Welcome and Introduction to Colin Yankee

Intro & Outro 0:00

Welcome to the Tennessee on Supply Chain Management podcast . Listen in as co-hosts Ted Stank and Tom Goldsby set sail into the world of end-to-end supply chain management , diving deep into today's most relevant business topics . They'll share insights in pressing industry issues and tackle the challenges keeping supply chain professionals up at night . If you're enjoying the ride , download and subscribe to Tennessee on Supply Chain Management on your favorite podcast platform now .

Tom Goldsby 0:28

Hello and welcome to the Tennessee on Supply Chain Management podcast . I'm Professor Tom Goldsby coming to you from Rocky Top with my dear friend Dr Ted Stank . Good morning Ted . Morning Tom , great to be here . Can you kind of report on the scene for our listeners what are you looking out upon this year ?

Ted Stank 0:44

Yeah , I mean , like always , we record from a very intimate environment with about , I think right now about 350 of our closest friends here and our guest , Colin Yankee . Great to have you with us , Colin , Thank you . This is the opening session of our spring 2025 Supply Chain Forum . By the way , the forum started in 1998 .

Tom Goldsby 1:04

Not in a big room like this , though , right .

Ted Stank 1:07

No , I think there were probably about 20 of us in that room back then . So yeah , Tom , why don't you introduce Colin ?

Tom Goldsby 1:13

So Colin Yankee is the Chief Supply Chain Officer with Tractor Supply and , just doing a little bit of background research on you , you are a West Point graduate . You had a military career as an army officer for a time and then returned to the civilian sector , went to work for Target , had several roles in distribution and logistics with the Target Corporation and then went to Neiman Marcus , was vice president of Neiman Marcus and then in 2015 , I believe . So you've marked 10 years now with Tractor Supply and a really fast-growing , fascinating company and a great partner of ours here at UT . But welcome , colin , it's great to have you with us and maybe , to those who aren't so informed , I would hope that everyone out there has at least stepped into a Tractor Supply store . But what could a shopper expect ? And then we'll get into your role as the chief supply chain officer .

Colin Yankee 2:04

Sure , before I do that , I just want to say it's a great pleasure to be here and thank you to the University of Tennessee , knoxville . Like you said , I've been at TrackSupply for 10 years and we have hired a ton of leaders from this program , our amazing culture and this drive of our supply chain , the innovation of our supply chain , is a direct reflection of the products that have come out of this program , and so I'm just really privileged to get to work with them just quality people . So keep doing what you're doing .

Tom Goldsby 2:30

Fantastic . I very much appreciate that , hey . One other thing I missed is you're also a Spartan grad .

Colin Yankee 2:34

You've got an MS in supply chain .

Tom Goldsby 2:36

Ted over there was a faculty member . I got my PhD up in Spartan land , so a little quiet , go green this morning I got a hit on the West Point thing right . Steve .

Ted Stank 2:46

Plemensik , are you in the room ? Where are you Raise your hand , Steve ? Any other West Point grads in here ? All right , we outnumber them , Steve .

Colin Yankee 2:53

okay , Steve and I are day-locality grads . Jeff DeLulo is not here so we're safe .

Tractor Supply Company Overview

Colin Yankee 3:00

So a little bit about Tractor Supply for those of you who aren't familiar with it . We're the largest farm and ranch retailer in the United States . We have about 2,400 stores across the US in 49 states , about 50,000 team members who work at our company , $15 billion in revenue . Eighty-seven years now in business close to that . So just a very long history and lineage . We serve the rural lifestyle , so everything that our customers need to live life on their terms out in rural environments . That means for us our stores are small format so we can locate them in these rural communities . You walk into a tractor supply store you can expect to find everything from Carhartt workwear and Ariat boots to dog food and bird seed , to 850 pound gun safes , trailers , ranch gates make model specific parts .

Ted Stank 3:51

It is a cornucopia of different kind of things we move through our supply we get dog food from there , and we've also got these giant aluminum planters that might want to plant all kinds of products in so so we try to serve that lifestyle .

Colin Yankee 4:05

That really dictates how our supply chain is set up because of that small format store and we have to manage those demand patterns . You talked about planning a little bit earlier . I'd love to get into that topic because it's a passion point for ours , and how we manage that . About a billion dollars of our sales is online , so we have an omni-channel presence shipping from our store , shipping from our DC network , shipping from our vendor base to our customers , as well as a small private fleet that we're expanding out to expand our business there .

Tom Goldsby 4:34

Fantastic . I think the tagline is life out here , correct , right . And so I looked this morning . There's no downtown Knoxville location . Your stores tend to be out in the periphery a bit . In fact , I think I saw that they used to be based upon cow count in the county . Have you ever heard that ? Is there ?

Colin Yankee 4:54

any truth to that ? Yeah , so we have . We got a little more sophisticated than that with our real estate model .

Colin Yankee 4:58

Okay , we'll get into the 20s maybe , but we have just an incredible real estate portfolio and a set of algorithms that we take in all this different kind of information from demographics cattle count , equine count how many oil rigs are in a certain area , all these different kind of things . For how do we locate our stores ? About 50% of our stores are in what I call ex-urban areas , so not urban , not suburban , but on the fringe , and then the remainders are really in more rural communities .

Tom Goldsby 5:28

Yeah , so I thought there were maybe five store locations within 22 miles of where we're sitting right now , but , as I pointed out , none in the downtown area .

Ted Stank 5:36

It's going to be out there and for those of you who don't know , knoxville , east Tennessee , is a pretty big beef cattle area .

Colin Yankee 5:42

And because of the spread that you just described , we have the opportunity to continue to expand our stores . So we're adding between 80 and 100 new stores every single year for the next decade or so . So we have about 2,400 stores today we publicly stated we can go out to about 3,200 .

Tom Goldsby 5:57

And I know you take a lot of pride . I follow you on LinkedIn and you're great to follow on LinkedIn because you tell such a great story . You're out there at the stores routinely . It's not like you're living in Brentwood and just calling the shots from the headquarters location . I love to see you out in the field . So , in the store itself , you described some of the categories you're covering , but , like , how many SKUs are you all managing ? And we'll call out a few specific ones here in a moment .

