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Feb 13

Lessons from the McDonald’s USA Supply Chain

Posted on February 13, 2026 by Julian Blumenthal

On Wednesday, February 11, 2026, I attended a presentation by McDonald’s USA on their supply chain at Loyola University’s downtown Chicago campus. Because of its enormous scale, McDonald’s can do far more with its supply chain than most businesses can afford, but there were still valuable takeaways for any organization. Due its major size, McDonald’ s can do a lot more in its supply chain than what most businesses can afford to do.

I was particularly impressed that McDonald’s invited several of its major supplier partners to participate in the one?hour session. Ray Kroc established early in the company’s history that key suppliers would not be treated as transactional vendors but as true long?term partners. The goal has always been to do what is best for the company’s future. Suppliers must be able to finance long?term capital projects, and many of those present have worked with McDonald’s for decades. When supply chain changes are being considered, supplier councils are brought in early to provide meaningful input and even propose new solutions. The suppliers at that presentation have been with McDonald’s for decades.

A case study highlighted a promotional product that exceeded its forecast by 163% despite months of planning. The surge in demand placed significant stress on suppliers, distributors, and management. However, because of the company’s established structure and collaborative approach, the challenges were managed effectively

Most firms rely on a small number of key suppliers. Savings gained from purely transactional relationships do not build long?term stability. Developing true partnerships strengthens sustainability, improves risk planning, and provides the deeper information needed to navigate major business changes more effectively.

McDonald’s operates two types of distribution centers: high?volume facilities with rapid product turnover, and separate warehouses for low?volume items—mops were one example. This segmentation allows for more precise planning, software design, and organizational structure. A visitor would likely be impressed by the automation and technology in the high?volume centers, while the low?volume warehouses are less automated due to the wide variety of product sizes and shapes. This model is worth considering for organizations evaluating whether to segment their own warehousing processes. The low volume warehouse would likely not be so automated as likely has various size and dimension products.

The presentation touched briefly on artificial intelligence. Interestingly, the term “AI” was used sparingly; the focus was instead on company structure, processes, and culture. AI is used in McDonald’s warehousing and analytics, but many AI proposals have not been pursued because they did not make financial sense. The company is actively exploring autonomous long?haul trucking, which could offer significant cost savings.

From my perspective, autonomous trucks will likely be effective for long?distance interstate travel. However, they are not well?suited for restaurant?level deliveries, which require local knowledge and adaptability. In a region like Chicago, unpredictable street conditions and delays make full automation impractical. Living in the Chicago area, all types of issues cause delays on city streets, and you cannot program for them all.

I am glad Loyola students were exposed to this information, and I hope it contributes to strong career development in the future.

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Oct 15

Uncertain Times Requires More from Supply Chain Pros

Posted on October 15, 2025 by Julian Blumenthal

We can be certain that supply chain professionals are operating in uncertain times. Challenges arise from shifting tariffs, rapid advances in artificial intelligence, evolving legal and environmental regulations, and a fragile global economy. Yet, this period also presents an opportunity for supply chain professionals to bring exceptional value to their organizations value that might not be as visible or attainable in more stable conditions. The central thesis of this essay is that individual capabilities and personal values are particularly vital in today’s world.

This is a period of frequent tariff changes. Your firms pass data information will not be able to help your supply chain resilience. Your knowledge and imagination are needed in this period of time, for the firm to continue to be successful. It is important that though there might be a prohibitive tariff cost now, that may change in the future. Maintain relationships with your historic suppliers does have some importance to the future success of your organization, even with a temporary decoupling. How the change is handled by you, the supply chain professional is important.

Artificial Intelligence (AI) is transforming how data-driven processes operate. Here, too, your judgment is indispensable. While AI can optimize data setup and analysis, it cannot fully grasp all the contextual variables or human nuances. It’s up to you to question whether the data makes sense and whether the resulting changes align with your organization’s culture and long-term goals. Just as pilots must regularly perform manual landings to maintain proficiency—even though planes can land automatically—professionals must sometimes work without AI support. Systems can fail, be compromised, or lose connectivity. Ensuring backup processes and proper training for such situations is part of being truly resilient.

Legal and regulatory environments also shift with changing leadership. Resilience is critical in adapting to these transitions. For example, the rollback of certain environmental regulations may be temporary. It’s important to remember that these regulations exist to prevent health, safety, and environmental hazards. Ultimately the unused by products of production are waste materials. Better waste management often leads to improved profitability. Upholding your environmental values and applying them wherever possible will strengthen both your organization and its reputation.

