easy transition when you talk about the detail and the complexity of the designs because it is primarily engineering-driven and solution-driven. As a participant in that sales process, it was just natural, really, moving from an engineering leadership standpoint over into a sales position. It was an easy transition. I’m a competitor at heart. I love it, so getting into the sales side was fantastic for me. It was perfect and aligned with exactly where I wanted to be at the time, which is great.

Danny:

– No, that’s awesome. I love it. You mentioned, it’s such a technical sale. It’s very consultative, and it makes sense. You mentioned before a little bit really bringing value to customers. I think that’s where, obviously people talk about the dark side, sales, whatever. I don’t want to be the sales guy that’s always pushing this or that or whatever. But the reality of it is, when you really do have a solution that fits and you do have a customer that you know that you can really help solve their challenge, that is fantastic. Where it gets difficult is when that customer doesn’t know they have that problem that needs to be solved. That can be a little challenging.

Chad:

– Absolutely, absolutely. It sounds like you’ve been in sales.

Danny:

– Never, I’ve never done sales, ever. I do love sales. I think it’s a lot of fun, for those exact reasons you brought up. When you can solve a real, tangible problem for a customer or a client, that gets me excited when they say, wow, this is awesome. Look at this; this is great.

Chad:

– It does, and realistically in our industry right now these are large numbers. We’re not talking small investments. We’re talking material investments that in some instances are really career-changing for individuals making those decisions, and they don’t take them lightly. From our standpoint when you talk about sales cycles, nine months a year, in some cases well beyond that, both parties are making a big commitment to each other. I think you said it; it’s a mutual victory at that point. When you see the value, and the customer sees the value, and you’re really able to reach an agreement at the end of the day, everyone’s happy about it. You’re not really selling at that point. You want to be an advocate for change, and that’s really what the team is really happy about. What I enjoy is really working through just, I’m selling something to someone. It’s a solution that’ll make their business better, that’ll improve overall their company’s health, improve their personal careers as well. I think it’s fantastic.

Danny:

– Absolutely, no, I think it’s exciting. I love it. Over your career, tell me about somebody who’s had a big impact. I know there’s probably a lot. When I ask, most people are like, oh, there’s so many. Tell me about one that has had a big impact and why.

Chad:

– Sure, and we talked a little bit about it beforehand. I think in preparation I had seven names ready to go, past mom and dad and past other people. But in all honesty from a true career standpoint, I think the one person who is absolutely pivotal is Dick Jennings. He was the family friend that brought me into the 3PL industry and into supply chain right away. He really just had a unique perspective that resonated with me. I think his background was psychology, to be honest with you, and he made his way into operations and led really dynamic and fun teams.

I saw what he could do, not only from a building standpoint because he brought in great people for their different roles and different functional areas, but just how he built that team dynamic and how he handled them as a leader and how he was revered by everybody as a leader really shaped the way of what I thought a leader should be because you have that mindset when you’re 21 years old or whatever you are at the time, and you say, boy, I want to be like that. I want to be someone that inspires people. And yet he can absolutely relate to everybody on the team. He was fantastic. He really set me on the right path to where I’m at today. Outside of that I’d probably be working for a bank somewhere. I’m really blessed and grateful. He really had a huge impact on my direction for my career, and then obviously personally its impact from there.

Danny:

– That’s awesome. You mentioned leadership was a big aspect of that. What are some of those lessons that you’ve learned from him, from Dick, from what, maybe 5, 10 years ago? You look very young.

Chad:

– You are in sales. It’s official now; you are officially in sales. Well done; well done.

Danny:

– Well I come by it honestly. What are some of those learnings that you apply today?

Chad:

– I think with Dick, he knew how to balance humor with the seriousness of the job. Specifically in the automotive industry, minutes equal dollars. There’s penalties associated with that when you’re running your business. He understood how to take the gravity of the business and balance that with the good atmosphere for people to thrive. That really, like I said, it really resonated with me on how he handled that. He knew the time to turn up a little bit of the heat, and he knew the time when to let people blow off some steam. I think just recognizing that at a young age for me, I said this is an environment where I would prosper. Having seen different environments now throughout my career, I really respected that about him and what he could do. As much as I try to do it, I’m sure I can’t exactly replicate that, but I think it’s important, just that balance of humor and life with the gravity of the business. We’re out selling deals at over $100 million. That’s a lot for people to be a part of. It’s pressure, regardless, when you’re in sales. And it’s pressure for our customers. But balancing the human side of it, the relationships, I think is really important, and I really drew from that. I still think about it regularly.