Colin Yankee 6:22

Yeah , when you walk into one of our stores you'll have between 18,000 and 20,000 different SKUs per store . But 10% to 20% of our store we're moving to a much more localized kind of assortment reflective of that demographic . So that's going to increase our overall SKU count which means our planners are managing about 80 million different site SKU combinations every single day for inventory and in stocks and productivity that . So it's an incredible amount of things they have to manage . But if you walk in one thing , that is really great . It's like a general store . So many of our customers think that tractor supply is a local store like they're like my tractor supply and when I travel and I'm wearing track supply logo they'll tell me hey , the store in roanoke , texas , christ is a great manager , we'll all get feedback about products that they want or whatever , and they think I know everybody in the company which is exactly what we want .

Colin Yankee 7:10

We want that kind of belly-to-belly service in our stores . But you're going to walk in and you're going to see clothing and apparel and you're going to smell molasses from the sweet feed that we're selling in the back . So it has kind of a little bit of retail theater . You can hear chickens that we sell live chickens in our stores , so you'll hear the chirp of chicks in the middle of our stores and then you'll have a home decor area and fertilizer , heating , whatever else you need for your seasonal needs .

Tom Goldsby 7:35

You got on the skew of particular interest to me . I believe we're in the throes of chick days right now . I saw , and I have to believe , with egg prices there's been incredible interest in chicks . That's a very different skew to manage than apparel or feed right .

Colin Yankee 7:53

Yeah , we sell about 11 to 12 million chicks per year , so a lot of chickens move through , you can imagine . The timing of this is very important , because as they come out of the hatcheries for spring , it's cold , and we need to ensure that they make it to the stores alive , in good condition . And then they get to the stores and we have to have a selfie rate before they become full grown chickens walking around our stores , which would be a disaster as well . But the way we think about the chickens , it's kind of two different things . It's the gateway drug to the lifestyle . Ok , so people who get into chickens , they're like fanatical about it , and it's a whole thing on social media , instagram , all the kind of things , but people love their chickens ,

Supply Chain Culture and Leadership Philosophy

Colin Yankee 8:45

and with that , though , comes not just the chicken , but then the coop and the feed we sell them right and their entire life cycle of kind of maturity of . We can follow them along that journey as a kind of get into lifestyle and they and that , that chicken .

Ted Stank 8:50

They're your equivalent of a gillette razor .

Tom Goldsby 8:52

It's exactly the right equivalent , interesting and you can be the one-stop shop for all those needs colin , as I look at your history , I'd love to have your .

Ted Stank 8:59

You think about how culture impacts your supply chain . You know , obviously you have different suppliers . How do you work ? You mentioned hatcheries . You know how do you work with them . When I think about the how culture impacts your supply chain , obviously you have different suppliers . You mentioned hatcheries . How do you work with them ? When I think about the juxtaposition of tractor supply with some of your earlier experiences with Target and Neiman Marcus totally different demographics , different population base that they deal with how does that manifest itself in your supply chain ?

Colin Yankee 9:23

I think every supply chain leader needs to understand what their value proposition is . And so , as a retail leader , if I'm talking to some of my peers , we're all juggling four different things . It's in stocks , inventory productivity , logistics costs and service levels . And so for Tractor Supply , our job is be a dependable supplier . We're a needs-based retailer and we believe in everyday low prices . So for me , that kind of order stacking in generic terms this isn't the case for every single category would be I want to be in stock , I want to keep my logistics costs as efficient as possible , then I want to focus on my cash cycle , on inventory productivity , and then I'm focused on service levels . It's almost the exact opposite . When I was at Neiman Marcus , Service levels are the top .

Ted Stank 10:05

No chickens walking around .

Colin Yankee 10:06

No chickens walking around , but if you're buying a $10,000 dress or a $4,000 pair of shoes , service levels are super important . That's right . I was a private equity-backed company . I'm a publicly traded company now , so logistics cost and inventory productivity were kind of more equal in the middle , and actually in stock was the least thing you're worried about , because scarcity is part of the game , right ? Mrs Jones does not want to be the second person at the Boca Raton Junior League Social with the blue Chanel shoes . She wants to be the only one , right , and so it's a different kind of game , and that really reflects in how we set up our supply chain .

Colin Yankee 10:41

Culturally , though , I feel very fortunate . I had a wonderful experience in the Army . I'm sure a lot of veterans in the room or people who are spouses or family members , but if you're not familiar , people have this image of the military being very directive . That was not my experience . These were people who volunteered to be there and that experience then influenced how I led at Target and has experienced how I've tried to set the culture up here at Tractor Supply .

Colin Yankee 11:08

When I got out of the Army , I moved back to California where I grew up and I worked in a distribution center with people . I went to high school with , except for a few decisions and people helping me out along the way , I could very easily be driving a forklift into DC and Southern California and I have a baseline standard for our organization from a leadership principle standpoint . When I walk into a distribution center , would I allow my wife or my son , somebody I love , to work in that facility for that leader , for that ops manager , for that general manager , under these working conditions ? And that's the standard . It is super , super simple to communicate because every supervisor understands it , because every team member in our supply chain is somebody's son , daughter , husband , and I think that translates all the way how we treat our suppliers , how do we treat our carriers . This is a long-term game with long-term people for me , and so I try not to be transactional all the way from the front line , all the way from the front line , all the way to our vendor base .

Ted Stank 12:06

Yeah , I mean , last night somebody was telling me I think it was you , Daryl Edwards this is still a people game . We talk all about technology . We talk about all these great concepts and complications and complexities in the world . At the end of the day , it's a people game , Absolutely yeah . That's why we're so happy to have you as a great partner , because you do hire a lot of our great students and everybody wants to come back home , right ? Yeah ?

Tom Goldsby 12:26

Let's talk a little bit about strategy Again . You've been with the company 10 years there about we had a pandemic in there as well . Can you talk a little bit about how the business has changed , how your supply chains evolved ? Maybe how you weathered that storm and we'll get to , maybe how you're weathering the current storms ?

