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USD OFFERS M.B.A. WITH OPERATIONS AND SUPPLY CHAIN MANAGEMENT SPECIALIZATION

Education programs for executives in companies with shipments of export cargo and import cargo in international trade.

USD OFFERS M.B.A. WITH OPERATIONS AND SUPPLY CHAIN MANAGEMENT SPECIALIZATION

The University of South Dakota Beacom School of Business now offers an online Master of Business Administration (M.B.A.) with Operations and Supply Chain Management specialization.

Enrollees “benefit from in-depth study of supply chain management, lean management, quality control and other topics relevant in today’s rapidly evolving global market,” according to Beacom School of Business officials.

In addition to the core M.B.A. courses that prepare students for leadership in any business role, those on the Operations and Supply Chain Management tract can cultivate a more focused career path with strengths in managing logistics, sourcing, quality and waste elimination.

The minimum number of credit hours for the M.B.A. program with a specialization in Operations and Supply Chain Management is 36 credit hours. You can apply online as long as you pay a $35 application fee and complete a Graduate Application. There are other requirements concerning undergraduate transcripts and letters of recommendation. To check out the full scope of what is required, visit www.usd.edu/acpc/graduate-school-application-support.

The priority application review dates for the M.B.A. program are:

  • Spring Semester: Apply by October 1
  • Summer Semester: Apply by March 1
  • Fall Semester: Apply by June 1

The University of South Dakota Beacom School of Business, established in 1927, has been continuously accredited by the Association to Advance Collegiate Schools of Business (AACSB) International since 1949. The school’s M.B.A. program has been accredited by AACSB since 1965. AACSB International Accreditation is considered the hallmark of excellence in management education.

The University of South Dakota’s online Master of Business Administration also offers specialization in Business Analytics, Health Services Administration and Marketing. For more information, contact USD Online at 800-233-7937 or via e-mail at cde@usd.edu.

MOL LAUNCHES EXECUTIVE TRAINING WITH A GLOBAL PERSPECTIVE

On Sept. 4—and for the fourth straight year—Tokyo-based Mitsui O.S.K. Lines Ltd. launched its One MOL Global Management College in-house training program, MOL President and CEO Junichiro Ikeda announced.

One MOL Global Management College was started in 2014 to improve management skills in a cross-cultural environment and develop the next generation of executives who will be leaders in the MOL Group’s global management.

The program targets not only employees in Japan but also personnel from overseas subsidiaries who represent the future of the MOL Group. For instance, this year the four-month program is hosting 14 participants from seven countries.

They will take part in what MOL calls “energetic, hands-on sessions focused on the themes of personal empowerment, organizational management and strategic leadership.” Special emphasis is placed on company values that are referred to as “MOL CHART Values.” CHART is an acronym for Challenge, Honesty, Accountability, Reliability and Teamwork.

Participants are also challenged to come up with their own proposals to improve the company. These are pitched to MOL’s top executives on the final day.

SHOULD CALIFORNIA HAVE ITS OWN TRADE POLICY?”

That is the question being asked Oct. 5 at the 2017 Annual Policy Conference of California State University at Los Angeles’ Pat Brown Institute for Public Affairs.

Held in association with the World Trade Center Los Angeles and the Los Angeles Economic Development Corp. at the L.A. Hotel Downtown, the conference aims to answer: What should the nation’s largest state and the world’s 6th largest economy be doing? And: What role can and should cities, large and small, play?

Among those scheduled to show up, dialogue and debate are: Los Angeles Mayor Eric Garcetti; Panorea Avdis, director of the California Governor’s Office of Business and Economic Development; Stephen Cheung, president of the World Trade Center Los Angeles; John Grubb, COO of the Bay Area Council; Mickey Kantor, former U.S. Trade Representative and Secretary of Commerce; and Joann Lo, co-director of Food Chain Workers Alliance.

Also, Carla Marinucci, senior writer of the Politico California Playbook; Ambassador Vilma Martinez, president of the Los Angeles Board of Harbor Commissioners; Robert Shrum, director of Jesse Unruh Institute of Politics at the University of Southern California; and Rodrigo Tavares, author of Paradiplomacy: Cities and States as Global Players and former head of the São Paulo State Government’s Office of Foreign Affairs.

Ticket information is available at calstatela.patbrowninstitute.org.

WMG AND DYSON WELCOME FIRST COHORT ONTO THE NEW ENGINEERING DEGREE

 Undergraduate engineering students recently launched the Dyson Institute of Engineering and Technology on the Dyson technology campus in Malmesbury, Wiltshire, England.

