EP 581: A Global Logistics Strategy Rooted in Optionality
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The New Warehouse Podcast hosted by Kevin Lawton is your source for insights and ideas from the distribution, transportation, and logistics industry. A new episode every Monday morning brings you the latest from industry experts and thought leaders. And now, here's Kevin. Hey, it's Kevin Lawton with the New Warehouse Podcast bringing you a new episode today. And on today's episode, we are going to have...

I could say a legend in the supply chain industry. On the show today, we're going to have Jim Tompkins, who is the chairman of Tompkins Ventures, now has been in the supply chain industry for 50 years. So what I can see from his LinkedIn experience, maybe a little longer than that, maybe a little shorter, we'll find out here. But we're going to talk a little bit about him.

his experience, what he's seen over that time in the supply chain industry, specifically in the warehouse side as well. We're also going to talk a little bit about what he sees going on in the industry right now around supply chain and the idea of re-globalization and how that's going to have an impact on the supply chain overall, but also, of course, the warehouse side of things, which we love here at The New Warehouse. So

So, Jim, it's a pleasure to get you on this show. How are you today? I'm doing really well, Kevin, and thank you for having me. And you've already set the bar high with that legend stuff. But you also said I have over 50 years, so they'll get ready for the old guy to make some mistakes. So all good.

There you go. I got you on both sides there. So you're covered. So it's a pleasure to get you on, definitely. And, you know, obviously, you've done a lot of things within the industry. The Tompkins name is out there and one that I think is well recognized throughout the warehouse side of things, definitely, that I see, but the supply chain as a whole. So why don't you tell us a little bit about your background and, you know, tell us about these 50 years that you've been in the supply chain.

Well, I began the pursuit of my career at Purdue University, where I got a bachelor's in industrial engineering, a master's in industrial engineering, and a PhD in industrial engineering at Purdue University.

And my focus there was material handling. I did material handling in factories and in warehouses. So that was what my master's and my Ph.D. dissertation were on. Because it took me a while to graduate from those three degrees, the U.S. Army thought I'd make a great soldier. And so they were in hot pursuit. And they actually drafted me the 17th time, three months before I finished my Ph.D.,

And so I went and sat down with them and said, guys, I need three months. And they said, the only way you can delay your entry by three months is if you enlist for three years, as opposed to being drafted for two. So I enlisted for three years.

And that turned out to be fortuitous because since I enlisted, I did not get sent to Vietnam. Everyone I went to basic training with went to Vietnam that was in for two years. Since I was in for three years, I got sent to New Jersey, which some could argue was equally bad as Vietnam. Oh, weird.

I got to ask because I'm literally down the road from Fort Dix-Maguire Air Force Base right now. Did you spend time there in New Jersey? No, I was at Fort Monmouth. I was across the state in what is now a Netflix movie studio. And I was very involved with the fort because I wound up –

essentially being the facility engineer. The facility engineer knew nothing about facilities or maintenance or engineering. He was just some colonel passing through. And he put his hands on me and said, go grow your hair, take those military tags off your car. I'm going to make you the facility engineer here. So here I was, you know, like 27 years old and I was running 450 tradesmen

I had a planning department of 10. I had a procurement department of 15. And what we did is we maintained the fort

called Fort Monmouth. And so I got involved with planning and procurement and transportation and warehousing. And it was a great experience. I actually learned quite a bit there. And it was a good Army experience. I left there in 1975, came down here to North Carolina, where I still live, and joined the faculty of NC State in the Industrial Engineering Department.

I taught facilities planning. I taught material handling. I taught industrial distribution. And then I began teaching a two-day warehouse seminar. I didn't do that because I loved warehousing. I did that because I needed to make money. I was poor. All my wife's friends and I had been married seven years and had houses and kids and so forth. And we did own a washer and dryer and a kitchen table. That was about it. And so I needed to make some money.

So my boss suggested I teach a course in warehousing. I'm quite proud of the fact that I had the best warehousing two-day seminar in the world in 1975. Now, how do I know it was the best in the world? Well, it was also the only two-day warehousing course in the world because back in 1975, warehousing was not considered a profession. And so me taking industrial engineering and applying it

in what I called planning and managing warehouse operations was quite a unique outreach. I began teaching that in 1975. I got my first consulting project, and I couldn't even spell consulting. I had no idea what consultants were. But I got my first consulting project in 1975 in helping people develop the warehouse, learn how to use their space better, learn how to use their labor better, better on meeting client requirements.

requirements and so forth. What I found is after teaching that course several times, for every 20 people who attended that course, I wound up with a consulting assignment. And so I now had the university job. I had the seminar job and I had the consulting job. Couldn't handle them all. So I hired a guy, a graduate student to help me with the consulting business. And I would give him Saturdays and I would teach him on Saturday what he needed to do the next week.