Colin Yankee 12:40

Sure For us , the pandemic . Obviously people were moving out of urban areas into a lot more rural areas , whether permanently or temporarily . I think there was a little bit of the zeitgeist of self-sufficiency and do-it-yourself in that , as people saw that scarcity and the vulnerabilities of the supply chain which fit right into our kind of do-it-yourself mindset in our

Pandemic Impacts and Business Evolution

Colin Yankee 13:00

stores , and so we saw tremendous growth that we've had to keep up . From a supply chain standpoint , we are always chasing volume and capacity right , Just trying to keep up with the growth , and COVID turbocharged that . For us , what was really cool is going into the pandemic .

Colin Yankee 13:17

We had built purpose-built flow paths for our supply chain . The only reason a retail supply chain exists is to effectively deploy inventory . If I could 3D print dog food onto the shelf in a store , I would do that . I'm not really super into trucks , I'm not super into DCs , I don't really care about automation , I care about serving the customer with the inventory . And because we had built these purpose-built flow paths , we were able to kind of shunt around different congestion points we had . We also had a lot of variety in our assortment . So because we're needs-based , a customer would come in if they're like this thing is out of stock because we have a shortage , they could find something to solve the job . So while as a supply chain operator I'm always like reduce SKUs , reduce SKU , count right . I learned a valuable lesson during COVID about the power of substitution and that assortment to help our customers out . And then it just really elevated tractor supply from a visibility standpoint because we had a lot more customers shopping our store who had never lived the lifestyle and just elevated our overall profile .

Tom Goldsby 14:21

I mean , certainly , our lifestyle is adjusted and something that remains true throughout it all and Ted likes to call me out for this I make reference to the American consumer in particular as being diabolical , right . I mean , we're more demanding in every aspect of the consumption experience and oh , by the way , we don't want to pay a hand and fist for it . So how do you kind of view the evolution , I guess maybe the changes and expectations that we have as consumers ? And again , we would love to see you go to you know , maybe 30 million SKUs , but how do you fight the force there and say this is what we're going to take to market and by the way , there's a thread there I'm going to pull after you .

Ted Stank 15:03

Answer this one about cost .

Colin Yankee 15:04

I'll kind of tackle this with two different vectors . There's the assortment component and then the convenience component . So , on the assortment component , I think one of the powers of being an omnichannel retailer is we can really focus on where we position our inventory based upon the demands for the customer . So if you walked into a tractor supply 30 years ago , you would see a huge section of tractor maintenance parts which is high margin , low turn inventory . That was really what the niche was built about . But the business has changed and so as an omnichannel retailer , we can reduce that assortment and footprint in our store , dedicate more productive products to that space for what the customer wants , for a variety standpoint , move those things to different points in our supply chain and , with speed , get you the things you need just as fast using our online capabilities .

Colin Yankee 15:56

The interesting thing about convenience is when I talk to our customers being out in the stores , they are not necessarily interested in having things today or tomorrow . They're interested in having completeness of their order before their job or project starts . So most of our customers are not big farmers . I have a 60-acre farm and I care about having my product on Friday before I'm working on Saturday . That means if I order it on Thursday , I want it on Friday . That means if I order it on Thursday , I want it on Friday . That means if I order it on the Sunday before , I still want it on the Friday . So we can design our network to be very flexible around that let's talk a little bit about cost .

Ted Stank 16:35

We're in a really interesting time now and we're not going to be able to avoid it . It's going to be a theme for the next two days , right , potentially , with what's happening with the tariff administration . Next two days , right , potentially , with what's happening with the tariff administration , we're going to see some potential increase in cost . I'm assuming that there's a significant

Economic Changes and Cost Management

Ted Stank 16:50

number of your SKUs that are imported . How are you thinking about costs ? How are you going to manage costs as we move forward with what , potentially , is a new economic model ?

Colin Yankee 17:00

Sure , I'll speak in generic terms here , because we have our earnings call in two weeks and I'd get in a lot of trouble if I got out ahead of messaging on this . So I will speak in generics . I hope that doesn't disappoint you too much , but I feel like TractorSpy is in a very good position to win and thrive in this environment . It's significant but not existential for us . About 8% of our cost of goods purchases are a product that we direct import . Okay , about 40 to 45% of the product that we purchase is consumable , usable or edible , so very domestic production .

Colin Yankee 17:32

And we , a few years ago , went through a process where we took our major categories and individual kind of SKUs that are stalwarts of our assortment and broke down the bills of materials and so we could look at how much steel , how much copper , how much aluminum , how much corn , how much riboflavin , whatever it is goes in each one of those finished goods . And so , as we're talking to our supplier base and we're looking at the new tariff regime , we can say what kind of impact is this going to have on cost ? I think the common misperception is I'm making up the numbers here a 20% tariff increase equals a 20% increase in cost . The truck doesn't cost more . The fixed cost of labor doesn't cost more . None of those things are costing more today . So 20% tariff increase does not necessarily increase cost by 20% . That being said , I just think it's a lot to digest right now . I'm going to take off my tractor supply hat right now and just like all these comments here are my own .

Tom Goldsby 18:28

Put it off to the side . Yeah , put it off to the side .

Colin Yankee 18:30

So when I think about it , it's not just tariffs , it's trade barriers . So there's the goods barriers for tariffs , then there's the service barriers , where we have American companies cannot operate in foreign markets , and then there's the foreign investment barriers that the administration is trying to address . At the same time , we've got the tax bill going through Congress , which could extend the 2017 tax cuts . If that doesn't , it could revert back . We also have the potential for no tax on Social Security , no tax on overtime , no tax on tips . Interest rates are changing , energy policy from a domestic production standpoint is changing , reduction in federal spending happening all at the same time .

Colin Yankee 19:12

It is just a lot to digest . So , as a leader , I'm like this isn't a crisis , this is a disruption , and the way you handle a crisis is very directed . Just start making decisions that can confuse a lot of people in an organization . If you have a disruption , the things that you once assumed to be true are no longer true , and if you don't understand it and it's highly complex you should probably pause the decision cycle and start to really reflect about what's going on and leaders who can take a breath and understand the ripple effects or the implications of that and then direct their organizations in a response mode . I think will be much better off , and I'm going on a bit of diet , yeah , no , no , this is great .

Tom Goldsby 19:56

So this is great .