Dyson, the maker of powerful vacuum cleaners, fans, heaters, parts and tools, developed the program in collaboration with Warwick Manufacturing Group and the University of Warwick.

More than 850 applicants sought 25 places in the Dyson Institute, but due to what officials called “the exceptionally high caliber of candidates,” 33 undergraduate engineers were accepted onto the four-year engineering degree.

They will be mentored by Dyson’s practicing scientists and engineers and taught by academics from WMG, University of Warwick. Students “will benefit from learning high-level science and engineering theory, combined with real-world application on live projects,” say school officials. “They will come away from higher education debt-free, having earned a salary throughout and the prospect of a graduate role with Dyson on completion of the four-year degree.”

Adds Professor Lord Bhattacharyya, chairman and founder of WMG, University of Warwick, “It is vital that in order for UK companies to be competitive they must have the right people with the right skills. I am delighted we are working with the Dyson Institute on this degree and welcome the move by James Dyson to develop a pool of talent which have the skills that are required to work in industry today.”

Applications are now open for 2018; visit www.dysoninstitute.com for more information.

R.I.P. TO SUPPLY CHAIN EDUCATION BOOSTER ART VAN BODEGRAVEN JR.

Art van Bodegraven passed away on June 18 but, befitting a supply chain education advocate, his “final shipment” did not arrive at its destination until Sept. 13.

That is when DC Velocity magazine posted van Bodegraven’s final The Art of Art blog entry, “An ROI for Supply Chain Education.”

Art was a prolific writer and had amassed a collection of unpublished blog posts he had planned to run well into the future,” reads the editor’s note that precedes the article. “To honor his memory, we will continue to post these remaining blogs as he had intended.” 

Van Bodegraven drew from some vast knowledge for his stories. He had been managing principal of the van Bodegraven Associates consultancy and the founding principal of Discovery Executive Services, which develops and delivers supply chain educational programs. Before “graduating” to the popular The Art of Art blog, he had been principal co-author of DC Velocity’s Basic Training monthly column for a decade and principal co-author (with Ken Ackerman) of Fundamentals of Supply Chain Management, the definitive primer in the field.

An ROI for Supply Chain Education” explores the value of such an education, pointing out that many now claim it can pay off more—in terms of knowledge and earning potential gained—than a traditional M.B.A. How does van Bodegraven come down on that notion? You’re going to have to read the column yourself at blogs.dcvelocity.com/the_art_of_art/2017/09/my-entry.html.

The World Is His Orchard

Paul Thomas is driving out of Julian, California, along State Route 79. There’s snow on the roadside and it’s late at night. When we’re not talking highway safety we’re talking hard cider, a drink made from fermented apple juice that began in that unrecorded, prehistoric moment when a giddy hominid discovered that one bad apple spoils the whole bunch but might make for a remarkable alcoholic beverage.

Thomas first encountered hard cider in 1984, while playing soccer in England. Like all Americans, the “cider” Thomas grew up with was straight apple juice. But in the UK, he notes, “apple juice is just apple juice and all cider is ‘hard.’”

Julian Hard Cider, the company he founded in 2008, represents Thomas’ bet that marketing can transform hard cider—what might be seen as a millennia-old commodity—into something that grabs aspirational foreign buyers.

“Our tagline is ‘American to the core,’” Thomas says, adding that he can’t believe no one else in the apple game thought of it first.

“It says everything about who we are.” If there’s any question, the company’s black-and-white logo shows the rest: an angry-looking eagle with a banner in its talons (“American Made Julian, CA”) descends on a pair of crossed pick-axes. It’s like a motorcycle club’s symbol. Even the bottles’ dark glass bespeaks something artisanal, craft-like, early industrial.

“Ninety-nine percent of the hard ciders out there are made out of concentrate,” Thomas says. Not his. “Our apples are handpicked—no bruising, no holes, no insects—and we press them, and the juice goes immediately to fermentation—there’s no oxidation. It’s critical that we produce a cider that is as close to the fresh apple as possible.”
So what does Thomas get for all of his costly, artisanal freshness?

“Brand prestige.”

“There’s growing consumer appreciation for fresh-pressed around the world. In Asia, there’s generally a big movement toward quality. People are willing to pay more for quality of product.”

Behind the savvy marketing is a solid businessman whose unique strategy for going global has led to fast, early global growth—and not because he’s independently wealthy or backed by international beverage companies or well-heeled investors. In 2009, just months before he was ready to go global with Julian Hard Cider, Thomas was living out of his car. There—out of pure necessity—he developed a financial gift for tapping internal sources of investment capital and transforming vendors and distributors into global partners.

