Technical Edge and Systematic Approach; The Way to Success

Joel Mickelson, Vice President—Engineering, Hearth & Home Technologies

In light of your experience, what are the major trends and challenges that you see in the procurement space?

I have a couple of decades experience in the procurement space. Today, I am the VP of Engineering at Hearth & Home Technologies. With my longstanding experience in the procurement industry, I have been deeply involved in how the sector had developed in the past and how it is developing now. The recent trend that has become very urgent is the significant changes in the tariff structure brought on by the trade war. It has caused a lot of reactive activity among us and every other company involved in international sourcing. Rather than focusing on strategic planning and other forward-thinking activities as we have in the past, we are now working on defensive measures. This disruption, like any disruption, is a good test of our thought processes and how we go about conducting business. We are now rethinking a lot of assumptions and standard practices, which is healthy.

Another significant element that I find is the activities pertaining to managing the relationship with our suppliers regardless of the geography. We are helping the good ones get better, leveraging their strengths, and getting closer to them. We face several challenges when working with suppliers less aligned with our business processes in terms of making internal decisions—either to replace an underperforming current supplier or to continue with them and work to improve the supply relationship to meet our needs. It all comes down to potential we see with each specific supplier. To objectively see their performance and understand their potential, there needs to be continuous improvement in terms of identifying good measurements, collecting data, and a substantial effort in analysis. As a company that focuses on continues improvement, we focus on suppliers who can provide us what we want superbly and without error.

  I apply my technical expertise in leading my team, making business decisions, and ultimately, guiding my company toward success  

The third factor is discipline. Being a lean manufacturing firm, it is imperative to adopt a well-disciplined and thorough mindset. For the last 20 years, we are driving towards incorporating sound processes and strong discipline in our core procurement functions. It is also necessary that the suppliers we work with have this same elementary skillset to ensure consistent performance and a stronger partner throughout our supply chain.

Could you talk about the strategies that you adopt in finding the right partnership?

As a manufacturing company and an innovative leader in our industry, we desire strong partnerships with technology experts and best in class direct and indirect materials suppliers. For us, they are equally important, and we adopt a formal, structured sourcing methodology to ensure we have done our best job each time to select partners where we leverage each other’s skills to outperform the competition. Our strategic sourcing methodology comprises a step by step process that we follow in selecting our suppliers and allocating the business. In this comprehensive methodology, we have a formal gate process with checklists where we begin with a procurement assessment to identify the spend, research the industry, identify a pool of incumbent and potential suppliers, and present the opportunity and our requirements to them. Each supplier then prepares a profile of their company and submits it with their quote. The company profile includes their organization, capabilities, skillsets, differentiating factors, certifications, and other items we use to identify whether they are well suited to align with our specific needs. Every attribute is measured and scored in a head-to-head comparison.

Throughout this entire sourcing process, we will continually filter through the initial supplier list. For instance, a pool of 12 companies at the start will be reduced fewer and fewer at each step. The profile review will separate out the few we will continue with to negotiations. In the negotiations phase we identify 18 to 25 specific topics to discuss with each potential supplier. Negotiations in general, will last one day per supplier per negotiation team. We are focusing on the feasibility of partnering with the supplier, on alignment with business practices. At this point the selection team meets and the final steps of supplier selection, transition implementation and alliance management are completed. It is a thorough process, and the time allocated depends on the complexity of the spend. Its good though, we have many outstanding suppliers.

Could you illustrate with some examples of the strategy that you have adopted to steer your organization to success?

At Hearth & Home Technologies, we manufacture fireplaces and stoves. Our goal is to achieve fully satisfied customers. Therefore, we are quality conscious in every step of the product development path. We focus on improving the quality of our products and enhancing our capabilities in terms of technology. For that, we continue to partner with the industry-best technology providers and suppliers to stay ahead of the pack. As our products are closely related to the daily lives of customers, we always try to bring in innovation that enables them to be comfortable using our products. Our R&D and New Product Development teams are amazing, and our Brand Directors and Product Managers are the best in the business.

We have a supply chain that is second to none in our industry to deliver our product to our customers when we promise it. This is a critical strength for us and we manage it fiercely.

We also have an outstanding mechanism to hear from our customers and take action. If a customer has a concern that falls in my area of responsibility, someone from my team, or I, will call the customer the day we get it to hear the concern and act on it.

We are also on the path to design our product suite to align well with smart homes. We want our products to integrate into their houses like other consumer goods such as refrigerators, televisions, and security systems.

How have your personal skills, traits, and hobbies help propel your company to success and leading your team?

I have an educational background in science and finance and worked as a nuclear engineer officer on a submarine. I am very comfortable with technology and I have seen the significant role technologies and technical skills can play in molding a business and leading it to success. Although many decisions are finance based, I apply my technical expertise in leading my team, making business decisions, and ultimately, guiding my teams toward success. My Navy experience equipped me with leadership training and experience that has been invaluable throughout my career. The Navy showed me what a good leader with a strong team and a clear purpose can achieve. It was a phenomenal experience and I had exceptional leaders during my tenure. Personally, I am curious to learn and love to gain expertise in newer technologies as they hit the market with new features and possibilities. In terms of home automation, I lead my team toward success by leveraging our collective knowledge in current technologies, including smartphones and other smart device apps, remote diagnostics, and more. I realize that the technical edge that I gained in my career will help me to embrace upcoming advancements in the technological space and guide my organization.

What would be the piece of advice that you give to your colleagues to guide them in building a powerful strategy for the organization?

All organizations want to succeed. If you are a part of a company, you want your procurement team to succeed. A strong procurement team is incredibly critical to a company’s success as they are responsible for selecting good suppliers, managing costs, and managing the supply chain. Raise questions, have a curious mindset, think critically, and work continuously to perfect your craftsmanship. Procurement can be an amazing asset to an organization in its unique position to leverage the skills of your supply partners who are fully vested in your success. This can make huge differences in how your business succeeds. Finally, I would say have fun! It is necessary to enjoy yourself and your job. If you are not having fun, its your fault, so change it.

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