Transportation Innovation with Michelle Livingstone, Vice President - Transportation at The Home Depot

[MUSIC PLAYING] Narrator: Welcome to MIT Supply Chain Frontiers, where we discover the future of global supply chain education, research, and innovation. Brought to you by the MIT Center for Transportation and Logistics, every episode features center researchers and staff, who welcome experts from the field for in-depth conversations about business, education, and beyond. Today, CTL Executive Director and FreightLab Founder, Chris Caplice, speaks with Michelle Livingstone, Vice President of Transportation at the Home Depot. Take it away, Chris. 

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CHRIS CAPLICE: Hi. Today I'm talking with Michelle Livingstone. For those who don't know, Home Depot was founded in 1978, and is the world's largest home improvement retailer, with more than 2,200 stores across North America, with revenues in excess of $110 billion. So welcome to MIT, Michelle. 

MICHELLE LIVINGSTONE: Thank you, Chris. 

CHRIS CAPLICE: So tell us a little bit about your role at Home Depot. 

MICHELLE LIVINGSTONE: Well, I have the pleasure and privilege of leading the Transportation for Home Depot. That includes making sure that whatever we buy from around the world, or domestically, finds its way into a distribution center or a store. We also help support customer deliveries as well. 

CHRIS CAPLICE: So how much of that is split between the international, I'd imagine it's just inbound international, versus the domestic, the truck load and rail intermodal or any of that? 

MICHELLE LIVINGSTONE: Yeah. Actually, the domestic is our biggest expenditure. But certainly, international continues to grow. 

CHRIS CAPLICE: But as far as the problems and to solve, does it follow the revenue or the spend? Or is it international more, take more time to manage than the domestic? 

MICHELLE LIVINGSTONE: Well, it really depends on the year. So certainly in 2018, when the domestic transportation was a little more active, a lot of time, energy went toward that. But you throw in a Hanjin closure, or a Maersk cyber attack, or a port closure, then suddenly international, although not the biggest expenditure, becomes the biggest headache, for sure. 

CHRIS CAPLICE: Right. And something happening across the world, on the other side of the world-- 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: --has an impact on you. That's got to be a challenge. So it's a big job. And you've had for a little over a decade now. 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: Is that right? 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: Tell us how you got there. 

MICHELLE LIVINGSTONE: Actually, I'm one of those folks who graduated from Indiana University with a business degree and a concentration in transportation. And I've gone out to do exactly what I went to school for, so-- 

CHRIS CAPLICE: Let me stop you. What made you pick transportation? Is this a master's specialization? Or was it undergrad? 

MICHELLE LIVINGSTONE: It was undergrad. 

CHRIS CAPLICE: Wow. 

MICHELLE LIVINGSTONE: And the reason that I chose transportation, it was because first of all, my dad was in trucking for all of my life and most of his. So it's amazing how much you pick up at the dinner table. So never underestimate the conversations you have at home with your kids. 

Then secondly, at the time, there were not many women in transportation. So as I was looking at the salaries that graduating seniors were getting for finance and marketing and accounting and other disciplines, it turned out that the transportation graduates were making just as much. And coupled with the fact that there was a need for more women in the industry and I knew a little something about it. It seemed like a great, great career decision. And I've never regretted it. 

CHRIS CAPLICE: OK. So you graduated. Was your father a trucker? Or was he in the industry doing other things? 

MICHELLE LIVINGSTONE: He was. He worked for a LTL carrier. Then he went on and worked for a truckload carrier. And he did operations and sales. 

CHRIS CAPLICE: Wow. So then, tell us a little about the other companies you worked with prior to coming to Home Depot? 

MICHELLE LIVINGSTONE: I spent the bulk of my career at Kraft Foods. That was a great experience. Then from there, I went to JCPenney. And I was Vice President of Transportation for JCPenney. 

Then C&S Wholesale Grocers called. And they were a customer of Kraft's, so I was somewhat familiar with them. And they had an interesting vision at the time. So I packed my bags and went to Keene, New Hampshire. 

CHRIS CAPLICE: Keene. 

MICHELLE LIVINGSTONE: Yeah. [LAUGHS] And then Home Depot called, actually, 12 years ago. And it seemed at that point in time, they were making a big investment in their supply chain. And it was warmer weather. And both seemed like a good idea, so I came south. 