While the current economy remains relatively stable, signs such as slower job growth and rising inflation suggest caution. Stay alert to how these shifts may affect your organization and prepare accordingly.

In challenging times, there are always opportunities. Bring your best, most resilient self to your work, and you will be ready for whatever tomorrow brings

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May 01

Supply Chain, Change is not Linear

Posted on May 1, 2025 by Julian Blumenthal

This past two weeks I attended two different events which dealt with supply chain change. The Chicago Roundtable CSCMP (Council of Supply Chain Management Professionals) had a one-day conference “Strategy Meets Execution”. I attended meet the presenters in an event for Ted Talk Wilmette (IL) where the subject discussed was pivoting for change. Both presentations talked about bumps in the road in major changes in the organization. This essay will focus on those bumps.

Let’s say the obvious. Supply Chain is in a period where there is significant pressure to make changes. Tariff changes happening continuously creates a lot of uncertainty. How often did you hear the word AI (Artificial Intelligence) and words to the effect, your organization must do these software programs to be effective. For some businesses they must change to stay in business. For other businesses, they must be more efficient to maintain profitability.

There are statistics that say only roughly 25% of these big changes are successfully concluded in top managements opinion. So let me discuss, about managing these changes, once a decision is made to go forward. The best chance of any positive change is a clear understanding on what the organization is trying to accomplish and find ways to measure it. Establish KPI’s, data, to record the project’s success.

No major change process goes smoothly. There is no way upfront an organization can know all the variables which affect the change project. One way to migrate this issue is to listen closely to your employees and team members who are on the ground floor dealing with production, customers and deadlines. If these ground floor people are listened too, your organization will have a much higher chance in dealing with the bumps in the road to change.

Let’s repeat a sentence. No major change process goes smoothly. Processes and procedures are needed to be in place for these issues to be communicated to people who can respond to these bumps. Plans need to be created for the project to be sustainable. Top management will be distracted with another project or an emergency issue, but project progress needs to be maintained. Sustainability is key issue in change management.

At the Ted Talk event I attended, one of the leaders in discussion compared change also to athletics. Most sports when a player changes direction must have one pivot down. In organization change, one foot planted in the ground means recognizing past success and make that be a steady part when other changes are necessary.

To summarize handling supply chain change:

  1. Have a clear idea of what needs to be accomplished in change with clear KPI’s to focus on whether it is working.
  2. Listen to the day to day workers on the ground level. They will know variables you will not know. They will be instrumental in the actual change procsss.
  3. Keep one foot planted on the ground, so basic organizational values are not comprised.
  4. Just expect many bumps in the road and develop ways these can be communicated and handled.
  5. Be sure to plan sustainability into the project so it keeps on going what the search light is off it.

There are intense demands for supply chain change. Be wise how you do it.

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Feb 10

Managing AI Supply Chain Change

Posted on February 10, 2025 by Julian Blumenthal

Artificially Intelligence, AI, is the current next big thing. I enjoy reading what it can do for an organization and watch it create the initial version of this essay. However, AI presents challenges to organization management and training people to analyze and use its value.

I remember the first time I learned that the pivot table function in Excel would give you bad numbers, when all the data was not there, causing it create incorrect data and leading to incorrect conclusions. It forced me to challenge every result for reasonableness and accuracy. So too with AI.

Numbers have a high status, not incorrectly. But they can leave out a lot and not deal with all realities.  

When I am using AI generated wording I will put in italics.

The Changing Landscape of Management

One of the biggest changes of AI is the elimination or limiting of current repetitive tasks. You many need less bodies to do number crunching, but an organization will now people who can question the results and connecting them to realities where there will be missing numbers or non-existent information and data to begin with. This shift requires a deep understanding of AI technologies and their implications for business strategy.

Data Literacy and Analytical Skills

I remember way back in my college days how difficult to learn the skills needed to pass a statistics class. Now, understanding data is just a basic to survive in the business world. As AI systems rely heavily on data to function, managers must be proficient in interpreting data outputs and deriving actionable insights. This involves not only understanding statistical methods and data visualization techniques but also being able to communicate data-driven findings to stakeholders in a clear and compelling manner..

Change Management

Below, in the first paragraph what AI wrote. The next paragraph I will point out what missing from this statement.

Implementing AI solutions often entails significant changes to existing workflows and processes. Managers must be adept at change management, guiding their teams through transitions and addressing any resistance that may arise. Effective change management strategies include clear communication, training programs, and providing support to employees as they adapt to new ways of working.