Colin Yankee 19:57

There was a thing I learned in the army , which was slow is smooth and smooth is fast yeah , right and that saying comes from when you're working in urban environment and you have a bunch of people who are really excited , adrenaline's upine's up , and all of them have guns and the worst thing that can happen is you shoot at each other friendly fire . But if you slow down and you're methodical , slow becomes smooth and smooth becomes fast and you move to that chaotic , complex environment together . That would be when I'm talking to my organization , my team . That's the approach I'm trying to take , like just chill , do the analysis , figure it out and then you know , adapt from there .

Tom Goldsby 20:33

I'm just thinking how amazing for your organization to have a leader with that perspective . You know , I mean we've got Ted as a leader . You know , it's the Naval Academy , right , it's not West Point .

Colin Yankee 20:45

It's a good second tier school .

Ted Stank 20:47

I'm not sure how to respond to that actually .

Tom Goldsby 20:56

No , but something I want to go back to is you mentioned , as a retailer , bill of materials and I'm just wondering how many other retailers get so concerned about the SKUs . Typically , you're just going to lean harder on your supplier and say you know , get your stuff together out there , right , you're going to just tighten the screws . But meanwhile you're saying you tried to understand what went into the products that you sourced . Maybe map that supply chain and realize where you had those vulnerabilities .

Colin Yankee 21:18

Absolutely , and it's actually a lesson we learned from a couple of other retailers out there who had . We really kind of saw that the cool thing about supply chain is there's just a lot of sharing . Yeah , so when I go to retail supply chain events , I have peers who will share best practices . I have peers from other retailers who will visit our DCs . Right , I visit their DCs because we're not trying to just compete on , you know , who has the best sourcing or who has the best DC or has the best transportation . It's all knitted together in an end-to-end supply chain which is very unique and purpose-built for their particular case . So there's a lot of sharing in that . And it's also to your point earlier it's a people business and your reputation matters , and so if you're a jerk and don't share , people aren't going to share with you .

Colin Yankee 22:01

So we learned that from a couple of the retailers who helped us think about the approach . Obviously , they just said here's kind of what we did , and we went after that and it gave us just a ton of visibility that we hadn't previously had , where , instead of just beating somebody over the head on rate or cost , which is adversarial and not necessarily effective , how do we understand where the costs are and how do we manage our product portfolio . It's kind of the strength of our business . If we just sold dog food we wouldn't be in a good position . But we can manage our costs and our margins and everything else across a portfolio .

Ted Stank 22:36

So one of the things that really impressed me , colin , when I was looking at all of your responsibilities , is really how , end to end , your responsibilities are . You've got engineering and , as a responsibility , you've got relationships with merchandising . You've got a lot of financial responsibilities . Can you talk a little bit about how you work across the what imminently always becomes silos in organizations ? So you know , you mentioned about merchandising that you'd like to reduce SKUs . Right , but merchants always want to increase SKUs . How do you work with your merchant base ? How do you work with your chief financial officer to make sure that in that end-to-end mix , you really are optimizing the total picture to customers ?

Colin Yankee 23:14

Sure , when I interview somebody for a job and I ask them tell me about your team , if they start telling me about their direct report team

Cross-Functional Collaboration and Enterprise Metrics

Colin Yankee 23:20

, I think I'm going to have to re-educate this person . I didn't raise them . I'm going to have to re-educate them because my first team is my peer team . Because my first team is my peer team and my job is to be an enterprise leader and to think about the entire spectrum of running the business . While I'm held accountable for the supply chain , I'm incentivized on the total company performance and I think that ethos really kind of works its way down into my direct report team , their team on how do we achieve the best thing for the customer and work across .

Ted Stank 23:51

But that says a lot that your metrics are about enterprise success , right ? Not just supply chain .

Colin Yankee 23:56

Now , I don't want to be Pollyanna right , right .

Ted Stank 23:58

Yeah , I'm sure you've got a lot of KPIs related to supply chain .

Colin Yankee 24:02

And so I think that is really kind of an important leadership component to it Within that to operationalize it . We're not trying to optimize a part , we're trying to optimize the whole . So if there's something that is beneficial for our stores and it's going to cost the logistics organization more but it's a net positive , then that's what we do . If there's something that is going to reduce our cost of goods on the merchandising side and increase that initial margin , it costs us more in transportation but it's a win . That's what we try to do , and so those trade-offs across those organizations become really , really important .

Colin Yankee 24:40

There's systems that support that . There's financial analysis that support that . There's routines that support that . I think the most important thing that supports that is our talent lattices . We have a lot of people who love working in DCs or love working in inventory , and they can build great careers there . We have a lot of people who will work here in inventory , work over in planning , work over investor relations , go work in strategy , go to marketing , come back to supply chain and with that , all of a sudden you have a different set of empathy that you're applying with .

Ted Stank 25:12

How far down the organization do those enterprise-wide metrics push ? If I were to come work for you as a new grad , would I also have as part of my KPIs something related to high-level metric ?

Colin Yankee 25:24

You would Everybody's incentivized on sales and net income . Well , top line sales , and what is our overall profitability ? Now there are a lot of people who work in major Fortune 500 companies like ours . Their metrics aren't as definable and so they may be incentivized on sales and net income . The closer you are to the fire , the more accountability metrics you have , so the closer you are to the customer . So , if you're in DC , your cost per unit and your safety . If you're working supporting merchandising your individual areas , profitability is important so that you have some clarity on that and you own it , but at a high level , top line .

Ted Stank 26:02

That's powerful . Right , Because now you can talk across those different teams to say , hey , your logistics costs are going to increase . In a traditional organization that's bad and I'm going to do everything to prevent that , even though it might hurt something downstream , Whereas your teams have the ability to say , all right , we're going to eat that additional cost because it's good for the overall picture . It's powerful .

Colin Yankee 26:22

Metrics are important , your incentives are important . Kind of the Warren Buffett showed me your incentives and I'll show you your outcomes . Kind of conversation . Kind of the Warren Buffett show me your incentives and I'll show you your outcomes kind of conversation . But I think even more powerful than that is what you recognize . So if you slap people down for trying to do the right thing , that's going to send a message . If you elevate people and recognize them for thinking that way , all of a sudden that becomes a model for somebody .