In seven years, the smallish craft brewer has gone from zero to five foreign markets, including Australia, Hong Kong and the Philippines. He expects to double that number by the end of this year, adding China, Singapore, Korea, Japan, Taiwan and Thailand.

Foreign sales have led to accolades and acolytes. Thomas is a member of the San Diego & Imperial Counties District Export Council and teaches classes on exporting at local universities. He’s a poster boy of U.S. government export promoters—a Small Business

Administration Exporter of the Year in 2014. In January 2015, along with other exporters, he went to the White House to discuss the president’s trade agenda; ahead of that visit, he posted a picture of the White House with three bottles of his favorite hard cider atop the south portico of the White House, like giant empties on a fraternity house.

He’s also a tireless competitor. He was a Navy corpsman in the first Gulf War and a Division 1 soccer player at the University of Connecticut. He’s a volunteer firefighter and a competitive poker player and sailor. He recalls with self-effacing humor a Newport-to-Ensenada race when a boom sweeping the deck of his boat smacked him in the noggin and sent him on a line-drive into the Pacific Ocean.

He races dirt bikes for fun and philanthropy, using his participation in each race to raise cash to buy prosthetics for veterans and orphans, he says. In an early 2015 race in the Baja California town of San Felipe, Thomas says, as he accelerated toward the finish line, a spectator drove through police barricades and onto the track and hit him head on. He landed half a football field from his bike “with my leg on backwards,” he says. After multiple surgeries, still recovering, he seems unbowed.

“I spoke to him in the hospital afterwards and he had not one complaint,” says his longtime friend, David Weild, a New York investment banker and former vice chairman of NASDAQ. “He was his typically upbeat self—amazing. He carried on the business of Julian Hard Cider from bed and through multiple surgeries. That’s Paul.”

TRAVEL BACK WITH ME TO THE EARLY 1980s to meet our global trader as a kid. He’s an adolescent, watching TV in his family’s San Diego home. On the screen, British Prime Minister Margaret Thatcher is shaking hands with a People’s Republic of China official at talks to cede authority over the colony of Hong Kong to the PRC in 1997. Thomas makes a resolution: he’ll be in Hong Kong to see the handover.

Nearly two decades later, in the summer of 1997, we find Thomas on a solo backpack trip in Hong Kong. On July 1, the big day, he says, he “went out to the New Territories with a photographer from Time magazine. We watched the British literally hand the keys to a chain-link gate to a Chinese military officer with 4,000 troops behind him in the rain, ready to cross into Hong Kong. I saw history.”
While on that trip, he saw something else.

“I saw Tabasco all across Asia. That is what really blew my mind away—how this family-owned, American company produced one product that was amazing. And at that time, they just focused on keeping the great qualities of the original blend consistent and opening more markets.”

The iconic pepper sauce from Louisiana would become the key to Thomas’ personal historical transformation. “I thought, ‘I’ve got to come up with my own brand, my own product.’”

He spent a few years in publishing, not just selling advertising into his Southern California music magazine, but producing events—getting readers and advertisers together in the same physical space.

“I knew that alcohol sells in good and bad times,” Thomas says. “And I knew that their biggest need is to get their brands into the hands of consumers. I became an expert in ‘experiential marketing’—creating and documenting events for the target demographics of Heineken and other brands. I noticed they always had these TV commercials or billboards with all these beautiful people having fun. My whole thing was that, as a consumer, you never saw those people in real life. So I created that experience in real life.”

But running a magazine was grueling—“every month, it’s like you’re making a new product from scratch”—and he yearned for a single, simple product, a Tabasco, we’ll call it.

The downturn in publishing made his decision easier. “I saw Rolling Stone shrink in size, and Life disappear,” he recalls. “I figured before everything goes to hell, I should start planning my next step.”

And then came his resolution: “I thought, ‘I’m going to take everything I’ve learned in marketing, and use that to promote experiential, live events for my own product. I’m going to put all the wood behind the arrow of my own brand.”
All that waited was his own Tabasco.

GROWING UP IN SAN DIEGO, Thomas says he spent summers in the historical gold town of Julian. Julian is now more famous for its apples; after the summer heat, Southern Californians eager for something like fall foliage drive from all over to pick apples in the foothills rolling up to the Cuyamaca Mountains.

“I noticed that nobody had done much with the apples—I mean, they had famous apple festivals and apple picking and pies, but not much else,” he recalls. “No one was making hard cider.”

As a product, Thomas figured, cider had much to offer.

In the UK, he learned, cider accounted for 40 percent of all alcohol beverage sales. But almost no one was producing cider in the U.S. “I was thinking in the U.S. it’s not even on the radar,” Thomas says.

