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Building a Supply-Chain AP Team from Tee to Green

EDITORS NOTE: Mike Combs is director of asset protection, global supply chain at The Home Depot. Prior to assuming this role in 2008, he was director of loss prevention for AutoZone for six years and held various LP positions with Macys for eight years. Combs earned a master of science degree from Eastern Kentucky University in 1990. He is active with the Loss Prevention Research Council, including chairing its supply-chain working group, and is on the board of advisors for CargoNet.

EDITOR: To start out, Mike, share something about yourself that isnt widely known.

COMBS: Well, one is that I have an identical twin brother. Second is I was a professional golfer for a few years.

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EDITOR: Tell us about your golf career.

COMBS: I played for about three and a half years from 1998 to 2001. I played two years on the Asian PGA tour, which was predominantly in Malaysia, China, Thailand, Indonesia, and India; basically, everywhere in Southeast Asia minus Japan. I also played pretty much every minor tour you can think of in the US. In winter months I played in South America on the South American PGA tour. We tried PGA Q-school twice and did not quite make it through that grueling process. But after three and a half years, I wasnt quite sure I was going to make it. I definitely had the physical game, but the mental side of it was difficult. It was getting better, but it was far from a sure thing. So that is why I decided to get back into the industry and make some money. Its expensive to golf professionally, except the PGA Tour. If you can break even doing that, you are doing very well. The experience of traveling the world and meeting new people from diverse cultures has changed me forever and really gave me a new perspective on life.

EDITOR: How did you get from golfing into supply-chain asset protection?

COMBS: Early on, I really thought I wanted to be in criminal justice, either a police officer or FBI. My father was a judge in my hometown, and his dad before him was a judge as well. I knew I was into criminal justice, but I leaned more towards law enforcement. So I went to Eastern Kentucky University in its criminal justice program, graduated, and got my masters degree there.

EDITOR: Given your studies, why didnt you end up in law enforcement?

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COMBS: Well, I was working through college at Kings Island amusement park as supervisor of security. Another guy and I were challenged to start an undercover shoplifting prevention program for all of their shops. As goofy as that sounds in an amusement park, there was a lot of crazy stuff that went on there. We were able to develop that program with the police department there in the amusement park and did that for a couple years. Thats where I really caught the bug.

When I graduated college I got a job with what was then Lazarus department stores, which eventually ended up being Richs and then Macys. I worked in logistics and then in their stores in different roles. I really fell in love with retail and never looked back.

EDITOR: What was your final position at Lazarus before you left there?

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tores. Then, around the time of the Macys merger, I took my stint in golf. When I came back from the golf venture, I knew I wanted to do something different. Fortunately, Libby Rabun at AutoZone was willing to take a chance on a guy who had been out of the scene for three years. I learned a great deal about the retail business, how to grow profits, and how to run a company profitably at AutoZone. It was a pretty unique opportunity. Libby was a great leader and mentor who championed my career. I owe her a lot.

EDITOR: What then attracted you to Home Depot?

COMBS: When I left AutoZone, I was the director of the field loss prevention team, which was at the time about 4,500 stores. There was a guy by the name of Mike Lamb who I had worked with at Richs. Mike called me and said, Were going to be transforming the supply-chain AP team at Home Depot. Mainly weve shipped from vendors straight to stores, and were rolling out a major capital play to build a central fulfillment distribution network. We need someone to help craft the AP team. I knew Mikes leadership style. I loved Atlanta. Plus, I was always enamored by Home Depot and their stores as a customer. Thats what got me started listening, and the more I listened, I was really intrigued by the investment they were making in their supply-chain network to set the company up for the future. Now Ive been here nine years and thankful that Mike put his trust in me.

EDITOR: Thinking about the changes in the supply-chain side of the business from nine years ago until today, have you seen a transition from a role of just physical security to a broader asset protection role?

COMBS: I have, and I would agree that back then there were probably only a few places doing much more than physical security. To some extent, theres still a lot of focus on security. But absolutely now things are much more automated. Theres much more data. There are more systems. Now there are more people trying to leverage those to craft a better strategy to look at everything end to end versus just the four walls of that warehouse.

The great thing about going to Home Depot at that time was that we were at the development stages of a long-term supply-chain transformation. We were able to build an infrastructure, both team and technology, that had the vision of our long-term strategy guiding us. Starting from scratch like we did, we are able to build the physical security aspects from the outside in, to where we have a really sound, secure network of distribution centers. The controls are great. You dont have a lot of unknowns like you do in a store environment with customers, returns, and all that. By setting up the proper controls up front, we didnt have to deal with questions like, Did we put the right fence up, do we have the right alarms, how are we controlling visitors, and is our freight secure? We can trust that those types of things are solid, so you can focus on other things.