Ted Stank 26:43

That's coming in . Let's dive into this planning realm a little bit here . You know I had said at the outset that we are starting to see across the organizations we work with that planning . You can be great in manufacturing . You can be great in logistics and DC operations , managing your transportation picture . All of that has a major impact on P&L , on your balance sheet , et cetera . But what we're starting to see is that if you can improve , make incremental , even improvements in planning , it cascades into so many other good things . Can you talk about your planning regime and your processes and how you guys are dealing with that ?

Colin Yankee 27:18

Yeah , I'll mention a name Dave Close . I think he's a Bauer Sox professor .

Tom Goldsby 27:21

Yeah , he was my dissertation advisor at Michigan State .

Colin Yankee 27:25

I took a logistics network engineering class from him and something he just hammered into me and he repeated over and over was it is incredibly difficult to execute your way out of planning problems . He just repeated that over and over and I believe it . I've seen it happen

The Critical Importance of Planning

Colin Yankee 27:40

. Financial planning team the team that is setting the purchasing goals of how much product we're going to buy , how much we're going to sell in each given week and for the longer term , is part of the supply chain . They do most of their work with their merchant partners , but they're part of the supply chain because their forecast is the North Star for us that we then break down into what are we doing for trucking ? What are we doing for distribution labor , what are we doing for omni-channel , that entire thing . And we're trying not to have people operate off a bunch of different hymnals , right , and so what their forecast is is what's important . We believe in that planning .

Colin Yankee 28:24

The other kind of philosophical principle that we put in place is we believe in process over technology . There's a lot of planning software out there . I don't know if anybody in here still is planning software , but my advice would be that if you try to put good technology over bad process . It's still going to be a bad process with really good technology and it's going to be a disaster . So , process over technology .

Colin Yankee 28:45

A lot of us operate in capital constrained environments and you're not changing out your technology all the time . The process always gives you improvement where , yeah , you may be enamored by this , new technology , may be cool , but that may be five years out for you , just on your capital investment cycle . So those routines and those processes are important . What are your monthly routines ? What are your weekly routines ? And that way every leader has a forum in which to present a planning issue . And that way every leader has a forum in which to present a planning issue , whether it's sales on the demand side , capacity or supply on the supply chain side . And then one thing I'm just incredibly excited about our team , a couple of years ago , changed out our forecasting and replenishment system and really took a leap forward in our technology capabilities .

Colin Yankee 29:29

I stutter stepped on that for a couple of years because I was like our process isn't there yet .

Colin Yankee 29:31

We still have a lot of improvement to do . I'm not giving us an A plus , but what I'd say is our ability to take in structured data so things like seasonality , day of the week profiles , vendor performance , all that kind of stuff has dramatically increased . Our next kind of chapter will be how do we take in more structured data like how many pickup trucks were sold in every zip code in the United States last month , because that's going to be an indicator of how many truck boxes we'll sell next month , how many dogs were adopted versus how many dogs were surrendered last month in every zip code , because that's going to dictate our demand pattern there , all kinds of things . And I think the next leap forward is going to be unstructured data , which is customer reviews , social media posts , calls to our call center , all those kind of things . My ask for my team as we start to get through this is I think we need to start to trust our technology more and trust the system and tune it , versus try to touch it all the time . I think we know better .

Ted Stank 30:31

The flip side of that is , if you don't have the process in place , then all of a sudden the technology starts driving your decisions and starts telling you this is what your forecast is , without your planners really understanding what's underneath .

Colin Yankee 30:42

Yeah , it's like the GPS taking you down the dirt road , right , yeah .

Ted Stank 30:44

Yeah , well , the other inevitable question we touched on tariffs , right , yeah , yeah .

Tom Goldsby 30:46

Well , the other inevitable question . We touched on tariffs , ai and perhaps in planning and execution where are you using it ? How are you using it ? Where are you finding it effective ?

Colin Yankee 30:57

Obviously it's a fertile , high-value target area for planning . We are not actually applying big AI onto our planning at this point .

AI Applications and Customer Experience

Colin Yankee 31:10

We are using what I call more traditional machine learning , forecast model , competition , being able to ingest that data , doing those kind of things for our planning . Where we are using AI and I think is really quite progressive in retail is more on our sales side . So we have a lot of opportunities on the planning . But on the sales side , when you walk into one of our stores , we're using a combination of computer vision and large language models to help our store team members be more effective . So imagine you walk up to a TractorSupply store and there's a bunch of riding lawnmowers out front . We have cameras there that will observe the customer , see how long they're dwelling in front of that item and then , if it's dwelling for a certain amount of time , send a signal to a team member in the store in an earpiece that they're wearing to go engage with that customer .

Colin Yankee 31:51

One of the cool things about working at TractorSpy is for a long time we've hired our customers into our stores . They live the lifestyle so they can give you advice . They understood what problems you're dealing with . As we've grown , that becomes more and more challenging . So we took all the master data from our vendor base , all their product knowledge , put it into a large language model that a team member in the store can , through audio , engage with . So if you walked in and you bought some chickens , you're a new chicken owner and you said what kind of medicine do I need to get for this chicken because it has this thing going on with it ? And a person who has never raised chickens but they maybe know a lot about welding is helping you .

Colin Yankee 32:28

They can ask that question and it will give them a recommendation back to engage with the customer . How much K31 grassy do I spread over an acre in order to cover it Right , like those kinds of things , so we can give better customer service , wow , so anyway , it's full ground on the planning side . But I'm actually most more excited , because we're a sales driven organization , about how we help our customers .

Tom Goldsby 32:48

Yeah , that . I'm actually more excited because we're a sales-driven organization about how we help our customers . Yeah , that's great . So you mentioned 2,400 stores and growing . I'd like to maybe go upstream a bit to the distribution network . So what's kind of your DC count and how

Distribution Network and Omnichannel Strategy

Tom Goldsby 33:00

do they serve the stores ? And also that omni-channel strategy you mentioned earlier . What's being fulfilled from store ? What's coming from DC ?

Colin Yankee 33:07

Sure . So I mentioned earlier we have purpose-built flow paths and they are designed to allow inventory to behave the way it wants to behave , to give us the most options . So the heart and soul , kind of center of gravity of our network is our distribution center network . We have 10 DCs . They're between 650,000 and 1.2 million square feet all across the country to service our stores . Each DC operates 24-7 , various levels of automation services , about 250 stores each . Then we have 17 what we call mixing centers , but they're really high velocity , just-in-time cross-docs and they allow us to serve our stores with just-in-time replenishment for our fastest moving items .