And then we got more consulting works. I had another guy and I gave him Sunday and then I gave the first guy Saturday morning, another guy Saturday afternoon, another guy Sunday morning, another guy Sunday afternoon. And we built the company that was called Tompkins International at that point. In the 1980s, we added to that practice inventory, transportation and network planning. And so we were doing pretty good full warehousing type of work.

By 1985, we then added warehouse management systems and got into the technology side. By 1990, we went further in technology in adding the physical distribution, the materials management side. We did TMS. We did OMS. We did forecasting. We did what was called visibility back then. It wasn't really what we call visibility now, but it was shipping and receiving applications.

that we worked with in 1995, we began implementing our projects from a project management point of view. In year 2000, we went beyond project management and became the first consulting firm that also was a material handling integrator. We created our first, um, we back then we call it a material handling control system. Today, we would have called it a material handling execution system and went there very heavily.

In 2005, we started opening offices outside of the U.S., got very involved with private equity at that point. We had three private equity partners over the years. All of them were great partnerships and had great experiences. In 2010, we no longer considered ourselves a distribution or logistics consulting firm, but a supply chain consulting and implementation firm.

In 2015, we started the company Tompkins Robotics, which is a very successful company, still in practice, as an extension of Tompkins International, which is still very successful. In 2020,

As a result of COVID, I decided I was going to retire. We had taken a very bad hit in our backlog. And so I decided it would be better to save jobs for the people than myself. And so I fired myself and retired and really enjoyed that for three weeks. And then I started the firm Tompkins Ventures. And so first 50 years was at Tompkins International. And the last five years has been at Tompkins Ventures. Wow.

Interesting. And, you know, quite the history there, I think. And I got to ask you because, you know, 1975 to 1980, as you mentioned there, you started this warehouse seminar and warehousing was not really looked at as a profession, you said. So, I mean, where were you getting the knowledge and the education yourself from? I mean, was this something that you kind of were researching and

you know, put together in this seminar and things that you had learned from what you were doing in the army or how did you put that together?

Yeah, so the word research wasn't a part of it. The word army was the key. And so when I was in the army and I had this 24,000 square foot warehouse with about $8 million worth of materials in it, it was a disaster. And if you've been around maintenance warehouses, you know that they are usually some of the worst run. And mine was the worst of the worst. And so what I did is I just went in and started using basic industrial engineering to make it get better.

Other military installations heard about what I had done. And so I actually traveled to other Army bases. I went to Fort Dix, as a matter of fact, and helped them do the warehousing. And I kind of turned that into a course in the Army. My MOS, which my military occupational specialty, was a 501C3, which was warehousing management.

and so i actually learned logistics and warehousing from the army which is where the military terms came from so it was a pretty good underpinning and then when i brought it out to the market i was doing things that to me were just kind of second nature it was the obvious thing to do but people attending the course said oh my goodness this is revolutionary um you know abc inventory looking at doing

pick and pass, doing some very basic things without technology, but just significantly improved the warehouse, was just that people said, oh my goodness, this is brilliant. Well, it wasn't brilliant. It was 101 for the Army. And so that was the foundation of how we did that.

Very interesting there. Yeah. And, you know, I know from like a logistics perspective, I mean, the roots of it are within the military. Right. And, you know, it's very interesting how you're able to to take that knowledge and kind of transfer it to the civilian world, I guess we will say. And, you know, I'm curious, too. I mean, at that time, you know, if that was the case, like you were saying, you know, I imagine from a consulting perspective, I mean, you were kind of maybe the only only game in town, essentially. Right. Yeah.

Yeah. In fact, I didn't even know I was the only game in town because I didn't know the consulting game. So I was a consultant, a successful warehouse consultant at Tompkins International for five years before I met another one like me. You know, it's kind of like, you know, the walking down the hall in the middle of the night and you run into a Martian, you realize, oh, my goodness, there are people from other worlds here. You know, and that's I was shocked that there was people doing what I was doing. But yeah.

