Vikrant Host

Good morning, good afternoon everyone, depending on what time you are seeing it. Welcome to Execution at Scale. As you know, this series exists because most conversation happens over coffee and not on the actual stage. And today I have again Dr. Jim Tompkins with me. As we all know, this is episode two of the three-part series me and Jim are doing together. And just still to give you a quick introduction about Jim as most of you know him already, so I'll make it very short and quick. So Jim has spent over 50 years in the industry, started over 15 businesses, written over 30 books and given over like north of about 2000 presentations, which is amazing. And he holds a PhD in industrial engineering along with undergrad from Purdue, like boiler up, love Purdue. And so most of what you hear in this industry is about what happens next. This one is more about like what Jim has seen over the span of 50 years. So essentially reflections over 50 years and counting. So welcome, Jim. Thank you again for your time today and sharing your insights and anything which I missed or anything you would like to add on.

Jim Tompkins Guest

All good. Let's do it.

Vikrant Host

Awesome. Love it. Love it. So my first question to you is that 15 businesses, 50 years, that's quite an achievement. So what's the through line, across all of the businesses you have created so far?

Jim Tompkins Guest

So 15, now 16. And I'm not sure I'm counting, I might be 16 might be my final shot, but it's been a it's been a joy. And the thought line between the companies that I've done is that I see it's time for a shift. There's something going to happen that's going to create a major transition for the industry. I don't like starting businesses that are kind of like me too. You know, there's 20 other people doing the same thing. Well, let me make it 21. I don't like that. What I like to do is say, okay, as I look at this entire supply chain world, there is about time where there's going to be something that's going to be big, that's going to shift. And therefore I see an opportunity to create a business. I like to start a business that's kind of on the edges. It's other people haven't necessarily seen the problem I'm seeing yet. So I'm ahead of them. And it's an emerging problem that's coming upon us. And I see it and I say, oh, this is an opportunity to start a new business. So you mentioned the 50 years. In the 70s and the 80s, what we saw is that supply chain, although we didn't use that word back then, we used logistics or industrial distribution. What we saw mostly was fork trucks and racks. And that's what was going on in the industry. So there wasn't much. Mid 80s, we started getting WMS and we started understanding there is a technology component, but it was in the 1990s when we saw, oh my goodness, there's an opportunity for engineered systems, for robotics, for automation to start to come into play inside what we call supply chain. And so the engineering systems became something that I started a business on in the 1990s. And then in 2000, e-commerce came upon us and I said, oh my goodness, we don't need distribution centers. We need fulfillment centers. And oh my goodness, we need huge return centers. And so the problem was a major shift. We went from shipping pallets, maybe every now and then cases to a situation where we were shipping pallets, cases and lots of each's. And so it was a whole big shift there. I can recall people yelling and screaming at me and said, Jim, no company will ever be able to ship a shirt to someone's house and have it delivered to the house and make money doing that. It's impossible. And so that was to me, oh, there's an opportunity here. What we saw that has evolved in the 2000s and e-commerce grew and and we began seeing different types of delivery and types of innovation and delivery. In 2010, the robotics and the automation is drastically different than what we saw in the 90s. There is a material handling instead of being kind of a backward industry, became a very, very forward looking industry. So that was a new opportunity. I started my robotics company in 2015. And then today and what's been happening for the last three, four years is this thing called AI. And so what I've seen is there's major shifts. And when there's a major shift, I say to myself, oh, it's time to do business. And so I anticipate a shift and I say, what is going to be the need that industry is going to need for that shift? And then I can focus on that need and I can create a business.

Vikrant Host

Yeah, I know. I really appreciate you sharing that. And like, you know, while you were saying that and like talking about different phases, I was thinking about like, oh, like, you know, we used to talk about robotics in a way that, oh, it's a big capex, etc. And now, as we all are seeing, like hardware as a service has been evolving too. So that is very interesting turn. And like, also like a follow up on that, like, was there kind of a problem like you kept drawn back to over this time period? Or was it more of a moment like a different moment each time, like you said about opportunity? So was there like something similar, which was like, oh, like, you know, this is something like, you know, I'm going back to?