As I read and watch AI stores, I noted how positive in tone the output, specifically in its writings, In condescending tone of to any past different way of working. One of the keys of change management is understanding the successes and habits of the current and past periods. There is value there. Yes, there are desirable improvements to be made, but to get buy in and best results you need to take this information and merge into past practices. People know when they are respected and know when they are not. If this respect is not there, change at its best will be suboptimal and may be sabotaged.

The Unknown unknowns

Experience is a teacher. When you have new workers, they are not going to know what questions to ask of the data. One of the more important aspects of managing is the role of the teacher. The manager needs to guide the staff on what questions to ask and what experiences the newer employees might not have. Data is not complete story. More so in the past, managers cannot assume their new employees can fully judge the data.

Conclusion

AI management requires top managers to acquire a diverse set of new skills, ranging from data literacy and technological acumen to change management and ethical leadership. As AI continues to reshape the business landscape, leaders must adapt and evolve, embracing a culture of continuous learning and collaboration. By developing these competencies, top managers can effectively navigate the challenges and opportunities presented by AI, driving their organizations toward a future of sustained success and innovation.

Here is another example of positive language AI uses to make it seem it is all knowing. It is not. It can be extraordinary useful (and worth it’s cost) but to manage it optimally its limitations must be understood. I think one useful example in understanding may be the example of usings robots in the warehouse. The most successful projects have the robots and people working together, in a process to increase the efficiency of the warehouse.  Robots free warehouse personnel of repetitive and boring tasks, but the people there can deal with frequently changing realities of work, better and more fully than a programmed machine can. Another example is calling customer service on a non-typical problem and the frustration to get beyond the recorded voices to have the real issue resolved. So, really useful AI, must be managed and used wisely.

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Nov 21

The new national administration & the supply

Posted on November 21, 2024 by Julian Blumenthal

There is a change of presidential administrations coming when President Trump takes office. Here are my thoughts on how the supply chain may be affected. Let’s discuss sustainability, supply and demand of transportation capacity, and federal regulation. Let’s avoid name calling and focus what the new Trump administration will mean operationally. Key take away is agile and flexibility will be needed in changing environment.

One of my favorite supply chain words is sustainability. This word not only encompasses environmental concerns but also whether the organization can continue and strive in its environment. Let’s look at the environmental aspect first.

Organizations have embraced environmental concerns, most importantly as a business concern. A lot of environmental concern is about eliminating waste and be more productive and cost effective. Few organizations will choose to be less cost effective. It is also true, that despite any lessening of environmental regulations, a firm’s market may demand environmental responsibility. So even if the political structure is less concerned about environmental responsibility, most firms will find in its business interest to continue their sustainability practices.

However, as the political situation changes, keeping a business sustainable operation may need to change as their markets change for long tern survivability. One needs to be alert to those changes

There are a lot of articles out there saying the truck recession is over, and spot raises have risen at this writing. If the government chooses to depart a large number of immigrates, it will have an effect on the number of drivers out there. It will affect the ability to manufacture with less people. It will affect government financial resources. It will concentrate resources in its priorities to move out illegal immigrants. All of this is to say, the ability to be agile in your supply chain planning is going to critical. None of your software is likely anticipating these changes in its programming code, like software was not prepared for Covid in 2020.

The upkeep of transportation infrastructure is critical. Organizations should prioritize maintaining the funding by government for these programs as its absence will affect cost of operations

There is a feeling that eliminating regulation will be a boon to business operations. Yes, you can find fairly easily overstep in specific regulations. But lets imagine all OSHA regulations are ended and there was no safety regulations were out there, would choosing to end safety in your organization actually improve costs and efficiency? Only in a very short term period, as legal injury costs would likely sky rocket and your production efficiency would go down as workers are unavailable. My personal experience is when truck driver hours of service violations occur, the accident rate increases and costs go up.

Certainly there is a place to consider whether individual truck drivers hours of service rules might be better off changed or any regulation. Let’s support a wiser approach then just cutting the rules off the books. Organizations should support a process to change regulations, rather then take a scissor to them to them.

It is wise for organizations to consider how the supply chain might change in the new political climate. Agile and sustainability should be the key note of the supply chain in this environment.

Posted in Infrastructure, Logistics, Logistics Safety, Management, Process Management, Supply Chain, Supply Chain Software, Sustainability, Trucking, Uncategorized | Leave a comment
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Apr 12

An Ode to “B” Customers

Posted on April 12, 2024 by Julian Blumenthal

Those of us who read supply chain magazines and books have read a lot about the wonder of “A” customers who supply the bulk of the companies’ profits and how to focus your supply chain to serve them efficiently. A strong argument can be made that where an organization should spend a significant effort and band width on “A” customers..