That was an interesting revelation for me. Yeah, very interesting. And obviously, you know, goes to kind of show that foundation that you were able to build so long ago and then build these other companies based on that.

So now you're with Tompkins Ventures. You enjoyed your three weeks of retirement and I guess got antsy and needed to do something more, which is totally understandable, definitely. So tell us a little bit about Tompkins Ventures and what's different about Tompkins Ventures from Tompkins International, which you had retired from. Yeah, great.

Good question, Kevin, and it's really core. In fact, it's core to what you and I talked about when we first met in 2019, so kind of relevant to the Kevin and Jim discussion as well. Tompkins Ventures is a matchmaking organization, and so what we are is we are a community. We are an ecosystem of organizations that work with major corporations to solve major problems.

And so it's totally different than the traditional consulting firm. And so Tompkins International is the traditional consulting firm that does implementation. Tompkins Ventures is truly an ecosystem. And so let me explain that.

I believe everything goes through three periods. They go through a period of growth, they go through a period of transformation, and then reinvention. Some things do growth, transformation, and then die. Some do growth and then die. Some do growth and then transformation, and then go on to reinvention and start over with growth again. And so there's different patterns that organizations follow and that professions follow. If you look at what happened

In year 2020, obviously COVID happened. And what we found up until that point, the natural evolution of growth and

and transformation was taking place in the consulting business and specifically in the warehousing and supply chain consulting business, but in all businesses. Well, what happened then is when we went through this growth cycle at Tompkins International and we grew and we grew and we grew, and then because of technology, we would transform. And then we grow and grow and grow, and then we transform. And we grow and grow and grow and we transform. In 2020, it was time for reinvention because what happened

We had always done warehousing, logistics and distribution supply chain from a known perspective. We had certainty about what was going to happen. We had some understanding of what supply was. We had some understanding of demand. They were somewhat balanced. And so we could plan with pretty good certainty as to what

was going to happen. Well, the reinvention was the basic change that came about with COVID is that disruption became the new norm. Disruptions weren't something that happened and then went away. Disruptions are something that happened and then happened and then happened. And you didn't have a snowball chance of figuring out what was going to happen. And

And so transformation took place, but then we reinvented. To give you a kind of a business analogy on how this happens, Uber was a reinvention for transportation. Netflix was a reinvention for entertainment. Amazon was reinvention for shopping. Tompkins International was now in 2020 reinventing

itself so that it could get ready for the future. And as I looked at that, the challenge was huge because we had a large staff. We were the largest logistics supply chain consulting firm in the world. And now we had to we had to reinvent it. And that challenge was too large. And so with this new norm being disruption, we needed to understand how do we build warehouses? How do we build supply chains that are agile?

that are adaptable, that are resilient, that still meet the customer's requirements. Up until 2020, there was one thing was important, cost. Reduce cost, reduce cost, reduce cost. But after 2020, it went into more than just reducing costs and become much more complex. Well, there was three types of consulting firms back then. There was consulting firms that were very broad and very shallow.

And these were good consulting firms to do high business basics. But with COVID happening, high business basics was out. So the very broad, very shallow consulting firms didn't really fill a need anymore. Then there was firms like Tompkins International that were very deep but narrow.

If it had to do something starting with inventory, going through the warehouse, going through transportation to get it delivered to the customer, Tompkins International was awesome. Mm-hmm.

But if it got in front of the inventory where we were talking about branding or marketing or sales, not our field. If it got something beyond transportation into the circular economy, into sustainability or into anything that was down the road, trying to decide two-day shipping, four-day shipping, hey, man, I'm a warehouse guy. Don't ask me. Just tell me what you need. And so what we all of a sudden saw was

is that the deep but narrow was a great consulting firm to have. Tompkins International is a great company, but you had to manage those boundaries. And if you didn't have the boundaries managed well, you could very well go into an assignment with the wrong set of assumptions and wind up not doing well.

And so then the third type of consulting firm was very broad and very deep. These are the big guys, the big four and the McKinsey's and so marvelous firms really have tremendous capability, but the deep and broad, they have a problem in that they've got a lot of very, very, very good staff.

And so what they wind up with is a lot of overhead, and therefore their pricing is very high. And in fact, in many cases, when you're dealing with a disrupted type of world, they have outdone their cost is greater than their value. And so the value prop of the deep and broad was called into question.