Jim Tompkins Guest

In my head, I didn't have the word supply chain yet, but I had the concept of material flow that started someplace in an iron ore pit and wound up in someone's driveway. And so I saw this material flow, I saw this information flow, and I saw this cash flow. And I saw this not as a operational function. I don't see supply chain as an operational function. I see it as a strategic discipline. And so I saw supply chain as the heartbeat of business. It's kind of like the heart pumping, pumping, and it's pumping this stuff, money, information, materials through the supply chain. And if the heart dies, the business dies. And so it's a supply chain is a place where you can create differentiation. So you have a supply chain, I have a supply chain, how am I going to make my supply chain different than Vikram's? What am I going to do to make mine have more profits, have more customer experience, have more resilience? What are the services I can provide that gives my firm and my supply chain a strategic advantage? And so I went through everything I could see in what's going on with technology and automation and robotics and AI and globalization. And everything I did was driven by the strategic intent. I didn't do any research unless I understood what the strategic intent was. I didn't start a business. I didn't look at technology. I didn't look at AI until I understood. So I do not believe we should be thinking about a operational function. We should be thinking about a strategic intent. Also, what this tells me, if I'm looking at something as a strategic intent, and I go back and I wrap that into the first question about wanting to be anticipatory, what that tells me is I'm going to be early. And so what I found out about being early, you get people throwing rocks at you.

Vikrant Host

Yeah, no, absolutely. And like, you know, I'm enjoying like listening that here because as you share these experiences, I am reflecting back on my last 10 years, like, you know, I'm still in the early phase of my career for the most part. But as you know, from our multiple conversations, like, I also try to do things like, you know, in a similar way to create impact. The objective is not just to make a multi-billion dollar company or this, it's more about solving a problem. And when you think like differently than most people around you, then obviously like, you know, you get a lot of stones at you, as you said, then it's about persistence, having that resilience, even in yourself, not just the companies and making sure that you go through it. And then 50 years from now, maybe I'll be sitting in place of you, there'll be some other one called Vikrant.

Jim Tompkins Guest

Yeah, I like you use the word persistence. My wife uses the word stubborn. I prefer to think, no, I'm persistent.

Vikrant Host

Yeah. Well, that makes two of us for sure.

Jim Tompkins Guest

Exactly. Exactly.

Vikrant Host

So like, what was like, you know, kind of like the decision early in your career? Like, you know, you like, maybe it was like, you know, when you went to Purdue after that, like, what was your like early years, like before you founded the company?

Jim Tompkins Guest

And I guess the thing is that the thing that really drove me and also haunted me was my curiosity. I just want to understand why. And one time I had an opportunity to drive Dr. Lillian Gilbreth, the mother of my profession, of our profession, industrial engineering. I drove her from Purdue to the Indianapolis airport. And I used Dr. Rudy Reed's car. My car was a junk. I couldn't take my car. I took Dr. Reed's car. And I had prepared like 20 questions I was going to ask her. And we got in the car and I went and held the door for her. She was like 80 something years old. And I held the door for her and got her in. We started driving. And before I even got the car started, she looked at me and she said, Jim, tell me your story. What do your parents do? Why did you come to Purdue? Why do you want to be in it? And she started and just, and bam, bam, bam, bam, bam. And finally she took a breath and she said, do you have a question to me? I said, yes. What's, to be a good industrial engineer, what, what do I need to do? And she says, you need to learn to ask the question why. And you know what I said to her? Why? Now I wasn't playing with the question. I really, I really wanted to know why that I should be asking why. And that led to a delightful conversation. And I mean, it was so cool to learn from her. And so that gave me an awareness of wanting to be able to discover new thinking. You know, like finding the problem is the more difficult part than finding the solution, because at least if you know that there's a problem, you can find it.