Danny:

– That’s awesome; I love it. It makes a lot of sense. Obviously a ton of stress involved with these decisions because, as you mentioned, these could alter careers and alter the massive trajectory of businesses. Let’s talk about that a little bit right now as far as challenges that are going on in the industry. Obviously everything has been completely shaken up over the last two years. There was a lot of movement and a lot of activity moving into automation going into these solutions. You mentioned you guys have got a robotics division. A lot of this was hot beforehand. Ecomm, fulfillment was hot beforehand, and then the pandemic happened, and it was like somebody just threw a can of gasoline on the fire. What are some of these impacts that you’re seeing, that you guys have experienced over the last two years? What’s your experience like?

Chad:

– From our standpoint, like you said, the pandemic’s really been an accelerant. We have just seen the projections from a 10-year basis shrink down to two and three years. Everyone’s scrambling to make decisions and accommodate, so I think initially through the pandemic we really saw that push to say, what can we do? If you think about it from our standpoint, again I mentioned earlier sales cycles can be nine months plus, and then the actual implementation—we call realization here—but the realization cycle can be 18 months. There’s a significant lead time for those changes to take place. Really educating customers as much as possible, working with them as much as possible to better understand their business because we’re forecasting for five years out, four years out, whatever it may be for future capacity and demands.

Our customers were scrambling to come up with models that suggested what either through the pandemic and post-pandemic things would look like. That’s really been the challenge more recently, I would say. So that’s probably the first two years. More recently I would say it’s, the problems still exist, period, but it’s more on the supply chain side. Will I see that continued volume through my warehouses and what I have in my distribution nodes, and will the demand be there for the customers? It’s really interesting just to see how it’s evolved, even by Covid standards, over the past two years and how the customers are trying to balance that out with future projections because what we’re dealing with, honestly, are strategic decisions that are being made. It’s made it very difficult and very difficult to predict.

Danny:

– Yeah, it’s almost like trying to solve a Rubik’s Cube because it seems interesting looking at customer behavior. I think you said grocery, retail, fashion, apparel. Those are big industries. Looking at consumer behavior and how that, obviously that’s going to come downstream to affect you guys. There was a report that I heard—there’s a local consumer expert; I think he’s nationally syndicated, but Clark Howard, consumer advocate looking for value and whatnot. When you’re looking at all the inflation that’s going on right now, people are looking for cheaper solutions and whatnot, and one of the things that he brought in which I thought was interesting was that he was pointing out that certain big-box, online retailers that people are looking at from a pricing standpoint, they’re saying actually we’re paying a little bit more of a premium doing that, and he started to see that people are starting to go back into stores to shop there versus saying, hey, I’m going to have delivery.

This is something that I heard maybe a week or so ago, and I thought, oh my gosh, this is crazy because we were—this whole shift of online delivery, everything, and you’re seeing all the retailers, we’ve got our curbside; we’ve got this. Then, okay, no actually forget that. Now people are going to go back into the store. Let’s talk about micro-fulfillment for a minute, like oh, my gosh. Those challenges changing, and then you mentioned the supply chain piece. I imagine that you guys have not been immune from that operationally from your own standpoint, saying just raw materials, getting that in to manufacture. I’m sure if you’re like anybody else that we’ve talked to, orders coming in, companies saying we need to put these solutions in now. You’re like, well I’m waiting on all this steel or whatever to come in. It’s craziness as you’ve had that experience.

Chad:

– Yeah, absolutely. We’re not immune from our side. I think our team’s done a fantastic job really of trying to plan out, really for those long lead time components and those components that are critical to our success and what we’re trying to accomplish. We’ve been very fortunate; I will say that, very fortunate. But it’s an hourly, daily job. The best we can do is keep our customers informed. There’s no doubt when you say supply chain today, everybody knows what that means versus when I started my career. No one knew what supply chain really meant in logistics. But now it’s so common to our nomenclature and what we’re saying and what we’re doing on a daily basis. We hear it in the news about everything from what we buy to how it impacts our business. Again, it’s just dealing with the challenges. It’s head-on, making as many plans as you can, working your partnerships as strongly as possible so that you can make your way through and setting the right expectations. I think that’s clear.

From our standpoint I feel like we’re a little more predictable, probably than our customers have it. Like you said, there’s so many options out there, and it’s so difficult to say this is what our business will look like in two years, three years, five years. I spoke to a customer recently, and they had projections from 2019 that said by 2022, it’s an absolute decision point. After reevaluating over the last six months, that decision point’s been pushed out five, six years based on the projections. So it’s extremely dynamic right now, honestly, and I think everybody is just trying to level-set. That’s what I do appreciate. I think in conversations with customers, with our suppliers, with our trading partners, we’re having very open dialog about what timelines look like. I think that’s been the benefit across all of this, very open, honest communication, probably.