And so I looked at that and I said, well, the firms which are very broad and shallow, those worthless firms like Tompkins International that are deep and narrow, you've got to be very careful on how to use. And the companies that are very deep and very broad, you can't afford them because they got so much overhead.

And so the consulting industry is not in a good place. That's when you and I talked in 2019. That was the advice I gave you is that consulting is not a good place to go. And this is why it was, it wasn't just based on my opinion. It was what was happening. And I believe starting sometime in 2022, 23, the consulting industry is going to go down, not knowing that.

COVID was going to happen in 2020. When COVID happened and the world blew up, the supply chains blew up, no one could ship anything on time. Everyone's costs were out of line. Transportation was crazy. What we had was an uproar. And the industry said, we need somebody who is deep and broad

but not expensive. Well, how do you get deep and broad and not expensive? Well, you don't hire those people. What you do is you create partnerships. Okay. And you, on a matchmaker basis. So you get an opportunity. Here's an opportunity. This is my opportunity. How do I solve this problem? Well, I need some of this. I need some of this and I need some of that. And I have partnerships. I

I have commercial partners. I have capital partners. I have consulting partners that I pull in and create a team specifically for this opportunity. And now we pay the people. But when that assignment is over, they go back.

to where they belong before. So they might have been consultants, they might have been deep and narrow, they might have been deep and broad. I mean, who knows where they come from? But you bring them together, you create the team, you solve the problem, and then you go on to your next. And so what Tompkins Ventures consists of is we have over 200 business partners who are typically past chief supply chain officer that are

that are in 50 countries around the world. We have thousands of commercial partners, capital partners, and consulting partners that serve as a portion of our ecosystem. And what we can do is create a solution team, create an innovation team that's customized for that specific opportunity. We work in the areas of leadership, logistics, in procurement, in entrepreneurial growth, and we work in, which one am I forgetting?

someone's gonna be mad at me. Oh, logistics. - How could you forget that one? - I don't know. It's where I made money for 50 years. So we have these five areas covered and we've got an unbelievable guys in the clubhouse that we can call out and we can hit the ball out of the park, we can pitch, we can field. We've got an awesome team that can get this work done. So we are low overhead,

very, very, very deep, very, very, very broad people that can work with clients globally to solve big, big, big problems. That's what Tompkins Ventures is. Very interesting. And I love that you kind of recognize that in the industry and were able to create this. And, you know, not only...

you know, grow another business. But then, you know, it sounds like also give a lot of opportunity to other people that are your partners out there as well and get them connected into your ecosphere, which you have been building for, you know, so many years. And I will say for the audience too, so what Jim is referring to in 2019, when we met, I was looking at starting some consulting. At the time, I was working as a

inventory control manager at the time. And I'm like, oh, maybe I want to do some consulting. And I found Jim on LinkedIn. I sent him a message. I said, Jim, I'm thinking about doing some consulting. What advice would you have? He said, don't do it. And I was like, oh, okay. Yeah, but I love that explanation there, why you were saying that. And I think that

You know, it is so interesting to see how the industry has changed since COVID and, you know, what that spurred. And, you know, you mentioned disruption in there. And I'm curious, you know, you know, 50 years in the industry, I'm sure COVID stands out as one, but I'm curious, like, what has been,

you know one specific event or occurrence within the industry in those 50 years that really kind of stands out the most to you and you think you know either maybe created a lot of disruption or maybe it was an event that really like progressed our industry as a whole.

Well, there's actually one of each of those. That's a great question, Kevin. I guess the first one is a repeatable instance.

And it's tied to technology. You know, when I got in the field, barcoding was just coming about. Then we went to EDI and then we started having automated storage and retrieval. Then we had voice directed warehousing. We had big data. We had a whole robotics thing and automation thing. Then cloud computing and then Internet of Things and then drones and autonomous vehicles and everything.

and then we had augmented reality and virtual reality, and then we have artificial intelligence. So each one of these, I mean, I can actually go back and I have about an hour and a half speech I give on this, and it starts with barcoding and then shows how it builds all the way through, and there's about 14 steps to that.

of every time we thought we said, "Oh, well now we have it. We have it all now." And then six months later, bang, up pops AI and now off we go again. And so that's one set of things or one event or one occurrence that kind of stands out that makes me realize that this is never going to stop. So the technology, I mean,

I was talking to a guy the other day and he said, well, everything that can be invented is going to be invented. I said, well, that might be true for the next three minutes, but four minutes from now, something new was going to happen. And we're going to say, oh, wow, I wish I thought of that. That's a good idea. So that's one thing. Another thing that happened, it only happened once, but man, when it happened, it was mind boggling. I recall it clearly. It was year 2000. I wrote the book called No Boundaries that year.