CHRIS CAPLICE: I was going to say, C&S is the only one above the Mason-Dixon, right? You're only one up in the cold weather. So you've worked in both manufacturing and retail. What have you found that's similar in those industries? And what have you found that's different? 

MICHELLE LIVINGSTONE: Yeah. I mean, for the most part, you're moving product from point A to point B. Certainly in a manufacturing world, when you have an opportunity to shut down a manufacturing line, on time, that's really where I got my passion for on-time service, because that's a little different. But even the way that things have changed, and how tightly we're scheduling trucks to match labor, even though ice cream may not melt, so to speak, as it does in the food, that that on-time component is just the same. So really, there's not much difference between retail and manufacturing. 

CHRIS CAPLICE: What drives the urgency then? Because for manufacturing, yeah, you're stopping a line. Is it the worry of stocking out? 

MICHELLE LIVINGSTONE: It's definitely our need to make sure that we remain in stock. We're always trying to watch our inventory levels. So we want to replenish product quickly. We're also trying to align the arrival of a truck with store labor or DC labor as well. So that we're very efficient in that regard. 

CHRIS CAPLICE: So that's something that's getting a lot of attention now. Because a lot of companies don't do that well. It seems like the warehouse doesn't talk to the transportation. So you have these tremendous detention times at facilities. 

MICHELLE LIVINGSTONE: We are very fortunate that we have a dropped trailer model. So that we don't experience detention within our own buildings, for the most part. Where we occasionally encountered detention is from a vendor. But even through conversations with the vendor, we're typically able to address whatever creating those detention charges. Either by changing our ordering day or time. Or by going to the drop trailer scenario as well. 

CHRIS CAPLICE: So by going-- is it almost exclusive drop trailer as much as possible, I'd assume? 

MICHELLE LIVINGSTONE: Yes, Yes. 

CHRIS CAPLICE: Does that limit the number, the type of carriers you can work with? 

MICHELLE LIVINGSTONE: Yes. It does limit the number of carriers that we can do business with. Because not everyone has that capability of dropping trailers. But it works well for us. And it does give us the flexibility to do what we need to do. 

CHRIS CAPLICE: Right. So transportation has changed a lot in the 30 years. Deregulation was now 40 years ago, so forget that. But it took about a decade for it to ripple through. What do you think has changed the most over the last, say, 20, 30 years in managing transportation? What's stayed the same? 

MICHELLE LIVINGSTONE: Yeah, I think what's changed the most is really the technology. And it's all for the better. So the visibility that we have now to loads in transit is tremendous. The data that we can gather on our network, our vendor network, our carrier network, is tremendous. So I'm really, really pleased about all the technology improvements that have occurred. 

What really hasn't changed is that it still remains very much a relationship business. So even though the data is there and will drive to the right decisions, there's still a lot of relationship and people, issues and opportunities that are just the same they were decades ago. 

CHRIS CAPLICE: It's funny, because the availability of more data is like a double-edged sword, right? Because it's great to have all this data. But then you have all this data and you don't know what to do with it. And it's not always good. Have you found it's more of a benefit than a hassle now? 

MICHELLE LIVINGSTONE: Oh, it is definitely more of a benefit. Home Depot has made a significant investment in supply chain analytics in particular, and analytics across the entire company. And it has just improved our, I would say, our street cred. 

It used to be that we would get a complaint. And it was always a transportation problem, because we were the last in the supply chain to touch the load. Now, with our analytics, we are able to say that no, the vendor really didn't have the load available on time. Or something really did happen in transit. And we just have better data to help folks focus on the right root cause. It's really been a blessing. 

CHRIS CAPLICE: That makes sense. That makes sense. Let's talk about your current role. What's the one or two or three things that keep you up at night the most? 

MICHELLE LIVINGSTONE: The good news is, I'm sleeping very well in 2019 to 2020, so thank you for that. I think 2018 was a more challenging year for us. And it was a good reminder that we really have to stay current on changing market conditions. Because transportation is cyclical. And knowing when things are changing and being on top of that sooner is something that can certainly make one lose sleep. 