As almost in any manufacturing setting, workers in the field will tell you, the so called “B” customers will be the customers that keep the company sustainable. The whys of this are below. The “B” customers are significant larger number than “A” customers in most cases. From a supply chain perspective, your transportation providers are likely to know these customers on a one to one basis and handle the more nuance needs of the “B” customers.

Coincidently to writing this blog, TranzAct’s Mike Reagan, sent an email this week to his email audience telling about Sidney Yoshida. TranzAct is a supply chain firm which does supply chain consulting, LTL/TL sourcing and freight bill auditing.

In 1989, Sidney Yoshida essay entitled: “The Iceberg of Ignorance”. which said:

  1. Top Management knows 4% about the issues of the company.
  2. Next level of managers know 9% about the issues of the company
  3. Team Leaders know 74% of the issues of the company
  4. Front line worker know 100% of the issues of the company.

So this statement is a little bit over the top, but certainly true that many top-level managers just do not know (or sometimes cases care) about the details on how the market and customers really work. I have certainly seen disconnects from the knowledge in the field about customer needs and top management perceptions. The best run supply chains knows about the gap in information from the field and work diligently to obtain its inputs. Here is why significant time and resources should also be spent on “B” customers.

“B” customers are important to keep a company in business and sustainable. The usually large number of “B” customers are what covers the fix costs of the business. Since they are profitable customers the organization size is built around the demand needs of “A” and “B” customers. I have never seen a study of this, but without the “B” customers the “A” customers would not likely be profitable as fix costs will not be covered. While some “B” customers will come and go, many will be regular buyers of the company’s products. Their business is critical to the firm’s success. Many of these customers are on a first name basis with sales, customer service and sometimes even with production workers. They are source of demand information. When they complain, it is probably a good thing to listen to, heading off bigger problems and lose profitable business.

A lot and time and effort goes into designing a firm’s supply chain. Demand and supply planning, data management and automation take up time and money in most supply chains. In some cases, there is a disconnect supply chain suppliers, including trucking, and outsourcing partners. For the supply chain function well, this information disconnects must be factored in. I have time and time again found the field work outside the supply chain process to get necessary work done. Many times in practice, this information is put into the comment section of the order, so the work around can occur,

I am bit chagrined by the lack of discussion on “B” customers in supply chain literature. It is like they don’t exist. This is an area where there can be some improved processes.

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Dec 07

Supply Chain Resiliency on a Micro Level

Posted on December 7, 2023 by Julian Blumenthal

Lots has been written about Supply Chain Resilience since the Covid Pandemic started in 2020. Yes, it is important for the overall supply chain to be resilient. Planning for alternate production and supply sources is a good process.?Things fall down is on the local, individual level.?You can have the product you need and no way to get it to an “A” customer faster than normal. There is system resilience in the big picture but sadly the actual system delivery process is not designed for resiliency.

Let’s create a scenario to make this clearer. An “A” level customer has an emergency order from one of their “A” customers. Before ERP’s, TMA’s and warehouse systems were created, the sales person upon hearing from one of the assigned customers has a rush order, might call the plant supervisor, who can create the product by rescheduling some of the production facility in the plant to product the needed product. Maybe it is known a “C” customer shipment can be delayed. Transportation upon learning of the need, can call his biggest and most important carrier and say we need extra truck which needs an expedited delivery. For the volume business regularly tended, they will work to deliver the special need. There would likely be a higher than average cost, but for “A” customer this can be worked out. Plant shipping management would be advised and they would schedule their dock accordingly. The customer receives the product on timely basis. Their business is maintained and when a competitor to shipping organization comes in with a few pennies savings per SKU, the receiving customer remember the service received and says no the competing supplier.?

Today, in our digital world, there are organizations where this is impossible unless you operate out of system, which is not a desired process. When massive systems are created, resiliency on microlevel is many times blocked by the software system design. Plant schedulers cannot reschedule. Transportation cannot expedite. Buyers of the product often can see the big picture, which is incredibly important but may not have visibility to the day-to-day business issues occurring on the local level. Systems need to be designed to allow resilience and responsiveness to business needs.

Those organizations which allow resiliency on a micro-level have this ability will be marketplace winners.