Colin Yankee 33:49

The easiest analogy I'd use is um the product . That's kind of like our bread , milk and bananas . So you have to be in stock , you have to be fresh . You're not making a lot of margin on it but if you disappoint the customer you don't have it . You're gonna go shop someplace else if you disappoint multiple times . So we have that network and we work very closely with our producers and our partners on that . Or demand sensing , where they can actually sense our demand from our sales before we're writing POs because it's moving that fast . And then we have a longer lead time import network . So we have three import centers and one bulk center today , soon to be three bulk centers servicing that big bulky product or those products that are imported and seasonal . So we don't want to afford deploying the country because it may be influenced by weather . We'll hold it upstream and then postpone that allocation .

Colin Yankee 34:36

On Omnichannel , my long-term vision is to activate inventory everywhere . I don't want any inventory to be hidden from the customer , because for me , when I walk in a distribution center , I don't see boxes , I see cash in racks , because that's all it is , and I want to convert that cash as fast as possible . So today , every DC is a fulfillment center as well services , stores and online customers from the same inventory . Five of them , though , have a little bit more automation and can build a little bit different assortment in those as well . And then our mixing centers . We just turn those on to be fulfillment centers as well .

Tom Goldsby 35:10

Purpose-built low pathways . That's just fantastic .

Ted Stank 35:14

I'm thinking in my mind . You know we talk a lot about maxims around here . Most of our white papers have maxims in them , right ? And it comes from those of you who know Tennessee sports history , general Nealon , and I hate to say he was a West .

Ted Stank 35:28

Point graduate and he was a general , actually General Nealon , most successful football coach in Tennessee . History had these seven maxims for success . One of them was called like Oski Oski , which I still don't really understand what that is , some 1930s , 40s vernacular , but I'm thinking of the Colin Yankee maxims Customers first , right , it's all about making sure the customer comes in the store , gets what they want . Teams have to be cross-functional . You have to understand what's going on up and downstream so you re-educate your team members to be cross-functional . They have to have metrics that focus them on the big picture , not just on their functional area Process over technology . Then what was that last one you just said , tom ?

Tom Goldsby 36:10

Purpose-built flow paths .

Ted Stank 36:12

Okay , so there's five , Colin , you have to mark that .

Intro & Outro 36:18

We need to get two more .

Ted Stank 36:19

So let's get into a little bit of talent management . One of the things that I think was a real differentiator for us as our program has grown was perceiving ourselves as your talent management partner from a recruitment standpoint , from a retention standpoint and a development standpoint , et cetera . I mean , at the end of the day , a chief supply chain officer has to do a lot of things , but one of the biggest things is to build functioning , successful teams , right ? What is your perspective on leading teams and leadership and talent ?

Colin Yankee 36:47

From a talent management standpoint , I think it takes one drop of oil to spoil a well and the people you invite onto your team . If somebody walks in my doorway and I'm already annoyed , that tells me something , right ? I just don't have people like that on my team . And it starts with that assessment process . I think everybody thinks they are a good interviewer , right ? I don't think most people are good at interviewing . So how do you interview ? What kind of questions are you asking ? How are you assessing ? How are you getting collaboration with other people's perspectives to make the right choice ? How are you using data in that process as well , so that you're inviting the right people on the team ? And then from there I mentioned earlier building career lattices or ladders , depending on what the person wants .

Colin Yankee 37:35

We spend all this time assessing people , hiring them and training them , and my objective as chief supply chain officer is to empower them to make decisions . You know , with one another kind of maximum it would be think two levels higher and communicate two levels lower . For me , what that means is I'm trying to understand what my boss wants , so my CEO . What are the objectives for him ? What are the desired outcomes ? What does success look like ? Not just him , but our board of directors . Who's his boss ?

Colin Yankee 38:04

If I can do that and understand that really well , for my functional area it means I can communicate in a way that supports that larger objective . If I just communicate that to my direct report team , I lose something . But if I can communicate that two levels deep in the organization , now the directors who are responsible where a lot of the work really happens for their functional areas can go all right . Here's how I understand the intent of what we're trying to accomplish . I don't need to ask for permission , I don't need to get authority to do it . This information is showing this . This is what Colin wants to achieve . Let's go do it and the decision clock speed on that becomes so much faster . And my job is to hold people accountable for their performance , their behaviors and their decisions . And if we can do that because they understand the intent , then they can learn . If I'm just making every decision and then beating them up when they're not making decisions , then that's .

Ted Stank 38:56

I'm seeing your military background written all over your leadership style , right ? I mean , one of the things that makes the United States military the best military in the world is that we don't have officers who make all the decisions right . We have 19-year-old infantrymen or sailors making decisions about life and death , about multi-million dollar systems , all the time , and I can see that in your culture and your thought process .

Colin Yankee 39:19

Well , and I've learned the longer I've been in this job , the more I think I know less . And what I mean by that is when I was actually doing the work at that director level . I knew all the nitty gritty details . I knew every jump code in the system and where to go look at this and that kind of stuff . If you asked me right now to log into the planning , system on my team .

Intro & Outro 39:39

I could do it . I don't have to log it .

Colin Yankee 39:40

They don't let me do it . I couldn't log into our warehouse management system and so I'm always worried that what people aren't sharing with me and what I don't know , and holding that as a framework and making a decision off that versus empowering the team I have who actually knows that kind of stuff and being like here's what the objective is and hopefully that pays off for the long

Talent Management and Empowering Teams

Colin Yankee 40:00

run .

Tom Goldsby 40:00

What does that mean in terms of onboarding new talent , at whatever rank ? It might mean , right ? I mean , if you're going to entrust them with that influence , how do you prepare them to take on that kind of influence ?

Colin Yankee 40:11

This is going to be super informal , but one of the best ways I think to build teams and onboard people organization is windshield time . So you mentioned getting out in the stores and the DCs .