Danny:

– Yeah, that makes a lot of sense. I think that was a lot of challenge that was happening, a lot of education that was going on, too. Earlier on you were mentioning that the whole idea, supply chain and logistics, that people didn’t really necessarily know exactly what that meant or what were the nuances. Now there are supply chain experts everywhere. I’m sure if you had Thanksgiving, you ran into a lot of supply chain experts as well. Thanksgiving, the holidays, whatnot. One of the things that I found fascinating was that even on the C-suite, I was hearing stories that at the height of the pandemic that there was a lot of confusion, even internally, like why can’t we move this? Why do we have all these hold-ups? It was all this internal education, like well, there is this thing called supply chain. We can’t get our things in so we can make the things so we can ship them out. It was this, what? One of the things that I’m curious about is where do you think the industry is going, forward learning from what we’re still kind of going through, very much so, and what we’ve learned?

Chad:

– Sure, I still believe in the projections are there, in the fully-automated dark warehouse. I still think there’s a place for that, and that’s absolutely in our future, sooner than we think just based on the breakneck speed with which technology’s changing and improving. I think really the impediment to that right now is that predictability factor and really seeing what the pandemic will bring. Is this mid-term, long-term? I think there’s a hesitation, probably, in the marketplace in getting there right now. But at the end of the day I think the way technology’s improving, the way we are recognizing data as an absolute tool to run business, the way we are becoming more and more comfortable with automation within just various warehouses and warehousing applications, it’s absolutely where we’re headed.

I think the industry as a whole is going to head right where we think it’s going to with the growth rates. I think there just might be a little bit of hesitation to understand, okay, how do we invest? How do we get there, and how can we make sure that technology is reliable enough and flexible enough for our needs? Hopefully Covid will be a little bit of a blip, and we’ll have some more consistency post-Covid with regards to consumer behavior and our supply chains, et cetera. But it depends on who you listen to; this could last many, many years.

Danny:

– Yeah, exactly. Who knows, right? One thing you mentioned, obviously predictability. Earlier in the conversation you were talking about when you were specifically at GM and with Ryder. You were talking about just-in-time at that point. We get into a little bit of lean manufacturing and whatnot. Are you seeing a–well obviously everyone has had a pull-back in that, naturally, because if you don’t have your things, okay, then you’re seeing massive disruption there. But going forward, do you think that there’s maybe going to be some rethinking on that? That maybe, have we gone a little too far? Is there maybe a little bit of a pull-back? I’m curious.

Chad:

– I think the root of it—we talk about this quite a bit in the impact to our business. At the core of the issue is the labor market and the scarcity. Unemployment levels, lower than pre-pandemic periods. The aging workforce is not changing. It’s difficult to find people for peak. It’s difficult to find them for daily operations. I usually have conversations with our customers, prospective and existing. I ask them, how are you, related to the overall staffing? The numbers come back between 80 and 90%, so if you figure businesses on average are only staffed to 85% of where they need to be—and this is just in their distribution nodes. This is just in their warehouses. That labor is in demand. The need for automation just grows, so I see the need in demand to be there absolutely 100% because I don’t see the labor market and the labor pool changing anytime soon.

Emigration is down. You look at the aging workforce, you look at the jobs available to everybody right now, it’s a ridiculous amount of the great resignation with 40-some percent of the workforce turning over. People are looking; they’re seeing different options, and even through peak season, you see the signs going up offering 20, 30, 40% premiums for these jobs. I think that’s going to be the driving factor and will continue to be the driving factor. Yes, there may be some hesitance to say, my supply chain costs are greatly increased because of the scarcity of drivers because of the scarcity of ocean containers because the supply chains are being impeded. But at the end of the day I think the demand will continue to be there in some way, shape, or form, and the warehouses just aren’t staffed enough to support that.

Danny:

– Yeah, absolutely. I’m curious relative to your peers. What are you guys doing to stay ahead, sharpen that axe, if you will?

Chad:

– Yeah, I think the robotics company was purchased quite a few years ago, and I think utilizing them as an asset more and more in our solutions has been very advantageous for us. We explore strategic partnerships, technology changing so fast. Our core is in manufacturing. What we produce today is absolutely our strength, but we also recognize we have to continue to look in the marketplace. We have to continue to look with other trading partners to see what’s out there, AMRs, for example, other things. From our perspective it’s keeping your eye on innovation of what you have, but also recognizing that we have a core competence and maybe we can partner with others in the industry.