And No Boundaries was my attempt at indicating what was happening to supply chain. Before year 2000, people used the word supply chain and they were talking about within a company. So supply chain was the purchasing guy at Company X talking to the finance guy, talking to the warehouse guy, talking to the transportation, all from Company X. And supply chain was a function within a company.

In 2008,

One, I wrote the book, No Boundaries, and the book said, no, no, no, no. The big supply chain is not inside the company. In fact, I started using small S, small C for inside the company, capital S, capital C, when we're talking about starting in raw materials and winding up with a satisfied customer with a circular economy on the end. And so that was huge because our brain shifted

And we all of a sudden said, oh, you mean we need to know who purchasing bought this stuff from? And we need to know who the people they bought it from got the raw materials from? And we need to really understand that. Oh, my goodness, that's hard.

Because everything we did before was always done on the factory at 123 Grand Avenue. And we knew everything was in there. But now it's the whole world. And we could have stuff coming from India and China and Europe that's going to come into our factory. And we said, holy cow, this is a different problem. So that was an event where kind of, boing. Now, the thing that's interesting, there's still some people living in year 2000.

They still haven't got that this is revelation. And so when I talk to them, the first question I always ask them when I'm talking to them is, so you're a vice president of supply chain. What's in your, what do you do? And oftentimes they'll tell me, well, I don't have the full supply chain. What I really have, and then he gives me a long description. The answer is he has logistics.

And what he does is he manages distribution and transportation. That's all he does. Yeah. And that's not supply chain. And so, you know, we got to really look at this in a whole different perspective after that 2000, 2001 timeframe. So kind of interesting that it was a wake, it was a cold shower. Yeah. Yeah. Interesting. Definitely. Because,

you know, you think about now and you talk about, you know, Oh, I need to know where, where my materials are coming from, where the raw materials are coming from and how important has that become? You know, is this discussion around sustainability and sustainable sourcing and all these different things, you know, has become so prevalent. I mean, uh, it's pretty crazy to think about, you know, back, I would be like 25 years ago now, like, you know, that, that,

that was something that people were not even thinking about in any way. So it just shows not only, you know, how we've evolved our thinking around the supply chain, but I think also just, you know, the, I guess society as a whole has evolved too, because, you know, the consumer drives a lot of that inquiry and demand as well, right? So very interesting there. And, you know, talking about kind of where you're getting things from, and you mentioned a couple of different countries there. I mean, it's,

You know, as we look at the global supply chain now, and you recently put out a white paper on re-globalization, this idea of re-globalization. So tell us a little bit about from your view and obviously, you know, taking into account, you know, these 50 years that you've seen the supply chain evolve and develop and grow. What is this concept of re-globalization and what's happening within the global supply chain right now?

Well, it began, I was doing a study in 2018 looking at the rate of change

And I was looking at the number of bankruptcies. I was looking at the number of hurricanes, the number of weather and natural disasters, how many fires. And it seemed like in 2018, there was a lot going on that was turmoil. And then in June of 2019, I narrowed this down and I did a YouTube video and I resurfaced the U.S. Army term VUCA, volatility, uncertainty, complexity, and ambiguity.

And when I resurfaced that, I said, there's a lot going on that's upsetting things. And in fact, I believe your 2020 is going to be the most disruptive year in the history of mankind. Now, I did not predict COVID. I didn't know what the word COVID meant. I didn't know the word pandemic. I did not. But I did predict that.

that it was going to go capoe and it did go capoe and so in march of 2020 i can remember i came home from a modek show and my wife said we're going to lockdown i said oh really what time we're leaving

And she said, what? I said, what? I assumed lockdown was some new restaurant in town. I didn't know what the word lockdown meant. I mean, I literally had no idea. And she said, we're going to lie. And then she explained that. I said, oh, my goodness, that's crazy. What's that going to do to my business? Because I can't travel. And if we can't travel, I mean, I got hundreds of people that are on airplanes starting Monday morning. What do you mean we can't travel? And what do you mean we got to stay at home? And so 2020 was just a turnoff.

a total disaster. Now, it was interesting because it's when people learned about supply chain for the first time. My wife's girlfriends would call her up and say, I was watching the news and they're talking about supply chain. Isn't that what Jim does? My wife said, yeah, yeah, that's what Jim does. They said, so it's Jim's fault we can't buy toilet paper? And so, you know, we became famous because we were the guys that wouldn't allow them to get the beer at the local corner store anymore.

