Today we are joined by Jim Tompkins, the chairman and founder of Tompkins Ventures, and a globally recognized authority on supply chain strategy. In this episode, Jim shares his incredible journey from industrial engineering to becoming a leading figure in supply chain management. Learn about his extensive experience, including starting 15 businesses, authoring 31 books, and driving profitable growth through innovation and thought leadership. Discover the impact of e-commerce on business, the importance of resilient and adaptable supply chains, and the future of global logistics.
Jim is an expert in designing and implementing end-to-end supply chains, with decades of experience in supply chain strategy, warehousing and distribution, logistics, material handling, and industrial engineering. As a consultant, lecturer, and researcher, he has helped numerous companies enhance their profitable growth. In 2020, Jim founded Tompkins Ventures, a global solutions network, and co-founded Tompkins Leadership in 2022. He holds a Ph.D. in industrial engineering from Purdue University and has received numerous awards, including the Frank and Lillian Gilbreth Industrial Engineering Award.
Key Highlights:
- Jim’s transition from industrial engineering to supply chain management
- The impact of e-commerce on business and supply chain solutions
- The importance of resilient and adaptable supply chains in today’s world
- Insights into effective supply chain strategies and planning
- Lessons from Jim’s entrepreneurial journey and his successful ventures
Comment your thoughts on Jim’s journey and insights into the future of supply chain management.
Follow Jim Tompkins: LinkedIn: Jim Tompkins
Visit Tompkins Ventures.
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Listen to the podcast here
The Future Of Supply Chains: Expert Insights From Jim Tompkins
Jim Tompkins’ Journey Into Industrial Engineering
I’m sitting down with Jim Tompkins, the Founder-Owner of Tompkins Ventures. He’s got 40 years of supply chain expertise and has written 31 books in his career. I’m very excited to talk to him. Why don’t we jump right into it? Why don’t you tell us a little bit about your journey? I thought it was a pretty cool story when you told some earlier. How did you get into industrial engineering? How did you decide to specialize in supply chain management?
When I was about eight years old, I liked taking things apart and putting them back together. My father, who was a house painter and had a sixth-grade education, said, “You want to be an engineer.” Dad didn’t know what engineers were. He didn’t know mechanical engineering, industrial engineering, chemical engineering, and electrical engineering. He didn’t know. He didn’t have a clue but he knew I should be an engineer because he had seen TV programs where engineer people figured things out.
When people say, “What do you want to be when you grow up,” I said, “I wanted to be an engineer.” That stuck with me until I was a junior in high school. We had to write a paper for our English class, “What do you want to do when you grow up?” I wasn’t a really good study guy when I was in high school. In fact, I spend more time with my sports than I do with my books.
I wrote some stuff down about engineering. The teacher felt that maybe she could motivate me by giving me the option of reading my paper to the class for their fun and enjoyment or giving me a chance to rewrite the paper. I took the option of rewriting the paper. I went to the library, looked at some books on engineering, and found a book on industrial engineering written by a guy named Don Burnham, who was the Chief Executive Officer of Westinghouse. He was an industrial engineer.
He wrote about his profession and I thought, “This is cool.” Plus, it told me what an industrial engineer does so that’s what I wrote the paper on. I wanted to be an industrial engineer. When I wanted to go off to college, people said, “What are you going to do?” I said, “I’m going to be an industrial engineer.” I became an industrial engineer.
Contrary to a lot of people, I liked that. It was not an informed choice but it was a good choice. I went to Purdue and got a degree in Industrial Engineering. Once I got into that degree. I found that I liked what we called industrial distribution back then. We didn’t have the word supply chain back then. I worked in industrial distribution and finished my Bachelor’s degree.
A professor recruited me to go for my Master’s. I was married at that point and said, “No, I don’t want to go for my Master’s.” He said, “Why not?” I said, “My wife and I are poor. We want to make some money and go buy a house and everything.” He said, “I got it for you. I want you to be my graduate student. I will pay for education, your books, your room and board, and for you and your wife to get a new car. What else do I need to do?” I said, “Let me talk to her.” We talked about it and I went for my Master’s in Industrial Engineering.