Vikrant Host

And I think it all makes sense. That was a very interesting story. Thank you for sharing that.

Jim Tompkins Guest

Appreciate it.

Vikrant Host

So great. So like the next part is like, what's something you believe about running a business today that you would have completely disagreed with 30 years back?

Jim Tompkins Guest

Well, this is something that I think we all got stuck in. And I've spent quite a bit of time thinking on this because it was such a bozo thing for the world to do. But you, if we look back 20, 30 years, the thing that was obvious to everyone is that mega globalization was going to be the answer. I mean, you look at China came into the market with virtually unlimited labor, very inexpensive. And by the 1990s, their quality was really substantially improving. By year 2000, China became the factory of the world. They manufactured more than the whole rest of the world combined. By 2001, they joined the World Trade Organization. And the labor, the quality, the government building infrastructure. It was an unbelievable a surge. I mean, China went from nowhere to the leader of manufacturing. And then in the late 1990s, another thing happened is the containerization thing. And the reduction of cost of handling products around ships went down by one eighth the cost because of containerization. And we had a time there where we had global stability. The Cold War was over. Reagan said, take this wall down. And the wall came down. And we had U.S. as a global superpower. There was all sorts of trade agreements. There was all sorts of tariffs that were falling. And there was a time of stability. JIT became almost the obvious answer. It was lean this, lean that. Everything was lean. There was a concept of using technology to make globalization simpler. We really applied technology to the global flow of material and information. And that was a tremendous breakthrough. We had retail becoming huge. I mean, you just look at what three companies, Target, Home Depot and Walmart did. It changed the whole focus of retail around the world. And so the China globalization thing was absolutely embraced by everybody in the world. It was beautiful. We had low prices. We had higher margins. We had predictable flows. We had on-time transportation. We had scalable production. I mean, everything worked. And this would be, you know, the thing that was going to continue into the future. I mean, why not? I mean, this is absolutely marvelous. And then the surprise started to occur in 2018, 2019. It turned out to be a series of weather disasters and some lack of stability in the world. And then COVID gave it a huge shot in the arm. And the next thing we knew is that mass globalization was fragile.

Vikrant Host

I mean, I think that is a very, very interesting perspective and definitely nothing near close to the answer I was expecting.

Jim Tompkins Guest

Well, it wasn't the one I had either until about four that morning.

Vikrant Host

Yeah. But I mean, like, you know, and what do you think, like, you know, and kind of like this is somewhat part of it, you kind of answered here. But if there is anything else, like, what do you think was going to be a huge deal 20 or 30 years ago, which turned out to be nothing?

Jim Tompkins Guest

There's literally hundreds of micro things. But those micro things, when you add them all up, don't come close to that moment in time, when all of a sudden, we found out that we couldn't buy tomato juice in the grocery store, we couldn't buy toilet paper. And, and it literally people were saying why, and the answer was supply chain. And they were right, supply chain let the world down, because we forgot about optionality, we forgot about flexibility and adaptability. And that's the big one.

Vikrant Host

Yeah, like, you know, as an engineer, we always thought about like, constraints and assumptions, and most solutions are based on that. And I think about the engineering discipline that has always been the most, I would not even say worrisome, but something which I always ponder upon, like, since I started, like, you know, my career as a student and otherwise that, what if, like, you know, what if this one assumption is wrong, and but we have to start somewhere. And I think being aware, as you said, like, you know, being aware about it, and trying to build things into it is probably the way to go. Overall, like, you know, when you look at, as a follow up on this, is that what has changed less compared to what I think it has? You know, like, we have been talking about, like, disruption and everything, but there must be certain things which are around the steady state. That's, you know, that's the upside down almost question of the last one.