EDITOR: What do you mean when you talk about your process being end to end?

COMBS: As we built our supply chain, we were also building infrastructure for omni-channel retail, which we call interconnected retail at Home Depot. So we built out online fulfillment centers that are connecting our online sales to the customers. Theyre also delivering to our stores through our other distribution network. So there are a lot of moving parts, and inventory is moving around to fulfill the customers needs in any way possible. What we figured out pretty early on is that we needed to build our facilities around an end-to-end view, meaning from vendor to customer. From the time product leaves the vendor to the time it gets to the customer, and even the reverse logistics process when a customer does a return and gives it back to us, we have complete visibility throughout. Our senior leaders supported having AP look at loss from an end-to-end perspective. It really matches up with how Adrian Beck has been preaching for several years. His work has been enlightening in this area.

We have a shrink exposure report that a member of my team created that helps us look at the end-to-end process. It also gives operations leaders a tool to watch how theyre doing week to week on shrink and loss exposure. Its not just the inventory shrink that we look at. We do manage that, but we look at everything from damages to parcel carrier credits or customers saying they didnt get what they wanted and making a returnthe whole process.

EDITOR: Give us a brief look at the size and breadth of the operation that falls under your responsibility.

COMBS: To support Home Depots global supply chain, we manage these key areas: the safety and environmental regulations throughout the supply chain; the end-to-end shrink and loss; physical security; cargo security; and theft and fraud. And finally, we audit the outbound accuracy of what the distribution centers are sending to our stores.

All in all, we have about sixty-nine Home Depot locations around the countrysome of which have a group of buildings, so its more of a campus environment. Also, a year and a half ago, Home Depot bought a great company called Interline Brands, so we also support their business, which is another ninety-plus locations scattered around the country.

EDITOR: How many people report to you, and what functions do they perform?

COMBS: I have five senior managers reporting to me. One manages the store support center and the ten team members there. They design, develop, build, and support our supply-chain teams. I also have four geographically based senior managers who control a group of facilities. Three of those line up with the north, south, and west regional configuration, just like how Home Depot runs its stores. A fourth is in charge of the Interline Brands company and the program there.

EDITOR: Would you say that you and your people spend more time in the operational compliance disciplines than you do necessarily in theft and fraud investigations?

COMBS: Without a doubt, especially early on. Ive been here nine years, and thats about the time we started the supply-chain network. For the first few years, about half that time was operational compliance where weve gotten very, very stable, and the results, whether they are shrink or safety, have been trending great for six years now.

EDITOR: In a Home Depot store, safety is a very critical discipline. Do you have a safety manager or somebody on your staff who leads that effort?

COMBS: We own safety as well. It has not been my discipline over my career, so Ive learned a lot from my peers at Home Depot like Bryce Bennett, director of safety for store. Bryce was on my team prior to his promotion, and he helped develop our safety programs along with our safety manager, David Bell. David helped us build some really good programs to help drive safety.

Most of our injuries are ergonomic related, so we built a comprehensive program with the help of a company called Safety in Motion. The program is all about teaching people how to do things the right way from an ergonomic standpoint. It doesnt teach you never to do something; rather it teaches you how to do things in a less stressful way in order to prevent repetitive-motion injuries. A small change between a stressed body position and a better body position can make a huge difference in our associates lives, both at work and at home.

Weve also tried looking at safety from other perspectives. The typical measurements in safety performance are the OSHA rates of workplace injuries. As weve reduced those metrics over time, we have also looked for other ways to measure progress. Weve gone from a $50 billion company in revenue to almost a $100 billion company, so clearly the volume moving through the supply chain is increasing year over year. We started looking at different metrics to make sure that increasing productivity wasnt having a bad effect on safety. For example, how many cartons do we produce between injuries? And looking in different ways really showed whether or not we were improving as fast as we thought we were. I am happy to say we are safer now even with the increased product flow and productivity.

EDITOR: Often one of the measurables in supply chain is something you mentioned earlier, which is accuracy to the store. Often the stores side of the house may claim that you all in supply chain are not nearly as accurate as you tell us that you are. How do you manage that relationship with the stores and ensure that you are delivering what you say youre delivering?

COMBS: I think thats probably the most universal issue that supply chain has in retail. First of all, we make sure that we have an open feedback loop with our store partners. For every trailer that gets to the store, we have a feedback loop electronically that allows them to rate how were doing on that truck and give us any feedback. The process includes a mechanism for us to respond to that. Our AP team owns the audit process and the teams that conduct the audits, which gives our store partners a peace of mind that it is an unbiased effort.