When I was working on my Master’s, I fell in love with research. I then worked on my PhD. The thesis and dissertation were in the field of industrial distribution. What I was about was moving things from raw materials to manufactured products to the consumer. That is what we call the supply chain but that’s the profession I chose twenty years before we had the term supply chain.
You went from a very academically heavy beginning going all to get your PhD. You told me last time a little bit about a pivot you made over more to entrepreneurship. Can you walk me through how you made that pivot a little bit?
I finished my PhD and spent three years in the Army. My wife and I were poorer. We were ready to make some money and catch up with the people we had graduated with with our Bachelor’s degree. I took a job at NC State University. It was a great job. I had a great boss. Everything was fine until payday came. I got paid considerably less than I had anticipated. I had a problem. I went to my boss and said, “I need to make more money. We’ve bought a new house, a washer, and a dryer. I can’t pay the car bill, the washer, the dryer, and the mortgage, let alone have any food to eat, clothes to wear, or gas to put in the car. I need to make some money.”
The Start Of Teaching Seminars And Consulting
He said, “Why don’t you teach some seminars?” I said, “That’s a good idea.” I taught some seminars like a course in the summer of 1975 that I called Planning and Managing Warehouse Operations. I tell you, Paul, that was the best course in the world on warehousing. How do I know that? It’s because it was the only course in warehousing in the world. No one else was talking about warehousing but this course caught hold. A lot of companies were saying, “We’re having trouble with our warehouses.” Go to the seminar. I wound up teaching that seminar around the world.
What I learned after teaching this seminar about 25 times is every time I had 20 people from the industry attend the course, I would get one consulting project so I started doing consulting projects. I couldn’t do the scheduling of the seminars, teaching at the university, and consulting at the same time so I hired a graduate student to help me with consulting, another graduate student, and so on. In 1979, my wife sat me down and said, “Do you know that your part-time job is providing six times as much income as you’re making from NC State?” I said, “No, I haven’t worked on that.”
She said, “Here are the facts.” She showed me the facts and then we decided. At least this is my story. My wife’s story is that she decided but I had a vote. I left the university and became an entrepreneur. Did I know I was an entrepreneur? Did I make a decision to become an entrepreneur? No. I made a decision to leave the university and pursue my seminar and consulting business because I felt that was a path towards making a better living for myself and my family.
I have to ask. What were the three key takeaways you think that people were getting from your seminar? What were the key supply chain or warehousing challenges in the ‘70s?
Where we were in the ‘70s, there was no application of science to the warehouse at all. With planning and managing warehouse operations, I started with planning. I said, “You have to plan your space, your equipment, how you’re going to use that space, and the tracking systems.” Back then, we didn’t have warehouse management systems but we did have a variety of tools that allowed us to do locations and keep track of how much inventory we had in the warehouse.
There were some basic principles of receiving, shipping, picking, and packing right, and how you locate the product. There’s the ABC analysis where you put the most popular items close to the point of use, and then your B and C items you put in the back. That’s something we all do in the kitchen. We put the everyday dishes next to the sink, put the dishes we use only on Sunday up above the refrigerator, and the turkey roasting pan, which we only use on Thanksgiving, we put in the attic. That’s ABC inventory.
We didn’t do that in warehousing so I took basic principles of industrial engineering and applied them to warehousing. That was the big breakthrough, the scientific approach to warehousing. That resulted in a lot of people saying, “We need to do this but we’re not sure we know how.” That’s why they hired us to do consulting for them. We came in, relayed out their facility, and showed them how to use their space and labor better. They got promoted and were happy. We got the next project, the next project, and so on that led to material handling systems design, and in the mid-’80s that led to warehouse management systems and the application of technology. The business exploded from there.
You’ve also started a number of other businesses. You told me fifteen with a couple of billion in revenue. Are there any themes you’ve noticed across those businesses that allow them to be successful or in other businesses you’ve seen that make them not successful?
Some of those businesses have been very successful, some of those businesses have been mildly successful, and some of them didn’t work out at all. The common theme is I had the right vision with the right strategy and the right team that was aligned with the vision and strategy. I thought when I was doing it early on that having the right vision and strategy was the right key.
That allows a small business to become a little bigger but to grow that business that’s going to something be successful, you need the right people and alignment. If you have the right strategy and vision but you don’t have the right people or the ability to all pull in the same direction, you’re not going to be successful. Alignment becomes a key component. If we don’t have all those components, we’re going to have a real problem.