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Oct 30

Truck Freight Broker Historic Change

Posted on October 30, 2023 by Julian Blumenthal

Convoy Logistics, based in Seattle, business failure a few weeks ago, can be used as an historic marker in the supply chain/logistics field. It means, to be successful, just having a super software model no longer guarantees success. It is a challenge to all the medium size and small 3PL freight brokers in the United States. That does not mean that there will be a bloodbath of freight brokers. Rather it means that the successful ones will need to have updated their business model.

I live in Chicago. Crane’s Chicago Business listed in 2022 fastest growing Chicago area-based companies in the last five years in the Chicago area. Three of them are freight brokers were listed. They are Transportation One, Edge Logistics and Redwood Logistics. Clearly there is a way to be a successful business.

In the early 2000’s, it seems all a freight broker needed to be successful was to have a basic super software which moved the ball forward, giving shippers opportunity to be more efficient in the supply chain and for many firms providing the first reliable data on their supply chain/logistics process.

In my nearly 50 year career in supply chain management, I probably received thousands of sales pitches from brokers. It was amazing to me, how few of those sales calls, the sales person, knew what made their organization successful. They will just tell me the broker they represented was wonderful. I attribute that lack of information, to failure of the CEO to look beyond the transaction basis of business and figure out how the organization can bring value to a particular group of customers.

There are larger freight brokers out there, such as C H Robinson which will be able to provide value to the largest firms with all its many physical and software technologies. Nobody can do it all, and brokers who can find their niche in a market, such as food, hazardous materials, etc., can be successful.

The freight broker industry in 2023, is expected to be down 20% than in 2023. A dip like that will clear firms which do not have understanding of a market in can be successful in. Yes, the business market drop was a major contributing factor in Convoy Logistics failure. I will speculate that there were deeper issues in the firm than just poor business environment.

It also says what made you successful in the beginning of the 2000’s will no longer be enough. For the majority of freight brokers, 3PL’s, finding a market niche they can be successful in will be crucial to sustaining the business.

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Aug 17

Supply Chain-Making AI Transparent

Posted on August 17, 2023 by Julian Blumenthal

There has been a lot written on AI. It is a software that learns from previous iterations and searching the web, maybe both internally and externally. There are many opportunities to use this software in the supply chain and it will undoubtedly be beneficial.

But there will be times the incorrect or sub-optimal solutions will happen. There seems to be a word this type of issues, “hallucinations.”

My experience with supply chain software is it always had it biases. I discovered what those biases is through using the software. These biases are more pronounced when there is an unanticipated change in the market.

Right now, AI is mostly a black box. How does it make decisions?

Would it be useful to have the software be transparent on how it made the calls or decisions on a given topic? The chosen response by the AI software may have one piece of information heavier than another piece of information. For example, if recommended storing product X at a further warehouse, why did the software make that recommendation.

Software sellers love to sell the magical black box, a software that is always gives the best outcome. To make your best business decisions, there needs to be some transparency in the software recommendations came about.

Like good robotics, the best products enhance the employees of the company to be more efficient and increase productivity and safety. The organization and its employees really cannot do the best job if they do not understand what the software is telling them to do.

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May 17

ChatGPT, AI and the Supply Chain

Posted on May 17, 2023 by Julian Blumenthal

I am sure leaders of organizational supply chains just let out a sigh as yet a new wave of Logistics/Supply Chain software is coming down the pike. The main brand is known as ChatGPT, and will have other names as well as from other suppliers. I am going to call it DMT for Data Management Tool. I am going to recommend supply chain leaders look at this tool on two different levels. One for smaller applications and one for larger application

Supply Chain departments are typically organized with top people and lower-level people who has a primary responsibility of assembling data for organization understanding of what is going on and initiatives. Additionally, the lower-level people typically also handled day to day supply chain issues and are the main communication leak to others inside and outside the organization, particularly lower levels.

A smaller application DMT will make these lower level people more efficient as it minds basic data internally to the organization and externally on the web. Will these lower levels positions become unnecessary with DMT? No, because, providing context to the information, both from internal and external perspective, will still be needed. If data leads to process changes, change management will be needed and the lower level positions will need to carry this out. Supply chain processes ultimately are people management position.

This small application DMT should not be outlandishly expensive. You can some these tools for free on the web, but I believe a system working primarily on company databases and focused web sites, is worth a relatively inexpensive expense.

There are some large organizations with highly complex software and data needs. DMT, as an add on software, may have significant benefits which will make a higher cost worthwhile to spend. A large organization such as Kroger, will have different and more complex needs and software than successful mid-size firm let’s call it Joe’s Manufacturer. Both of them will benefit from a low cost DMT but Kroger would probably benefit from the larger application.

It will be interesting to see how this plays out.

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