But so 2020, 2021 were absolute chaos. The supply chains didn't work. Nothing was happening. We came into it with just in time. We came out of it with just in case, but still not working. So 2022 is the first year we started to kind of come up for air and said, wow, firefighting is over, but this is still a mess. What are we going to do? And one of the problems I saw

was that the East Coast was out of capacity. We did not have any affordable land that we could build warehouses on, and we didn't have any labor to work in those warehouses if we could find the land to build on. And so we were really, really, really in trouble. East Coast United States is 70% of the GDP of the United States. And so we were in deep trouble without that capability. And so what I started doing is I started looking at what can we do to replace that?

And I identified the Dominican Republic as a potential solution. Went to the DR, spent time with the president and the whole country and worked on things and so forth. Actually wound up writing a paper called the Dominican Republic, the Singapore of the Western Hemisphere. And the concept was there is we were going to make the DR, the East Coast Warehousing and Logistics Center to ship into the country. But then what I started to see is right when I was figuring that out,

that the world started shifting some of its supply. And in 2023, I wrote the white paper called "The World Is Not Flat" because we started in 2023, China plus one.

And people started saying, we can't just go with China because they're unreliable. So we have to find a second source. And so we need to diversify our supply chain. And so then I wrote the paper, The World Is Not Flat, The Ying and Yang of Globalization and De-Globalizations.

So globalization and deglobalization were opposite effects. Some companies were buying more from China, some were buying less, some were switching to Taiwan, some were shipping to Malaysia, some were shipping to Vietnam. This whole thing was happening and there was a lot of changing going on and the changes that went on had huge impacts on the supply chain.

Because we changed the sourcing. We went from sourcing in China to sourcing in Vietnam. Guess what? The port capacity in Vietnam was inadequate. Guess what? We couldn't get empties in Vietnam. Empty containers. So we had a real problem with running that supply chain. And so then in 2024, the idea of re-globalization, because in 2024, we went beyond China plus one.

A lot of companies have gone to ABC, anywhere but China. And now where they're not sourcing from China, but China was the factory of the world in 2023, going back to 2005. Now, all of a sudden, we're not buying from China. We're buying from other places. So we have different sourcing. We have different raw material. We have different shipping lanes. We need to put our warehouses in different places. And so what we need to do is we need to re-globalize. What does that look like?

Reglobalization is nearshoring, reshoring, and friendly-shoring all combined. And so what we need to do is we need to look at each specific application

and saying, okay, this product is no longer economical to buy in this country or these raw materials. We've got to buy them someplace else. Where else should we buy them? What is the cost implications? What are the implications on inventory? What are the implications on transportation time? What are the costs related to that? And then we really got into the thinking, you know, it's not all about cost.

Because I've got minimal cost, and I also got minimum customer satisfaction because I can't get them this stuff on time because it's not coming in on time. And so what we started to do is look at how do we build adaptability, agility, resilience, and responsiveness into our supply chain. And that's what re-globalization is. Now, what's going to happen...

Six days from today, President Trump is going to take office. I'm not making a political statement here, but when politicians impact supply chain, supply chains need to impact politicians. And we're going to have this tariff thing.

Less than a week from right now, there's going to be tariffs on China that are significant. There's going to be other tariffs that we hear about that are a negotiating tool that aren't going to happen, at least not now. But Trump uses his art of the deal in negotiating, and he uses tariffs. You know, he said the word tariffs, the most beautiful word in the dictionary. And so he loves tariffs, and he's going to use that to reorder what's taking place out there.