“Even if [cider] ends up at just 2 percent or 5 percent [of total U.S. alcohol sales], that’s a lot of sales. I was going to fill that gap.
“And I was going to make something that men would like by marketing our product as a classic American beverage. I wanted to connect hard cider with America.” He would produce that connection with “packaging that was all-American, classic— timeless not trendy. “

Third, that same “Made in America” vibe sells overseas, too.

“They love it,” Thomas says. “Without stereotyping, the Asian market loves classic American products. People around the world have a lot of opinions about what America represents now, but there’s a general consensus that the romantic period of the ’40s and ’50s in the U.S. are still appreciated around the world—Harleys, jeans, Elvis Presley. That was something I wanted to reflect with my packaging. It was an opportunity for me—old school American. We could present ourselves as a Jack Daniels [brand] overnight.”

Finally, there was the product itself. Craft beer needs refrigerating and a quick sale—it’s got an expiration date; craft cider needs no refrigeration and, like wine and champagne, the good stuff gets better with age. That fact would now allow Thomas to piggyback export rides in other people’s containers, saving him huge on shipping.

THOMAS MOVED INTO A FRIEND’S CABIN in Julian and made batches of hard cider that he tested on friends. When he hit on the right recipe, he went to distributor Stone Brewing Co. in nearby Escondido—because “they didn’t have a cider” and because they had a parallel product line.

Stone “liked the flavor, and they told me, ‘Come back when you have pricing and packaging.”

THERE’S AN OLD SAYING THAT GOD never closes one door without opening another. What the people who say that stuff don’t tell you is that the hallways are hell.

In Paul Thomas’ case, there’s cinematic quality to all that door closing and hallway walking. Consider: He’s found a product that people—his friends, at least—really like. He’s a marketing genius. He’s globally oriented. And now he’s got this just tantalizing offer—contingent on pricing and packaging—from a brewer and distributor to handle his first production run.

He’s got some cash in the bank, but he’s got something more: An offer to turn that modest stake into something massive.

In 2008, Thomas says, he produced a freestyle motocross event at the world-famous Feria Nacional de San Marcos—the National Fair of San Marcos, in Aguascalientes, Mexico. And when we say “world-famous,” we mean like a human magnet for the traveling/partying international touring class. It’s nearly two centuries old, dating back to a time when harvest celebrations featuring a local saint were still the rage. And it’s huge, drawing people from all over the world to a colonial capital in the springtime, just before the Mexican summer beats the heck out of European and Mexican tourists too stupid to stay in the shade.

So Thomas runs this event with motocross riders doing backflips, somersaults and handstands and just suicidal stunts for the ecstatic Mexicans in attendance. It was like Vegas. “We averaged three shows a day, with 15,000 people per show per day, for four days a week for a month,” Thomas says.

It was a huge success. “I made a good amount of money to start Julian Hard Cider.”

A few months later, he says, he gets a call from fair officials: do it again next year, they say. “But I’m doing Julian Hard Cider, so I can’t. They said, ‘Do it again and we’ll triple your money.’ A lot of things in Mexican business can be screwball. But this was legit. So I said okay. And it kicked my butt.”

He put all of his money back into the production. “Again,” Thomas says, “it’s a huge event. They’d expanded capacity to accommodate 25,000, and we’re just killing it.”

Then disaster strikes. A few days in, the World Health Organization tells Mexican federal officials they ought to close the fair immediately. Swine flu is sweeping through Mexico. Catastrophe is incubating in the crowds of Mexicans thronging the fair. When the national death toll hits 81, the Mexican president assumes emergency powers, banning all public gatherings. Movie theaters, promenades, sporting events—everything is shut down. And for the first time in 181 years, on April 29, 2009, the world-famous Feria Nacional de San Marcos closes early.

The angel of the apocalypse passes over Mexico. By May the epidemic is winding down. But Thomas has lost everything—not “everything” figuratively. Literally. He returns home penniless, moves out of his apartment, and into his car.

“Paul told me over the phone that he might not make payroll. He confided that part of the sacrifice he made to make ends meet was to live in his car and to drive the trucks to make sure deliveries remained on track,” says Thomas’ friend John Kilcullen, founder of the how-to books for Dummies series. “I was shocked—not only that Paul was sleeping in his car and what that must have felt like, but that his tone of voice in sharing this story remained calm. He did not ask for sympathy. He did not ask for a personal loan. It was clear Paul would do everything in his power to keep his company afloat, keep making payroll and keep serving his customers no matter the personal sacrifice.”

One year later, Julian Hard Cider was an international brand and turning a profit.