Building on that, you’ve got a team behind the vision. You can’t personally run fifteen businesses. You have to have good leaders in your org. Why don’t you tell me a little bit about a leader in one of those businesses that stuck out as someone who was a good entrepreneur and good at leading their teams?
If you’re going to lead the business, you have to be fully accountable. The reason accountability is so important because you expect that from your people. You can’t expect it from your people if you’re not doing it yourself. You have to be responsive. You need to have respect for people. You have to shut your big mouth and listen. A good entrepreneur will be right about 30% of the time. The other 70% of the time, he’s not right so what you need to do is learn from the people around you and your mistakes.
If you assume you’re right, you’re in trouble. You’re going down. If you assume, “This is the best decision I can make. However, I’m willing to review it as I go through the process,” you’ve got a good shot at being successful. Let’s face it. There are two things you can do in business. You can do something right, which is marvelous, that’s great, or you could do something bad and wrong. That’s good too if you learn from it.
Making stupid mistakes isn’t a stupid mistake if you learn from it. That’s an opportunity to learn. Those lessons will come back and come back. This is not a good trade but it is one I have. I have the tendency sometimes to make the same mistake over again. Doing the same mistake over again does not save you time but sometimes, it drives that understanding deeper and then you learn from that and say, “I’m not going to do that again,” and then you don’t. It’s an interesting evolution. It’s not that you’re bad and then you’re successful. The whole thing is a process and you have to enjoy the ride.
Founding Tompkins Ventures And Its Mission
Let’s pivot up a little bit. Why don’t you tell us a little bit about Tompkins Ventures? You started that around COVID time. What are your core objectives with that venture?
Tompkins Ventures was a realization that there is a tremendous amount of disruption in the world. It was in 2020 so this was COVID time. The amount of uncertainty that we had was paramount. It was driving people out of business. This had a huge impact on the supply chain. There became a new awareness of this thing called resilience, which required that you look at a wide variety of solutions. You didn’t just optimize on the best but you optionized. You had the ability to have a solution like, “If this happens, I’m going to do this.” You’re looking at the options.
I should have learned this. My son, when he was six years old, came to me and said, “Dad, I want to quit football.” I said, “Jimmy, you play good football. Why do you want to quit?” He said, “The coach tells me to do the same thing on every play. I’m an offensive and a defensive lineman. What he tells me is to knock the guy down in front of me. My basketball coach says that when I bring the ball up the floor, I’ll look at the defense I’m playing. If they do this, then I do this. You’re looking at the options. He said that any idiot can play football but it takes someone with brains to play basketball. I want to quit football and play basketball.”
I thought, “This kid’s teaching me a lot here.” That’s how business should work. You should have optionality in what you do. What we did is create Tompkins Ventures, not as people who solve problems but as people who do matchmaking. What I do is find someone who has a problem, find someone who has a solution, put them together, and then get out of the way.
We have 172 business partners in 44 countries that we are looking for problems. We have several thousand commercial partners, capital partners, and consulting partners that we can play matchmaker with. We find this guy has a problem and this guy has a solution so we put them two together. When they have success, we will be paid a small success fee.
At Tompkins Ventures, we’ve got 172 partners. We only have three full-time people. The overhead for Tompkins Ventures is less than $500,000 a year but we have the capacity to do more work, breath, and depth than McKinsey, IBM, and Accenture combined. We have a network of networks. We’re an ecosystem that’s alive, moving, changing, and growing. It’s cool with this capability. For most people in business who have a problem, especially if it’s related to the supply chain, we’ve got a solution for them and it’s going to provide them great results. What Tompkins Ventures does is it helps people who have a problem to find a solution.
What Tompkins Ventures does is it helps people who have a problem to find a solution. Share on XExamples Of Successful Matchmaking Projects
Can you give me an example of something that you’ve match-made in a problem-solution set that you’ve done? I want everybody to get a flavor of these different situations that you’re working on.
Sometimes, they have huge scopes and sometimes small scopes. A small scope doesn’t mean the impact is small. We’re working with a company that has a $52 million domestic transportation spend. What we have done is reduce that transportation spending by 26%. What we’ve done is look at what you’re moving, where you’re moving, how you’re moving it, the best technologies to drive that, and the right carriers to make those moves.