He puts 20% tariff on China, which I think is minimal of what he'll do. There's going to be a lot of products that you no longer can afford to buy from China because guess what? China is no longer low-cost labor. Labor in Mexico is cheaper than it is in China. Labor is cheaper in Poland than it is in China. Labor is cheaper in India than it is in China. Labor is cheaper in the Dominican Republic than it is in China. And so what we're going to have is we're going to get rid of all single sourcing

We're going to have multiple sources so we can have, and this is my favorite word, we can have optionality. As an industrial engineer, I was taught how to optimize systems.

Optimization is dead. Optimization is obsolete. What we need to have is optionality so that if this happens, we do this. If this happens, we do it. It's like football. The guy's going to go out at the end. Does he pitch it or not pitch it? Depends what the defense does. And you have some optionality out there.

And so now what we're going to see is a lot of activity in India, Indonesia, Malaysia, Vietnam, Thailand, Mexico, Turkey, Poland, Brazil. And what's going to happen is we're going to re-globalize. And so what we need to do is put on our optionality glasses, evaluate sourcing.

That's going to impact transportation. That's going to impact warehousing and distribution. And that's going to impact the ability for us to meet customers' requirements. And so re-globalization is redoing everything we've done over the last 200 years to now make it work given today's real requirements. And so it's a big, big, big deal. Yeah. Yeah, absolutely. And I think it's very interesting there. And, you know, it sounds like

that optionality is certainly the way to kind of survive through through this right and figure out you know how can like you said football you know we're gonna oh you know defense is doing this we're gonna call an audible right and you know figure out how to do that but but having that contingency in play and you know knowing if that happens then we do this instead of

Oh, this happened. Now what do we do? Right. Knowing ahead of time, I think, is going to create that resiliency and be able to to navigate any disruptions like that. So I'm curious, you mentioned, you know, the tariffs coming up here potentially. And, you know, what do you think about from.

the other countries perspective right i mean we had just before christmas right the announcement from the the mexican president about the changes to to textile tariffs and things like that i mean do you think not only will we see you know internally from the u.s some changes around this but do you think we'll see more from other countries similar to what we saw from from mexico recently

Well, Mexico is our number one trading partner, and they're going to get even bigger. We've got to remember that it was President Number 45 is the one that negotiated the U.S.-Mexican-Canadian agreement. And that's the same president as Number 47. So he's not going to go back and redo what he did. Now, is he going to leverage the threat of tariffs?

to win his way with respect to the border and with respect to illegal drugs? Yes, he absolutely will. Because that's a high, high, high priority to him. And therefore, he will use what he needs to use to get the job done. And what was the Mexican president's response? What did she say? She said, yes, sir. Mm-hmm.

Okay. What did Trudeau did? He get on an airplane and now he doesn't quite meet the level of what we need to do to really work as a unit. And Trudeau's stepping down. So, you know, a lot of people don't like the bully nature of President Trump. But let's face it, we have been weaklings and we've been getting taken advantage of. So when we're putting a 20 percent tariff on China, we're not punishing China, which

We're just trying to get the playing field level again. And what Trump doesn't want us to have an unfair advantage, but he doesn't want us to have an unfair advantage either. And that's what he's doing with respect to, you know, let's make America great again. And one of the things I'm saying to that is let's make American supply chain great again.

And to do that, we need help from India and Vietnam and Malaysia and Poland and Hungary and Mexico and Canada. And that's going to allow us to have the right power. Bringing reshoring is one of the, I got three levers. I got reshore, I got friendly shore, and I got near shore. Reshore works great when I can automate.

But if I can't automate, guess what? You don't have the choice of paying your labor too much because the labor is not there. They don't want those jobs. Okay. And so what they're going to do is we're going to look at when can we automate and

And then that's when we're going to bring it back and reshore. If we can't automate, we're going to nearshore and go someplace that's nearby that gives us a really good shot at it. But there's some things where the raw materials aren't here. And so it doesn't make sense to bring raw material into Mexico. What we're going to do is we're going to take the raw material, maybe in the Vietnam or Thailand or Malaysia, Indonesia, and we're going to do the processing there and then ship over here the material. Then maybe we make the item in Mexico or we make it in Mexico.

