CVS Health supply chain’s vigor relies on critical Link
It’s only fitting that the man responsible for leading CVS Health Inc’s supply chain team happens to be named Link. As senior vice president of logistics and supply chain at CVS Health, Ron Link views connectivity and collaboration as critical to the health of the Woonsocket, Rhode Island-based company, which has 9,762 retail locations in 49 states (all but Wyoming), the District of Columbia, Puerto Rico and, via an independent operation, Brazil. As part of his responsibilities, Link ensures that the company deploys leading-edge technology, advanced analytics and a hybrid of private fleet and third-party logistics operations to help get the job done. A graduate of Edinboro University of Pennsylvania, Link spent 11 years as operations manager at Wakefern Food Corp., supplier of ShopRite stores and other supermarkets, prior to joining CVS in 1994 as director of distribution operations. He then served 11 years as vice president of logistics prior to taking on greater responsibility for the past nine years as the company’s senior vice president of logistics and supply chain. In advance of the Coalition of New England Companies for Trade’s 21st annual CONECT Northeast Trade & Transportation Conference, April 11-13 in Newport, Rhode Island, Link shared thoughts on business and family with the American Journal of Transportation. How has your company’s supply chain evolved since 1994, when you joined the regional chain then known simply as CVS, to today’s CVS Health, a pharmacy innovation company with more than 9,700 retail locations? When I started with the company, we had three distribution centers that serviced the Northeast, which was our primary territory. Shortly thereafter, the company began to grow aggressively. Currently, we have 18 distribution locations, and we’ve broken ground on a 19th, in Kansas City, Missouri, which is scheduled to be operational in the third quarter of 2018. The new DC provides us with a very strong distribution point right in the middle of the country to service our current stores there. The supply chain has needed to keep pace with the company’s growth. I’ve always been very, very proud of our infrastructure, our capabilities and the investments we have made in our assets, technology and people. Just as we’ve grown in scale, we’ve also grown in complexity. We’ve been able to build a great team, which plays an integral role at CVS. And it’s really become one of the strengths of our company and our supply chain organization. We have many talented people whom we have hired or come aboard through acquisitions, and many have grown into roles of increasing responsibility. Do you see technology continuing to play an increasing role in the supply chain? Absolutely. We need to have both the right people and the right technologies. You need to be in that mode of constantly evaluating what makes the best sense for your business. The way I look at it is defined as point-of-use solutions – solutions that will provide optimal benefit for the segments of our business. Another piece that comes into play a lot is the use of more advanced analytics, having better tools and insights to analyze data and be in a better position to forecast and project outcomes. It puts us in a far better position to align and ensure – whether it’s from a capacity planning or a pure forward-looking operational view – that we have all the right pieces in play. Can you please provide a bit of detail regarding your strategy of distribution campuses served by company fleet trucks as well as third-party logistics operators – I believe including Ryder, Penske and M&M Transport? That has been our strategy for a number of years. For me, the value proposition associated with this blended approach achieves a couple of things. First of all, in the locations where we have our private fleet operations, we have a lot of tenured drivers who are very knowledgeable, and we have very, very low turnover. The quality of the service there is extremely, extremely high. When you’re dealing with a transportation industry environment with driver shortages and sourcing of drivers in general, it’s becoming more and more challenging. So we’ve had a high degree of success with the private fleets that we’ve had in play as part of our operating model. That being said, we also have third-party operations. These have come into play because many of the facilities where we have our 3PLs tend to be larger or more complex at times. With those operations, having a 3PL affords us the ability to have more flexibility in the 3PLs’ ability to scale and adapt to some of the business changes, so it’s a lot more effective for us. I also do like the fact that, when you have a blend like this, from a business point of view, it keeps you in the mix as far as understanding the business at large. When you’re managing private fleets and have people who are subject matter experts, you are truly knowledgeable of industry trends. It keeps you close to the transportation business and ensures that it doesn’t become something where you’re totally dependent on a 3PL to make decisions for you. How does the supply chain piece having a seat at the table in development of broad company strategies prove beneficial? It’s really critical, and it’s an absolute requirement to have that as part of our company’s operations. In the supply chain, you think about everything from sourcing of products to servicing our customers in our stores. Essentially, the vast majority of companies’ strategies in one way or another is going to touch or impact the supply chain. So it’s critical for us. We are at the table. We’re always actively engaged and partnering with all of our business partners to look at ways to drive better value, ensure that we’re doing the right thing for our customers, doing the right thing for our stores, not only from a standpoint of service but also providing input around what is the best way or most effective way to do things from a supply chain perspective. How important is collaboration in running an optimally efficient supply chain? It’s critical. Without collaboration, there’s no way to really be effective in doing the work that we do, especially when you think of it in relationship to our supplier partners. The value of that collaborative partnership is being able to jointly look at ways to drive incremental value, to drive incremental sales, to take cost out of the supply chain, to ensure that we’re optimizing bill rate and service to our stores. That’s critical from an alignment point of view. And then you’ve got that same level of collaboration that takes place from within the company, with all the business units. But the supplier component of the collaboration is absolutely critical. Have you ever thought about the interesting coincidence of your having a surname of Link and your having forged a long supply chain career? I’ve never really thought about it a lot. It sort of comes up from time to time, but I never honestly really gave it a lot of thought. It’s interesting that you brought it up. I’ve been fortunate to have a career in the supply chain. It’s sort of in my DNA. My father was a plant engineer [in Secaucus, New Jersey, with Christian Salvesen, now part of Norbert Dentressangle], and my grandfather worked in a distribution facility for Kuehne + Nagel. Working with my dad in my earlier years, through high school and college, being at the plant he worked at, really sparked my interest in pursuing this as a career. I’ve really been fortunate to be involved with really good companies and doing the work I’m doing. Where and how did you develop your proficiency in the German language? My parents are German. They came over to the United States in 1957. I was born in Washington, D.C. They still speak German and are obviously very proficient in speaking English, but I would have to say that, in my early childhood, German probably was the first language I learned, and it is a requirement if you want to interact with your relatives abroad. Does it ever come in handy in your work? It has. We have some strategic business partners with a company like [automated picking solutions provider] WITRON, which is a German company, so it does come in handy. When they come here or when I’ve had to travel to Germany, it obviously does help. I understand it better than I can speak it, but, if I had to get into the zone, I probably could pick up on it pretty quick. What non-work interests do you enjoy? I really enjoy spending time with my family. I’ve got a great family. I’ve got three boys. Two of them are married, and the other son is in a real strong relationship. I really feel blessed with my kids and my daughters-in-law and my wife and the rest of my family and the support system I’ve had with them over the years. I enjoy quality time fishing with my boys and going and playing golf. With the three boys, we’ve got a natural foursome there. Aha, the Links on the links… Does that ever get tense? Yeah, sometimes it does. There’s always what I would call that spirit of competition that comes into play, but it’s always a lot of fun. For us, it’s about being able to spend quality time together – and that’s what it’s all about right? Jawohl mein freund!