Here’s a company that we’ve been able to save something like $13 million out of $52 million. That’s significant and important for this company. Probably one of the bigger scopes that we do on projects is where a company is going through nearshoring. They’re saying, “We used to buy everything from China because China was the factory of the world and it was the cheapest.” China is no longer the cheapest. What we need to do is change our sourcing, transportation, distribution, and fulfillment. It changes the entire supply chain.
They say to us, “We were sourcing these products from China. Now, we’re going to source these products from this hemisphere and get some products from South America and Mexico. We’re going to bring these products together, maybe in the Dominican Republic. We’re going to assemble the products and then deliver them to the United States.” What we need to do is all new communications, technology, transportation, warehousing, and delivery, be it B2B or B2C.
We’ve done one of those where they decided to move from China and do the manufacturing in the Dominican Republic. Instead of sending it right into the US and having expensive storage, we’ll keep it in the Dominican Republic where their storage is much cheaper. We go from that Dominican location to three mixing centers on demand. We know how much is in there and how much is going out. We replenish what’s gone out. Those mixing centers take some of this product and they can go to B2B or B2C. The savings are created in inventory alone.
We’re not looking at, “This is B2B inventory and this is eCommerce. This is B2C inventory.” No. We’re saying, “We’ve got inventory.” We can go either way with it. You can ship it to a store or directly to the consumer. By doing that and allowing us to have an integrated system to make that happen, we can reduce inventory. In that particular situation, we’ve gone from 4 inventories a year up to 9 inventories a year. It has a huge impact on the bottom line of the company, the reduction of warehousing space, and the greater return on assets. The company is doing well. That would be a large-scope project. That gives you between doing one component of it versus the entire supply chain.
I don’t want to go too deep on here but why is it advantageous to pull your team in versus building those capabilities in-house?
It’s an issue of the core competency. A lot of organizations have great core competencies in some of those areas. I would suggest continuing to use your group if that’s a core competency. A lot of companies have core competency doing A, B, and C but they need to accomplish A, B, C, D, E, and F so they should do ABC. Let us do DEF.
What are you seeing as big opportunities in the supply chain as a whole? It was the lowest total cost for years and years. COVID flip-flopped that but where do you see the puck moving with respect to the supply chain?
The biggest challenge since COVID is dealing with uncertainty. Before COVID, what we did was just-in-case inventory. We had large warehouses full of inventory just in case. Things ran well. We had good customer service. We bit the bullet on the cost and thought, “This is what it costs to do business.” As we started looking at a relatively predictable demand, we developed a relatively predictable supply and that allowed us to eliminate a lot of inventory. We went from just-in-case inventory to just-in-time inventory. We had just-in-time inventory and things were operating well.
I mean 2016, ‘17, ‘18, and ‘19 were marvelous years for business because we had great customer service at a minimal cost. All of a sudden, COVID hits and our supply becomes very erratic. We’ve got a piece of paper that tells us these components are going to be arriving in my manufacturing plant next Tuesday. The fact of the matter is they haven’t even left China yet. They’re still in China. We’re planning on making these products that we need to fulfill the customer demand and we don’t get the components in. We oftentimes won’t know that. This is going back a couple of years. Until Tuesday, the truck doesn’t show up and we say, “The truck didn’t show up. I guess they have to send all those people home.”
I have the factory sitting there idle because we don’t have the components that we need to build out the finished product. What we learned is the supply is unreliable. What we need to do is go back to just-in-case inventory. We flipped the switch to just in case. We built these bloated warehouses with way too much inventory or we suffered from not being able to deliver our customers on time.
What happened is the demand went crazy. Everyone had to stay home. When you stay from home, your eating habits change. Instead of selling the big thing of tomato soup to the local diner where they get 40 servings in a can, people are buying more from home. You can find all sorts of tomato juice to sell commercially to restaurants but you can’t find tomato juice in the small bottles you want to drink from home.
It’s the same with toilet paper. At home, we use two-ply paper at the office and the hotel. In restaurants, we use a single-ply paper. All of a sudden, COVID hit. We didn’t have a toilet paper shortage. We had a two-ply toilet paper problem. What we found is we had this supply and demand that was erratic. We tried to solve the problem by doing just-in-case. We wound up. We had cost problems. The whole supply chain blew up. We couldn’t fill orders on time. When we did fill the orders, it cost too darn much.