or someplace. But so it's a total re-look at how do we do supply chain end to end. And that's what's needed to allow us to re-globalize and get ready for the optionality that we're going to need going forward. Very interesting perspective there. And definitely, you know, super insightful too on how do we look at this as a whole and how do we kind of, you know, peel back those layers to understand, you know, it's

how we've been doing things and how do we need to be doing things into the future there. So, so as we wrap this conversation up, I'm curious, you know, for those in, you know, the, the warehousing distribution side of things specifically, cause it's, you know, our, our audience, the new warehouse, right. So, you know, what is kind of one takeaway that you would give them to say, you know, this is what you need to do to, you know, kind of,

future-proof yourself a little bit and be in line with some of these changes that are going to be happening? Well, that's a great question. And I noticed you oftentimes end your podcast with that question. So I kind of thought on that one. So maybe I won't be quite as spontaneous on this one as I've been on some of the others. But what I would answer here is five W's and one H. Okay. And the five W's are

obviously where who why and when and the h is how and so what's the impact on warehousing and supply chain it's where the warehouse is going to be well they're going to be closer to the customer than they've ever been before and so that's going to happen what is important it's going to be space utilization because when we get closer to the customer the real estate costs more and so we're going to find multi-floor buildings we're going to find better use of space

There's a really interesting question is should we do it ourselves or should we do 3PL? And I really see the golden age of 3PL coming back again. There's going to be a lot of 3PLs that are going to be creating business because clients want optionality. And so they're not sure where that facility should be. And so they want the ability to get out of L.A. and to move into Salt Lake very quickly if that's what the numbers indicate we should do.

Why is the question of why are we doing distribution? And this is very difficult. The old days used to be easy. You were either doing B2B or you were doing direct to store. And so you were doing distribution to store or you were doing B2B. Nowadays, we've got the whole thing of fulfillment to customer.

And fulfillment to customer takes up a lot more warehouse space than the distribution to store because of the each picking that has to take place in the packing and so forth. And so there's a real major issue. And then there's the topic of returns. And then there's a topic of liquidation. So is it a DC, a distribution center, or is it a fulfillment center or is it a return center or is it a liquidation center?

Or is it three of those? Or is it two of those? Or is it all four of those? The ultimate is a DCFC-RCLC.

distribution center to store, fulfillment center to consumer, return center so we can turn the product around and get it back out again. And then liquidation, if it's not ready to go back out again, we're going to liquidate it right from the warehouse. And so the ultimate warehouse, the Y is DCFCRCLC. And so we need to get in a position where we can do that and do that well. That's not done a lot well. And so then the when is how quick do you want it? You

You know, is it same week, four days, three days, two days?

One hour, two hours? What is the customer requirement? I look at my wife, and we've been married for 56 years, and when first coming out with internet, my wife said, I'll never buy anything on internet. Well, if my wife never buys anything on internet, why every Wednesday morning am I the box boy and got to break down about 25 boxes on top of the refrigerator in the garage? It's because every day there's boxes on our French porch.

And so she's a, she doesn't go to the store anymore. Why would you go to the store? They bring it to the front door. And so it works like that. So I think what we're going to find is that the five W's and the one H are going to really change everything we do in warehousing and distribution. So we've got to be really, really nimble. We've got to be agile. We've got to be ready to have options available. And it's going to be an exciting time because if you're doing next year, the same thing you did last year, you're losing money for your company. Yeah.

Yeah. Yeah. I mean, I think it's more true than ever that you need to be, you need to be ahead of the curve, right? You can't wait for, for, like we said before, you know, having that optionality, you can't wait for, for the occurrence to happen. You need to be ready for the occurrence to happen. Right. Yeah.

right? And what are you going to do? What step are you going to take from there? So, so really amazing conversation with you, Jim, and it's super insightful, amazing to tap into your expertise and knowledge over so many years and companies and different projects and engagements that you've done. So really appreciate you coming on the show and,

talking with us and teaching us a little bit too about, you know, what the supply chain was like and some of the changes and also, you know, some of the things to be looking out for and how to prepare yourself for the future as well. So if people are interested in learning more about Tompkins Ventures or what you're up to, what's the best way to do that?

Well, Tompkins Ventures has a website, obviously, but maybe the best thing is just contact me directly. The email address is j, as in Jim, Tompkins, T-O-M-P-K-I-N-S, at Tompkins Ventures, T-O-M-P-K-I-N-S-V-E-N-T-U-R-E-S.com.

All right, great. And we'll definitely put that information in the show notes and also at thenewwarehouse.com. So, Jim, thank you so much for your time today. You've been listening to The New Warehouse Podcast with Kevin Lawton. Subscribe and check us out online at thenewwarehouse.com.

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