Jim Tompkins Guest

So, what we see is that the physics of supply chain, and I'll define that in a moment, unchanged, we change our technology, we change our vocabulary, we change the tools that we have. But at the end of the day, supply chain is plan, buy, make, move, store, sell, okay? We still need to balance cost, service, and speed. You know, if you can really teach a person plan, buy, make, move, store, sell, and balancing cost, service, and speed, they have a bachelor's degree in supply chain, if they really understand that, okay? Now, to get into a master's or a PhD in supply chain, we got to understand what we, guess what? Independent AI, not AI, technology, whatever, whatever, whatever, call it SNOP, call it IBP, call it whatever you want, we still have to forecast demand. We don't know what the demand is going to be, and we got to roll the dice. And so, we really need to work hard at that, because if you forecast demand incorrectly, which you will every time, you'll never get it right. And so, what we need to do is deal with that's a fact, it is, and it will be, and it will continue to be. Once we get the demand close to right, we then got to position the inventory. And when you position the inventory, you have to have a network that has the right locations. Then we need to build the right transportation, and we need to have the ability to flow material through that transportation network, through the distribution and fulfillment facilities, and get it to the customer, be it a B2B or B2C. At the end of the day, we are all humans, and having that human aspect in supply chain is probably the end part, putting this file on the end customer.

Vikrant Host

Probably my biggest takeaway from this part of our conversation. And this takes me to like, you know, my final question, which would kind of like, somewhat sort of sum everything up, is that if you were starting Tompkins International today, instead of 1975, what would you do differently given everything you know now? And you can probably answer it from the perspective of experience you have had, or where the world is today, or a mix of both. I'll leave it up to you.

Jim Tompkins Guest

If I really had the choice today about starting a business in 1975, I would have started something drastically different. I would have built an AI technology first ecosystem that was not a consulting company. But in 1975, I couldn't spell AI, and I didn't know what an ecosystem company was. And so I started a consulting company. Now, the interesting thing in 1975, what the industry needed was a consulting firm, because we lacked the basics, there wasn't a good foundation. Companies needed expertise, they needed strategy, they needed engineering, and they needed to get those basics right. And so the best way to do that was go in and help them do that. And so I think starting off as a consulting firm in 1975 was a good movement. But then as we moved into the 80s and the 90s, it became clear that you couldn't do a good job of consulting if you didn't have the right technology. And so we did WMS, and we did order management, we did TMS, and we did labor management, the yard management. And then we got into ERP, and how do those things interact. And then we got into the warehouse execution systems, the real time control system between the WMS and the equipment controllers. And so there was this evolution, where we learned what was needed, and we transferred from becoming the original Tompkins Associates that then became Tompkins International. And then as we started evolving, we saw that clients had lots of staff, and they didn't need that basic expertise and strategy, they already had that. And what they needed was more of a broad solutions capability. And so what we did is we went from being a company, Tompkins International, we went to being an ecosystem, which was Tompkins Ventures.

Vikrant Host

Yeah, I mean, it is very fascinating as we look back and look at things. And even if I look at both my companies, like, I probably pivoted three to four times in a short span of six years for one company and 10 years for the other. And it is very interesting that how quickly and, and we are in a pivot phase again. So I would not necessarily call it pivot more like, you know, restrategizing and I was talking to my co founder the other day that earlier we used to make that okay, like what's our company's three year plan, five year plan that used to be normal while I was growing up. But definitely for our generation, it never seemed true, because that's what we saw working for years. And suddenly, when we are in business, boom, no, it's one year max. And now we are literally looking at like months to go like, oh, let's plan next three months. And I'm pretty sure the next couple years we come to a point, let's plan like next day.

Jim Tompkins Guest

Yeah, yeah. But my wife says to me, she says, Jim, why do you keep pushing? Why do you keep? I mean, you know, you've had tremendous success, things have gone really great. Why don't you just relax a little bit? And I said, I would love to. But there's another chapter you have to write. And so we got to we got to write that now. Is this the final chapter? I don't know. But it needs to be written. And I didn't create the need for it. The world created the need. I'm just going to try to write down what we need to do to do well. And so it's exciting time.