We got all this data but with no insights or real information. As we’re looking at the supply chain problems, we can’t go back to having these giant bloated warehouses. What will the hybrid look like in the next years? We don’t know but we also don’t want to go back to not just toilet paper flying off the shelves like in COVID, where it got empty.
The first thing we have to do is create a truly connected supply chain. If you look back in 2019, most companies had a real good feel of what their suppliers and customers were doing. They had no idea what their supplier’s supplier’s supplier was doing and what their customers’ customers’ customers were doing. You believe what your supplier told you but your supplier couldn’t deliver on his promise because his supplier didn’t deliver on his promise, which didn’t deliver on their promise. What we have is a house of cards. One card falls and the whole supply chain stops operating.
What we have is a house of cards. One card falls and the whole supply chain stops operating. Share on XThe first thing we have to do is create connectivity. The second thing we have to do is provide visibility. We’ve got to be able to see what’s out there. Once we see what’s out there and what’s happening, we then need to have a real-time system telling us when something goes bad. When something goes bad, we have the information to know how we respond to that. We can proactively respond as opposed to reactively respond and say, “The truck didn’t show up.” That gives us the capability of synchronizing supply and demand, which is the objective of the supply chain and we can do it with technology.
What are the pushbacks that you’re getting from companies about why they can’t invest in supply chain tech or are you getting pushed back? It seems like a no-brainer but it could be moderately pricey.
The challenge is the issue of allocation of capital. The company has $1 with the capital and $5 with the request. The question is how we get this accomplished. The supply chain is not well understood by boards and CFOs. They tend to look past the opportunities to invest money in those activities and instead will invest money in ERP systems, sales promotion, and marketing campaigns. The supply chain gets left out.
The Evolution Of Supply Chain Respect And Leadership
What happened in the 2021, 2022, 2023, and 2024 timeframe is all of a sudden, people realized that if you don’t have resilience in your supply chain, you are not going to be able to deliver on your customer promise. Therefore, you won’t be profitable. The respect between 2023 and 2024 is unbelievable. Supply chain consultants are highly in demand. Whereas years ago, they thought you were the equivalent of maybe a guy who was the janitor. They weren’t thinking that you would be using a profession.
It’s been amazing. I feel the overnight success. For the last several years, I played in a piano bar and made $40 a night working my tail off. All of a sudden, bingo, overnight success. I’m singing in the largest amplifiers in the country and getting paid the big bucks. The overnight success wasn’t overnight. It was 40 years of working hard at developing these talents that all of a sudden are respected. There’s a huge evolution of respect growing in the board.
A supply chain guy even asked us to join the board. Are you kidding me? We’re getting chief supply chain officers. We never had those before. We used to have a Vice President of Logistics but then we got a Chief Supply Chain Officer. This new perspective is saying we need to invest money in the supply chain. There’s a great return on investment. That’s what’s taking companies and allowing them to jump forward. You have a new sales campaign but you can’t deliver the product yourself. Come on, that doesn’t help. We need to be able to complete a customer promise.
You’ve also written another book called Insightful Leadership: Surfing the Waves to Organizational Excellence. What drove you to write this book? You told me you took a break between books 30 and 31. Give me a little bit of context and then I’ll do a double click into that.
That’s a great story and it’s a great question, Paul. I wrote 30 books between 1975 and 2012. From 2013 to 2021, I wrote zero books. Why? If a guy had written 30 books, you’d expect him to write another book every year, every other year, or something. When I wrote books, I wrote them as a self-evaluation or self-analysis. I had made mistakes and the way I was learning from my mistakes was by putting down, “Here’s what I’ve learned in the last year.” That’s what I got each book but between 2012 and 2021, I hadn’t learned that much because I had been doing the same thing for 40 years.
I figured it out and I stopped making mistakes. When I stopped making mistakes, I stopped having stuff to write about. In 2020 and 2021, I won the grand championship for stupid mistakes. I made lots of mistakes. In that, we got a new book in 2022 and 2023 when it was published called Insightful Leadership. It was the process of learning about my mistakes that let me write books. I stopped making mistakes so I stopped writing books. In 2021 and 2022, I set world records for making stupid mistakes. Therefore, I wrote a new book.