The other thing we do is welcome our store partners to come into our locations at any time. We have district and retail meetings where they can come in and watch our process, see what were up against, and give us insight into how they think differently. And vice versawe send groups of people from the supply chain into the stores. Sometimes its training for our people, and sometimes its the other way around where were trying to educate or train new store or district associates that might need some help. I think that kind of partnership has really helped.

Another thing thats important to call out is the fact that I report to Kathleen Eaton, our vice president of asset protection, who reports to the store operations team. My supply-chain team leaders know that Im reporting up through store operations, which means I always have a keen focus on how were impacting our customers or stores. I give them that direct feedback all the time, and they are very open to that perspective. It really helps solve problems when your relationships span end to end and not just in the supply-chain silo.

EDITOR: Since youve had a great deal of store experience in your background and you know the value of that experience, do you make a habit of moving people from the store side into supply chain, and vice versa?

COMBS: We have probably a dozen managers from AP within distribution centers who have come from the store side. I even have a couple of district AP store managers who are now working in our supply chain and have provided amazing value to both sides of the equation. And then there are other people on my team who are pursuing careers down the road that will get them into the store operations piece. This type of cross-pollination has been key to the success of my team and is a pillar of Home Depot talent management. We have leaders on my team who can lead in many different areas of the company should they wish to do so.

EDITOR: In the past, the supply chain was sometimes a place where store people who werent making the cut got farmed out. But thats changed in the last decade. Do you see supply chain as a place for career growth today?

COMBS: Absolutely. I think people who are really looking at the landscape realize that logistics, supply chain, and order fulfillment are where a lot of career growth starts, not only in AP but also in any part of the process. From 2009 to 2015, Home Depot grew from a $500 million online business to $5 billion. So its definitely a great career path, and its somewhere you can grow your knowledge base as well.

EDITOR: If somebody in LP wants to learn more about the supply-chain side, can you give any advice on where to look for information?

COMBS: Right here in Atlanta, Georgia Tech has a great program. Home Depot has been involved with some of the research there. Auburn University is the other leader, and they turn out great training material that you can get online. There is also a supply-chain management industry group called the Council of Supply-Chain Management Professionals (CSCMP), which has tons of online training you can do.

EDITOR: What accomplishments are you and your team most proud of over the last several years?

COMBS: First off, we have an amazing team, a diverse team. I couldnt be prouder. If I were to move on, there are fifteen to twenty people who are ready to step up into an AP senior manager role. Any of my senior managers could easily step into my role. So the team is the thing I am most proud of.

On the technical side, I would say that the shrink-exposure dashboard that we built early on in our development is amazing. I give our manager of loss prevention a ton of credit for this. We basically look at every single thing that comes into the supply chain and everything that goes out. On a weekly basis we can look at a building and predict what their shrink or loss rate would be at any given time. And that has allowed us to drive down shrink for several years even as our size has doubled. That has probably been the biggest thing my team has delivered, not just the technical development, but embedding this into our operations culture.

EDITOR: From the store side of the business, the buzzword over the last several years is analytics. What types of analytics are critical to your business?

COMBS: The biggest one were looking at now is more the end-to-end exposure program. That is looking at the omni-channel side, or the interconnected sidejust making sure that as our interconnected business grows, were not growing the loss with that. We have to continually evolve that as the business evolves.

EDITOR: Youve been involved with the Loss Prevention Research Council for a long time. Tell us a little about the supply-chain working group at the LPRC, what that means, and what you hope to gain from that partnership.

COMBS: I think that for anybody who works in supply chain on the fulfillment side, its great to get involved. Its a great way of sharing information. There have been multiple times when we will work on an investigation and call peers and find out theyre working the same thing with the same group. We share information and are able to make a better case. So just having contacts in other companies and learning how theyre investigating or how theyre solving problems is a great benefit.

EDITOR: What are your thoughts about where the industry is headed in the future?

COMBS: One thing that comes to mind that I find myself saying thats different from a lot of other people is that I think that Millennials might possibly change the world for the better. Im not as pessimistic as other people looking at this new generation. I see things in them that really make me proud. They love their work-life balance, and they see the big picture there. Everybody loves hard work, and theyll work hard, but they also appreciate friendship and compassion because usually a lot of their relationships have been strong. Theyre close to their parents. Theyre close to their friends from high school and college. It just seems like theyre much more social and committed to keeping that going than maybe my generation was. Much like how our retail world and customers needs are drastically changing, our employees and what motivates them is very different. We better change and adapt to that quickly, or we will be left behind.

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