I think more tactically what we’re doing, honestly, in North America I’ll use some examples, and then we have our own apprentice program that we’re utilizing to develop and retain talent. I think that’s really important. Globally we have our own training academy, again talking about developing leaders inside the organization and our employees overall. It’s really about that retention and what we’re trying to do to ensure that we have the right baseline for future growth. We talk about, the sky’s the limit in the material handling industry. The projections long-term are extremely high. For us, we have to continue to retain talent to stay ahead of our competition. We have to keep those folks who have experience inside our ranks and develop the individuals to be able to support that growth in the future. That foundation is clearly important for our success, and I’d stack that up as a key component to our ability to compete against anybody in addition to any other technology advancement, et cetera. I think that people are going to be one of the most important factors.

Danny:

– Absolutely, I think you’re 100% right. I think you’re seeing a lot of companies that are struggling with that just across the board. You mentioned the great resignation there earlier, a lot of people just shifting. There’s a lot of things going on right now, but I love how you said you have an apprenticeship program you’ve got going on, and then also global training centers. I think that’s absolutely the key to help keep people engaged and to continue, help them to continuously grow and be able to have that advancement. I think that’s fantastic. I’m going to pivot real quick as we’re starting to wrap a little bit. I’m curious; are you a book reader? Do you do any book reading?

Chad:

– I do; I do read books, absolutely.

Danny:

– Okay, that is good. I’m going to be clear: book reading versus audio, podcast listening.

Chad:

– Both, it’s perfect 50/50. I spend hours a day on IndustrialSage.

Danny:

– That’s the right answer, perfect. Alright, so we’ll move on. No. I’m curious; we got a top book that you’re reading right now, or listening to?

Chad:

– Sure, yeah, literally just wrapping it up is The Power of Stay Interviews. When we talk about retention of our employees and what we’re doing, we’re really looking at that as an executive team and what it means to really work with our employees on a regular basis to understand how they are personally, what their opinions are of the industry, of the organization, and their needs. Really, that’s what it’s about right now. That’s the most recent book I have on my nightstand.

Danny:

– That’s cool; so you said The Power of Staying?

Chad:

– Yep, I think I wrote it down here. It’s The Power of Stay Interviews for Engagement and Retention.

Danny:

– Oh, awesome. I haven’t heard of that, and there’s five people I’m going to send that to right now.

Chad:

– The author is Richard Finnegan, if you need it.

Danny:

– Oh, very cool, awesome. Alright, so since we talked about a podcast, or audio, what’s your number one podcast? Outside of IndustrialSage, I know.

Chad:

– Listen, I am all over the map, honestly. I am all over the map. Mostly sports, I would say; that’s more for me personally.

Danny:

– That’s perfect. What are the sports?

Chad:

– Everything, I mean everything. Right now college basketball, NFL that just wrapped up, college football. I’ll listen to pretty much anything that I can get my hands on. I can’t name one specifically that I would say is my go-to. I just plug in and go.

Danny:

– If you’re looking for an apology for the Georgia-Michigan game, you’re not going to get one here. Sorry, I’m just—

Chad:

– You’re breaking up.

Danny:

– What, you can’t hear—? Anyways, that’s awesome. And last question, just curious, as we wrap on this. Top hobby when you’re not solving the world’s problems, what’s your top hobby?

Chad:

– Outside of my three kids, I love to fish. I love to be up at our lake house. It’s awesome; just love to be outdoors, and I personally love to fish. I get out there and relax. I didn’t say catch; I just said fish.

Danny:

– That’s a good distinction.

Chad:

– Absolutely, so just to sit out on the water and relax and enjoy, unwind, is my number one. I absolutely love it.

Danny:

– That’s awesome; I love that too. Yes, I enjoy fishing. I’m not very good at catching.

Chad:

– It’s okay; you have good company here.

Danny:

– Awesome, well Chad listen, I have really enjoyed our conversation and learning more about you and learning more about TGW, what you guys do. Thank you so much for coming on to the show here. If anyone wants to learn more about what you guys do, I’ve got the website here, tgw-group.com. Yeah, I encourage anybody that wants to learn more to go there.

Chad:

– Absolutely, give us a call. Thank you for having me. I really appreciate it. This was great.

Danny:

– No, this was awesome. I enjoyed it as well. Thanks for sharing some of your insights with me and our audience.

Chad:

– Thank you.

Danny:

– Alright, well that wraps up today’s IndustrialSage Executive Series interview with TGW Logistics. I really enjoyed my conversation with Chad, and I hope you did as well.

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