Colin Yankee 40:25

I will intentionally drive with people just so that we're sitting in the car together talking , because it's different than you're flying together and you're breaking bed together at whatever Hardee's or Dairy Queen when you're on the road and you're out in the field spending time with them . I could write the most fantastic onboarding plan , which we have those and we have the schedules and we have all those kind of things and who they visit with and the questions they ask and what they get exposed to . But there's nothing like getting your butt in the seat with a bunch of other people cross-functionally and driving the team who's here today from Tractor Supply .

Colin Yankee 41:00

I saw their car in the parking lot . They got in the car together and they're a different team when they go home from this because of the effectively six hours they spent in the car together than they were when they started .

Ted Stank 41:10

Yeah , very good . Wow , that's a great point . Another maximum .

Tom Goldsby 41:14

Windshield time .

Ted Stank 41:16

Windshield time All windshield time . Windshield time all right , let's go to some questions from the audience . We got some here that brian's curating for us . First one's from joe uh , how do you decide what product sk use are fulfilled directly from your suppliers and bypassing your dc's ?

Colin Yankee 41:28

so , um , if you think about what track supply stand for , we want to fulfill those kind of items , have them in the store , in our dc's , ready and accessible at all times , and if you think about it , that's like the head of the assortment . The next would be the body . We can only have so many items in our stores because there's only so much shelf-holding capacity , but there's items in categories that we should own . So , like think , dewalt power tools right , I can only hold so many in a store . I'm going to hold those common ones that we can fulfill for my DCs , but in those expanded assortments in our DCs I can hold more assortment .

Colin Yankee 42:06

The other thing is slow-moving things that have very sporadic and unpredictable demand patterns , right . So lawnmower blades and mower belts , right . You know , those are kind of things that people can come in and we can hold upstream . Then there's things that we may want to test or just try and expand our assortment . On that we will add to our website . We have 300,000 items on our website , so obviously the overwhelming majority of those are fulfilled from our vendor base , and so we go through that decision-making cycle and things will move up and down from head , body to tail or vice versa , based upon their performance .

Tom Goldsby 42:42

Kind of an off-the-wall question , but I've been teaching this metric that some retail organizations use GMROI , gimroy or Jimroy , depending upon whether it's a hard or soft G Sure Gross margin return on inventory . It's just a hybrid measure of those two inputs . Gross margin inventory turns Something's high and high in both , bring it in right , we'll give it plenty of shelf space . Low and low in both , get it out of here , right , yeah ? And then there's a whole host of in between , right ? Is that kind of a logic anyway ?

Colin Yankee 43:11

Very much so . So , like we talked about metrics earlier , one of the members of the audience here he sends me a report every single month that has our general way on it right for each of those different kind of categories . Very much how the decision-making cycle is so if that's what you're teaching , it's practice and approval .

Ted Stank 43:25

Okay , cool , cool . Good , he is a Dave Close disciple , that's right . Quick one here for you . What software are you using in demand planning ?

Colin Yankee 43:33

So I'll break that into two different things . For inventory forecasting or replenishment , we're using a software called Relex . We've been very good and pleased with their capabilities and awesome partners and then for our merchandise financial planning , we're using a system called TM1 . I'm seeing the evolution of over time , though , is that we're making more and more platform decisions for more unified planning than these point solutions for different kind of planning functions , and so I think over the next we're talking 10 years from now I might just say one platform , because we have the same platform for price and promotion and assortment planning , micro and macro space planning of our assortment footprint in our stores , plus merchandise financial planning , plus the inventory planning , and I'm not saying that one tool can do all those things the best , but the integrations are where the problem happens , and so the more and more platforms we get , I think the better off we'll be as a more integrated supply chain .

Ted Stank 44:30

Okay , how much customization did your ERP require versus out-of-the-box solutions ?

Colin Yankee 44:35

A lot . So we are an SAP shop . Right now we are getting ready to go through an SAP upgrade . We have highly customized SAP . Over the last 24 years I think Maybe longer than that we've had this particular version , so it's going to be a significantly emotional event . We're about to go through Mm-hmm Prepare yourself .

Ted Stank 44:57

We're in the midst of going through that . We feel that pain .

Tom Goldsby 45:02

Interesting question there about sustainability goals . We talked about a lot of different metrics and what matters to the customer . Where does sustainability kind of fit in and how are you all kind of conveying what you're doing to the market ?

Colin Yankee 45:15

Sure Land stewardship and sustainability is important to us . It comes out in a couple different ways . One this weekend is the opening season of turkey spring season here in Tennessee , so on Saturday morning I'm going to be leaning against a tree out in West Tennessee . But we have a lot of partnerships with Ducks Unlimited , trout Unlimited . We do a lot of community service in that way .

Colin Yankee 45:34

In our DC design . Our DCs are designed to lead certified standards and so our two latest DCs are net zero , so we produce as much energy as we consume in those facilities and have designed them in other kinds of ways that are sustainable From a transportation perspective . For me it's the double win . When we are more efficient in our transportation network , we reduce carbon . So while the motives may be different , it's a twofer . And the thing for me is our team does , I think , a very good job assessing the upstream network .

Colin Yankee 46:07

I'm a follow the money guy and so in our supply chain the

Q&A Session and Key Takeaways

Colin Yankee 46:10

overwhelming majority of the money we spend is getting product from our vendors through that transportation network into our DCs , not from the DC to the end customer or the store . And so if we follow that money , if we can reduce miles in our inbound network through sourcing , optimization , network design , packaging , ordering , profiles , rounding of products , all those kind of things . We reduce miles and the rate I pay on a mile I never drive is zero . And so before I ever talk about rate , let's get rid of miles and then we reduce the carbon goals . Because of that we have been for the last three years selected as a high performer for Smartway , the ETA program . We've been a long-term participant in that program and been recognized , but the recognitions have just kind of kept on going up , not necessarily because I'm like go reduce this amount of carbon , because I'm like go optimize the network , something else we didn't touch on .

Tom Goldsby 47:02

do you all have a private fleet or do you rely on the outsourced market ?