Something else that keeps me up at night, not that I have too many sleepless nights, but it's really making sure that the talent is correct. That we're leading and growing our associates. And that we have the right people, as we say, on the right bus, in the right seat, at the right time. So it's really more of a people and leadership opportunity. 

CHRIS CAPLICE: Do you tend to try to promote from within and move people up? Or do you try to maybe inject external people in at different levels from other organizations? 

MICHELLE LIVINGSTONE: Primarily, Home Depot is a company that promotes from within. But I was an example of someone that came in as a lateral-- 

CHRIS CAPLICE: You came in as a lateral, right? 

MICHELLE LIVINGSTONE: As a lateral, as Vice President of Transportation. And we do have that on occasion. But primarily, we have great talent and are able to promote from within. 

CHRIS CAPLICE: It's easier to keep the culture that way. But sometimes it helps the culture to have someone external come in. 

MICHELLE LIVINGSTONE: Yeah. Well, Home Depot is very passionate about the culture. We always say, if you take care of your associates, they take care of your customers. And the rest take care of itself. And that Home Depot orange culture is critical to our success. 

CHRIS CAPLICE: Orange culture. Yeah. 

[LAUGHTER] 

MICHELLE LIVINGSTONE: We bleed orange. 

CHRIS CAPLICE: You bleed orange. So what do you see as the most disruptive technology or trend over the next 1, 5, 10 years, that you're seeing? 

MICHELLE LIVINGSTONE: What I really hope is that the autonomous vehicle, or the driver-assisted vehicle, however you want to define it, really takes off. Because I think, hopefully in 10 years from now, that it will be a much more accepted by the public. The technology is definitely there and capable today. 

But certainly, the public acceptance is lagging. But it's going to make such a big difference and really, I think, improving the drivers' quality of life. And how they need to adjust their skill set, if they're able to focus on other parts of the job, as opposed to just the driving component. So I'm hoping that is one of the things that in 10 years-- 

CHRIS CAPLICE: Probably not in one year. 

MICHELLE LIVINGSTONE: No, no, not in one year. No. 

CHRIS CAPLICE: 5 to probably 10-plus. 

MICHELLE LIVINGSTONE: 10-plus years, for sure. 

CHRIS CAPLICE: Let's say there were autonomous trucks. Where would they be placed in your network? Where would they displace or be used the most? 

MICHELLE LIVINGSTONE: I think one of the things that we looked at with the company not long ago, they do yard management. 

CHRIS CAPLICE: Sure. 

MICHELLE LIVINGSTONE: Within your own yard, you have complete control of it. 

CHRIS CAPLICE: Right, right. 

MICHELLE LIVINGSTONE: Can you move trailers in and out from the dock doors? And it was a remote-control situation, where the controller was in California. And we were in Atlanta, watching this trailer back up into a dock and back out. And that was intriguing to see what the possibilities are. 

CHRIS CAPLICE: Yeah. That seems that would make sense. It's really controlled. Do you save anything? That's not where there's a driver shortage, right? 

MICHELLE LIVINGSTONE: Well, that's true. [LAUGHS] 

CHRIS CAPLICE: Because that person's working. And they go home every night, every night. 

MICHELLE LIVINGSTONE: That is true. We may not save quite as much on that one. But the opportunity to operate 24/7, it's really on a 24-- 

CHRIS CAPLICE: Ah, fair. 

MICHELLE LIVINGSTONE: That, and perhaps you could supplement easier for peak periods in that situation. So I think there's some benefit there. 

CHRIS CAPLICE: What about line haul? Do you see that as being? Because that's where a lot of people said where it might come and almost displace intermodal. So you have a human drives it to an exit ramp or anything. And the robot picks it up and takes it to the final ramp. And then last mile is with human. Do you see that fitting in? Or is that too Jetsons? 

MICHELLE LIVINGSTONE: No. Actually, I grew up, I loved The Jetsons. We are in that period now. We actually had an autonomous vehicle load, or driver-assisted load there was a driver still in the cab, rest assured. And they picked up at one of our vendors in El Paso, Texas, and took it to our distribution center in Tolleson, Arizona. And it was an autonomous vehicle. So it's already happening. 

CHRIS CAPLICE: It happened, 

MICHELLE LIVINGSTONE: It is. 