What’s the key premise of the book? What’s your big takeaway? I’d love to hear about the themes that you think are important enough to write about.
The Concept Behind Insightful Leadership
The book is titled Insightful Leadership. What’s more important though is the subtitle, Surfing the Waves of Organizational Excellence. What it means is the world is uncertain. We have to get past believing we know what’s going to happen. The reality is disruptions are nonstop. This is going to be a disruption of economic problems, political problems, economic problems, global warming, or the attitude of the younger generation. Pick up any Wall Street Journal and you can find five disruptions that are taking place that are having an impact on business. What we have is constant disruption.
As you paddle, you get in front of the wave. That’s going to propel and accelerate you. Share on XMy beach house is on the ocean. What do I see when I look out the window? I see waves. The waves never stop. Sometimes, the tide is in that waves come up closer. Sometimes, the tide is out but there are always waves. If you want to surf those waves to your benefit and you’re a surfer, what you do is sit on the board and look at the shore. You’re facing the shore but you look over your shoulder at the waves that are coming and say, “No, that one is not worth riding. It’s not breaking correctly for me. The one behind it is not.”
Look at that third wave. That third wave back is breaking and rolling. It’s going to peak right here. What I need to do is get ahead of that wave because that wave is going to provide me the acceleration to get to the shore to create the improvement I need. As the wave approaches, I can’t just sit idle because if I’m sitting idle, that wave is going to wash over me. I’m going to hit my head on the bottom of the sand. Instead, what you do as the wave approaches is paddle. As you paddle, you get in front of the wave. As you get in front of the wave, that’s going to propel and accelerate you. Paul’s hat is going to fly off at that point because you’re going so fast. You’re going to wind up at the shore and have a great ride.
That’s what we have to do in business. We have to be insightful. Our leadership is not based on what happened in the past. Our leadership is based on what’s going to happen next. Wayne Gretzky says, “You don’t go where the puck is. You go where the puck’s going to be.” How do you know where the puck is going to be? You have insight. We have insightfulness.
Our leadership is not based on what happened in the past. Our leadership is based on what's going to happen next. Share on XGretzky had beyond-normal seeing and hearing. He could hear the puck and tell you where it was going to go. He could tell in each particular stadium he played in when a puck came off the wall based on the sound of where that puck was going to go. He understood where things were going to happen. If you’re using your insight, you know what’s going to happen. You respond to it by using that disruption as an acceleration to take you in front of your competition.
Let’s see a couple more quick questions here. The one we always ask everybody to wrap up is other than your own, what’s the favorite book you’ve ever read in your life? Why do you like it? Why is it impactful for entrepreneurs?
It was my first favorite book. I’ve had several since but my first favorite book was a book called The Science of Paradigms: Discovering the Future.
I haven’t read that. It’s going on my list.
It’s written by a guy named Joel Barker. The book is about twenty years old. When I first read the book, I thought it was a book about paradigms because the word is a paradigm. What is a paradigm? I thought a paradigm was a pair of dimes. I call it paradigms. What that book says is there are things that we think we know to be true that will turn out in the long run not to be true. The people who are going to be successful in business are the ones that discover the shift in paradigms.
Discovering the shift in paradigms has a lot to do with the way I thought about things. Not how’s the solution going to operate in the next six months but how’s this solution going to work over the next two years. That ties in with the optionality that we were talking about. We have to build solutions that are flexible, modular, and adaptable enough so that even when it hits the fan and something happens we don’t expect, the solution is still going to give us a great solution.
This book by Joel Barker is his whole philosophy of understanding if what you’re doing is improving what you’re already doing, you’re not going to be a successful entrepreneur. What you need to do is get in front of the next major shift, beat that paradigm, and you’re going to be successful. That was a major opening of my mind, which then led to a lot of other books that let me understand entrepreneurship, which is about harnessing the power of change. That’s why I would call that my favorite book.
This has been a lot of fun. Could you do me a favor? How can anybody get in touch with you? What’s the best way?
The best way is by email. It’s JTompkins@TompkinsVentures.com.
It was great getting to know you more. Hopefully, we can get face-to-face soon.
I look forward to that, Paul. Thanks so much.