Colin Yankee 47:06

For our truckload . We're a heavy truckload shipper . We rely on our carrier partners For our final mile . We are building out our own final mile network for big bulky deliveries into these rural environments for customers that require that . So for a final mile delivery , I've been out dealing with our drivers in the past and they're not just dropping something on somebody's doorstep , they're having to get through a ranch gate , drive up a half-mile driveway . I did a delivery with a driver who was delivering to the guy who trains all the Belgian Malinois for police forces . Scary dogs , right . And so we're like stacking dog food in there . Next delivery I did was to a lady who lived off grid . We had our fence fixed and we had to drive off there . And then the very next delivery was to the lady who's trained a couple of Belmont Stakes winners and you're standing next to a $5 million horse , right . So all those kind of things . It's not like the person just shows up in the Nissan Altima and toss something on your driveway , right .

Tom Goldsby 48:00

They've got some great stories to tell , yeah .

Colin Yankee 48:03

But we want red-vested team members out there on people's properties .

Tom Goldsby 48:07

Excellent , very good , very cool . Here's a question about average to peak seasonality . What does that look like in terms of ebbs and flows in your business ? And again you've got a pretty wide spectrum of products , so something's going to be in season at any point in time .

Ted Stank 48:21

And I also noted , like you know I'm sure that you're taking weather feeds as part of this you know this assortment of planning too , and I got a note on my phone this morning that there's going to be snowstorms across the Northeast . Wonderful , yeah , oh , wow , right , so I don't know if you're flying there .

Colin Yankee 48:35

No , right , so I don't know if you're flying there . No , no , I want spring to hit so we can sell spring Right Exactly .

Ted Stank 48:39

But I'm thinking about you know snowblowers and snow shovels and things like that .

Colin Yankee 48:43

Yeah , so I mentioned earlier that about 45 percent of our product is consumable , usable and edible . That's very repeatable and highly predictable . So it does have seasonality and impacts from pricing and promotion , but in general highly predictable . Our seasonal product is exactly that . And when I say seasonal , I'm not talking about like Valentine's Day is a certain day , I know when that is , or back to school is this day . It's like is it going to snow in the Northeast ? It snowed in Michigan last week and in Florida it was 75 degrees right .

Colin Yankee 49:13

So because our stores have very limited holding capacity , we cannot hide inventory sense . You walk into other home improvement stores and they have six levels of racking in these big back rooms . If we miss , we're either out or it's spilling out the sides , and so what we try to do is we try to set the store with an initial amount that they need to look good and to get through that initial season and then use the agility of our supply chain to replenish based upon need . So from a peak to average you'll hear the term if you ever talk to somebody at a track supply the hockey stick . As soon as spring hits . Grass is going to grow , bugs are going to come out . Things are going to break and the hockey stick of demand comes out . When it's cold , people will go buy safety , salt and snow throwers , those kind of things .

Ted Stank 49:56

So we have a mix of both . Thomas has a question about which TMS you use .

Colin Yankee 50:01

From an execution system or a Manhattan shop , Manhattan WMS , Manhattan TMS .

Ted Stank 50:05

Okay , so you mentioned about windshield time . Right , In a sense , we all have windshield time here with you today . One of the things that we have is that we want everybody that comes to one of our forums to be able to leave with one , at least one actionable idea when they go . They got a chance to have windshield time here with you today . What is your advice that these folks should be able to take as an actionable idea that they might be able to go back to work on Thursday or Friday or next Monday and start really putting in place their job ?

Colin Yankee 50:35

So this may be only me you know probably all better people than I am , but when I go home and I sit down with my wife and I have four kids there's three still in the house for dinner and if I start complaining about something or someone , my wife in her , all her sage wisdom is like you need to go talk to that person . What are you doing about it ? And I would say , the things that bother you are opportunities for empathy , understanding , seeking to understand and understand their business drivers . And so the moment you start complaining about , those people are doing something . That would be my idea . Like , if you want to be an enterprise leader , go talk to those people and that will do wonders for just helping out . It's not always going to go well , but if you can't handle conflict , you're in the wrong job .

Ted Stank 51:24

Yeah , you've got to have the confidence to be able to face those conflicts .

Colin Yankee 51:28

I measure my success in the supply chain by who I disappoint the least , and what I mean by that is we talked about tradeoffs a little bit earlier . If I can set an expectation for somebody and disappoint them slightly less than I promised , that probably means I've done a good job . If I walk into a store and they say they have enough inventory , it means they have too much . If I walk into a DC and they're complaining that they have too much variety , they want long-level lead times , they're probably just about right . Everybody wants to move everything full truckload all the time and be fully cubed out . It's like all those kind of things . I kind of gauge where my friction point's at and then steer into that conflict . If you love conflict as a combat sport in an intellectual chess game , man , you're in the right game .

Ted Stank 52:14

I think there was your seventh match .

Colin Yankee 52:15

There it is .

Ted Stank 52:18

No , not that one that might be eighth . No , view every problem as an opportunity . That's it .

Tom Goldsby 52:24

Be willing to have those conversations . Yep , yeah , fantastic . Well , hey , thank you so much for having a conversation with us today , colin . Just tremendous to have your perspectives and experience brought before the group . Here's a great way to get our forum kicked off today . Thanks also for participating in the podcast .

Colin Yankee 52:39

Yeah , thank you for the opportunity and I hope it's a wonderful rest of the conference for you all .

Tom Goldsby 52:43

Certainly so . We'll just close out Again thanks to our listeners out there . At any time , you can reach us here at Rocky Top , Tennessee , on Supply Chain Management . Gsciutkedu , Ted , why don't you close us out ? Yep . Thank you all for joining us Again . So , Ted , why don't you close us out ? Yep ?

Ted Stank 52:55

Thank you all for joining us Again . This is our Tennessee on Supply Chain Management podcast with Colin Yankee , Chief Supply Chain Officer , Tractor Supply . Great , great time together with you , Colin . Thank you so much , Appreciate it . Thanks all Go , Navy .

Tom Goldsby 53:12

I knew you were going to slip that in there . Thank you guys . I didn't say B to R .

Intro & Outro 53:18

Thanks for tuning in to Tennessee on Supply Chain Management . If you enjoyed the episode , subscribe today on your favorite listening platform to get all of our episodes as soon as they drop , and don't forget to take a moment to leave us a rating . Have any questions , thoughts or feedback ? We'd love to hear from our listeners . Email us at gsci at utkedu . Email us at gsci at utkedu . Join us next time as we continue pulling back the curtain on the world of supply chain , educating and entertaining you along the way . Until then , listeners .