CHRIS CAPLICE: But with an engineer and everything, 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: We're still piloting, but yeah. 

MICHELLE LIVINGSTONE: We;re still piloting. But it's exciting to think about the possibilities. 

CHRIS CAPLICE: Yeah. It's always in Arizona. Because it's flat. 

MICHELLE LIVINGSTONE: It's wide open. 

CHRIS CAPLICE: It's wide, right. 

[LAUGHS] 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: Let's get back to people. You said that one of the big things that you're trying to work on that keeps you up at night is talent management, essentially. Making sure the right person is in the right role, developing the right people. So what do you think are the top two or three skillsets that supply chain professionals, as well as transportation, need to have to be successful? 

MICHELLE LIVINGSTONE: I think the number one skillset is the ability to think end to end. It's easy when you're just focusing on one component of a problem, and optimizing on that one component. But you have to really understand and appreciate the impact from beginning to end. So I think as our new supply chain leaders come in, that end-to-end thinking is going to be critical for success. 

CHRIS CAPLICE: How do you get them to think end to end? Because a lot of times, it's funny, I love with the younger students, because they don't think in the box. But once you start your career, you start focusing, being an expert at one thing, how do you break them out of that and look into it? Do you have certain skills, a rotation program? What do you do? 

MICHELLE LIVINGSTONE: Certainly, there's no doubt that job rotations are critical to success. We always talk about our inventory planning and replenishment group as being the quarterback of supply chain. They are the ones that are deciding what's going to ship from where and when. So that knowledge is great to have. And we love to attract and retain folks from our inventory planning group for that reason. 

So I do think a lot of it is how you lay out those career opportunities. I think it's also in how you pose the question as well. Because depending on how you ask the question will get you a different answer. So I think as a senior leader you have that opportunity to say, hey, let me help you understand. Let's go out and see this. What is the impact? Did you think about this? So some of it is just case studies in real life, helping folks to think about beyond their-- 

CHRIS CAPLICE: Beyond their one skill. 

MICHELLE LIVINGSTONE: --scope. 

CHRIS CAPLICE: Let me ask you a question. We get this a lot here at MIT for students. There are soft skills and hard skills. And by soft skills, 

I mean the interpersonal work in the corridors and being able to work on teams and everything. And then the hard skills, now it's become more data science, analytics, and those kind of things. Where do you see the mix between those? And which is easier to teach? 

MICHELLE LIVINGSTONE: Mm, that's a really good question. Prior to that lead in, I was going to say that the balancing, the need between data and people is really the key to success. Because the data will drive you to one answer, potentially. 

But again, you have to think about, what is the impact on people? And I would say, I am a more of a people person. So I would say learning the analytics is more challenging. 

I think if you're analytics, learning the people skills definitely is more challenging. But both can be learned. So I think there are many, many ways to learn those skills. And part of it is just jumping in and doing it. And the other part's the formal study and job training. 

CHRIS CAPLICE: Which is easier, to get a trucker to learn math? Or a mathematician to learn trucking? 

MICHELLE LIVINGSTONE: Both. Both are definitely challenging, without a doubt. Which is why teams are good. 

CHRIS CAPLICE: Oh, there you go. You're so dodging the question. 

[LAUGHTER] 

That's OK. 

MICHELLE LIVINGSTONE: You need to have a mix of talent on your team. 

CHRIS CAPLICE: So what's the one skill that you wish you had had earlier in your career? 

MICHELLE LIVINGSTONE: Boy, I tell you, the one thing I wish I would have known then that I know now is organization savvy, and leadership savvy. And I'll tell you what I learned much later in life than I probably should have, is that I thought if I worked really hard and provided great results, that promotional opportunities were going to fall from the sky and I would be in great demand. What I didn't understand then that I understand now, is a concept called PIE. So PIE is performance, image, and exposure. 

CHRIS CAPLICE: Exposure, OK. 

MICHELLE LIVINGSTONE: Performance is a given. You have to be able to do your job effectively. But what the components I was missing, is I didn't realize I needed to be much more exposed. I needed more exposure to senior leaders. I didn't understand the value of having a mentor. 

