On Demand News: 02/08/18

Target Left Bunch, Philly Special

08 February, 2018 // Last Sunday, Philadelphia Eagles head coach Doug Pederson reminded us of an important supply chain lesson.

Facing a historically great Super Bowl opponent in the defending-champion New England Patriots, Pederson made some unconventional calls at critical points in the big game.

Conventional wisdom says that on fourth down near the end zone, a team should kick a field goal and take the near-sure-thing of three points. It's not worth it to try for a touchdown and risk coming away with nothing. So, what did Pederson's Eagles do? Not only did they "go for it" on fourth and goal, they ran a wild, trick play called "Target Left Bunch, Philly Special" in which the ball snapped to running back Corey Clement instead of quarterback Nick Foles. Clement flipped the ball to tight end Trey Burton, who the defense expected to run left. Instead, he passed back to the right corner of the end zone where Foles had snuck completely undetected. Result: a 10-point halftime lead and a momentum swing from which the Patriots never fully recovered.

What does this risky play calling have to do with supply chain optimization? Plenty, it turns out.

As Pederson explained in his post-game interview, "if you call plays conservatively, you are going to be 8-8, 9-7 every year." Beating Coach Bill Belichik, Tom Brady and the Patriots was going to mean thinking differently. Or, in supply chain terms, simply following the herd or implementing industry best practices won't lead to superior results.

Doing what everyone else does leads at best to average good results. If your supply chain doesn't much affect your competitiveness, maybe that's okay. Think about the supply chain for stuffed teddy bears, for example. If you have some extra inventory or buffered stock in transit or at a warehouse, big deal. 

On the other hand, if you make high value goods with uncertain demand patterns or short product lifecycles, having the most efficient supply system can make the difference between industry leader and also ran. To dominate these industries, you're going to need some target left bunch, Philly special.

Hedge fund legend Howard Marks of Oaktree Capital made the same point (as we read in a blog by our friends at Chenmark Capital) with a famous investment riddle that he recalled in a famous memo called "Dare to Be Great."

"For years I’ve posed the following riddle: Suppose I hire you as a portfolio manager and we agree you will get no compensation next year if your return is in the bottom nine deciles of the investor universe but $10 million if you’re in the top decile. What’s the first thing you have to do – the absolute prerequisite – in order to have a chance at the big money? No one has ever answered it right.

"The answer may not be obvious, but it’s imperative: you have to assemble a portfolio that’s different from those held by most other investors. If your portfolio looks like everyone else’s, you may do well, or you may do poorly, but you can’t do different. And being different is absolutely essential if you want a chance at being superior."

In the supply chain, a target left bunch, Philly special mentality means having the courage to transform your supply chain instead of nibbling at the efficiency edges. Instead of running RFPs to save a few pennies on a lane, you might analyze the entire end-to-end network. Then, find ways to coordinate work across suppliers. Convert LTL ground movements to truckloads. Consolidate air shipments. Postpone use of integrators until goods get as close as possible to end customers. Or, in the best case, eliminate inventory altogether from your pipeline.

It goes without saying that this requires not just analytics but experience. When you're playing against the Patriots, you have to do something unprecedented, but that doesn't mean it has to be reckless. The Patriots weren't prepared for target left bunch, Philly special because they had never seen tight end Burton throw a pass in the NFL. In fact, he had been recruited to Florida as a college quarterback. They had never seen a quarterback catch a touchdown pass, but the Eagles had taken the play from a successful execution by the Chicago Bears way back in 2016. Then, they practiced in secret throughout the playoffs, waiting for just the right moment to unveil their trick. They were so ready that when they broke huddle before the play, guard Stefan Wisniewski said he thought to himself, "This is about to be a touchdown."

That's the kind of uncommon wisdom, unconventional thinking and confident execution we admire at D.W. Morgan—and what we seek to provide to our clients in every engagement.