I didn't understand what a sponsor was. All of those corporate things, that when you enter the real work world, come to life later. And I really wish somebody had told me these things sooner. Because I've been very pleased with how my career has unfolded. But I think I could have been more effective earlier, if I would have been aware of some of these softer skills that you don't necessarily get taught in school. 

CHRIS CAPLICE: Yeah, the exposure piece, you don't. If you're naturally not an extrovert, if you're an introvert, it doesn't come naturally to you. And some people just put themselves in the way. Do you think that's one of the challenges that women, in general, face? That they don't go for that exposure? Or do you think it's regardless of gender? 

MICHELLE LIVINGSTONE: I think it is probably more prevalent for women. I think they think that if they work really hard, the results are going to speak for themselves. But what they fail to understand-- and men as well-- is that if you're not known, then the chances of you getting that next opportunity are slim. Whether it's being selected for the best project, or being given an opportunity to have a conversation with a senior executive, or whatever. If you're not known, you will not be selected for that. 

CHRIS CAPLICE: Now you're on the other side. 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: You're looking in. So you can see why the exposure is so important. Because you've got how many people indirectly or directly report to you at Home Depot? 

MICHELLE LIVINGSTONE: My department's got 135 people in it. 

CHRIS CAPLICE: Yeah. So you can't see them all every day. So if they don't expose, the onus is on them to do it. But do you try to look for those people that have the strong performance that aren't doing the exposure? 

MICHELLE LIVINGSTONE: I do. Because I do recognize that. Certainly, we do have a number of folks that are introverted, very analytical, and it's hard for them. So we have to provide those opportunities. 

So a lot of times I'll select the least-likely person to lead a committee. For instance, on Voice of the Associate. Go help us figure out how we can be a better department and go work with others and put them in that role and grant them that opportunity. 

Because it's a lot easier, a lot of times, to meet someone when you say, hey, I'm on the special project. May I talk to you about this? As opposed to, hey, I'm walking down the hallway. 

CHRIS CAPLICE: How do you deal with the idea that it's OK to fail, but that you need to improve. Because a lot of times, I've had people, they do it once and then they never want to do it again. 

MICHELLE LIVINGSTONE: Yeah, that is a hard one. Because none of us want to be a failure. We all want to exceed. But part of that is also just continuing to build confidence in small steps. 

It really is just reinforcing that hey, not everything's going to be a home run, but what did we learn from it? So that's really important. And I know at Home Depot, some groups actually have a good try award. 

It's in recognition, to say hey, you worked really hard on this project. It didn't develop the way we wanted it to. But it wasn't from lack of effort Good try. 

CHRIS CAPLICE: I know-- I forget the name of the company. It was in Silicon Valley and they had a fail wall. And it was filled with sticky pads. And it was a thing of pride if you failed. But if you got to fail, you fail fast. 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: Then you learn from it. The CEO had a big fail. Like, we shouldn't have gone into that country. And I thought that was interesting, interesting culture. Because here in academia, we don't like to fail. 

MICHELLE LIVINGSTONE: No. 

CHRIS CAPLICE: It's called a failing grade, an F, right? But that's an interesting thing, how you get that culture where it's OK to experiment. . And you're not always going to come out on top. 

MICHELLE LIVINGSTONE: Yes. 

CHRIS CAPLICE: Well, Michelle, thank you for being here. Any last words of advice that you want to partake on the podcast? 

MICHELLE LIVINGSTONE: Yes. I would just like to say there is a great career for students in supply chain. There is a great need for that in the business world. And I'm really optimistic that we'll be able to attract more women into the supply chain field in particular. And hopefully every CEO will, at some point in time, have supply chain in their background. 

CHRIS CAPLICE: That's great. Because when we were in school, supply chain didn't exist. So in a very short, very short period of time, it's become a major profession. So thank you again for coming, Michelle. Appreciate it. 

MICHELLE LIVINGSTONE: Thank you. 

ARTHUR GRAU: All right, everyone. Thank you for listening. I hope you enjoyed this edition of the MIT Supply Chain Frontiers. My name is Arthur Grau, Communications Officer for the center. I invite you to visit us anytime at ctl.mit.edu. Or search for MIT Supply Chain Frontiers on your favorite listening platform. Until next time. 

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