HOMELESSNESS TURNED OUT TO BE A KEY to discovering the finance strategy that would help Julian Hard Cider go global. Necessity was the parental unit of ingenuity.

Kilcullen had told Thomas that, when it comes to investment capital, “Always go where the money is. Go internally. Don’t take out a loan. Don’t borrow.”

“The last thing I wanted was to burn relations with friends and family. And do you know who has money?” he asks me. My head swims with possibility, but before I can answer, Thomas answers himself: “Your own distributors have money.”

So Paul Thomas made his distributors his investors—in North America, in Europe, and in Asia. He approached them with what sounds like an improbable deal: I will sell you Julian Hard Cider, and you will pay me COD, Cash on Delivery. Not in 30 or 60 or 90 days.

You will pay me immediately. Now.

Who would take such a deal? Lots of people, apparently. And not because they’re charitable, but because those distributors get more than a golden elixir, but the promise of Thomas’ reinvestment in their market.

What about the people who say, “Send me a sample”? Forget them. Or the distributor who says, “We’ll take your product on 60 days”? Forget them too. “We get offers all the time from people who want me to send the product with terms. But even shipping a small amount costs so much in terms of time, and effort and our money.”

That first pitch can take place over the phone or on something like Skype or WebEx. “As a small-business exporter, I can’t be everywhere,” he says. “So if they don’t pick you up, you’ve just blown three to five grand [on travel].”

So along with the promise of reinvestment, there must be—on this first telephonic or online how-do-you-do—something more: there must be evidence that you understand the distributor’s market.

If you’re cash-poor, in other words—or just averse to borrowing other people’s money or even spending your own—you must be plan-rich, he says. “If you want that COD, you must focus on your plan, your presentation. If someone were to come to me and say, ‘I have a great product here, so you’re going to do well,’ I’d ask how they know. But a lot of companies don’t have an answer. That’s just a sales pitch!

“Nobody expects a crystal ball. They know you can’t promise everybody’s going to be rich. But if you can mitigate risk for a potential partner, they’re going to be more receptive to bringing your product on board on your terms.”

When he finally gets a commitment, Thomas tells me, “When I start getting paid, I will turn around and reinvest my money back into your market with a visit. And I’ll bring someone else, and we’ll work with your sales team, we’ll visit your accounts. We’re not just taking your money. We’re putting the money to work for our partnership.”
His willingness to travel to a distant market is like a gift, he says, and it sparks the cycle of reciprocity.

“Everybody understands that’s how it’s done. At first you can do this online or whatever, but then you’ve got to meet them face to face. Especially in Asia. In the Asia market, meeting someone in person really says a lot about who you are. It says honesty and respect and integrity.

“It really works,” he says, almost surprised himself, it seems. “If you make the time to meet with an honorable company—an honorable company—they feel obligated to put a lot of effort into generating sales for the partnership.”

COD payments do something else: They incentivize Thomas’ distributors to move Julian Hard Cider. It does the distributor precisely no good to leave the product sitting in a warehouse, or gathering dust on store shelves.

So this is what Thomas did when he went global: “My first two, even three accounts were COD—as many COD orders as I could get before they finally demanded terms.”

In turn, he demanded terms from his own vendors in the U.S. “It’s all about cash flow,” he says. He’d show his vendors that he had deals with distributors. They gave him terms based on the timing of payments from those distribution deals.

“I got my COD payments, and turned around and paid off the guys with terms. We were small, so we had to be smarter with our cash flow.”

The result, Thomas says: He’s “barely had to borrow money throughout the years. When we open markets, they have to work with us as partners. Now we do that with 40 or 50 distributors and importers.

“It was easier to go and open the kimono and show them a business plan for their market. They give me terms. That was their investment. Instead of looking for money for expansion, I tell people to put that time into developing a better sales and marketing plan to get COD terms from your partners.”

Transforming his business relationships into investors has given Julian Hard Cider an intellectual advantage in the marketplace, too. “These aren’t just business relationships. These partners are like my own team. By treating them as partners, I’ve added like 10 or 12 brainiacs to my team.”

PART OF THOMAS’ MARKETING has always been “Putting the brand in the hand.” The hand into which he’d like to place Julian Hard Cider is typically young and connected to an Asian person.

“People are people no matter where you go—especially young people,” he says, young people who, unlike their parents and grandparents, are plugged into a kind of global youth movement. Thanks to social media, they see what their trendsetting peers are doing from Beirut to Boston, from Belgium to Beijing.

The Julian Hard Cider demographic “runs between 24 and 44 years old,” Thomas says, “and that group, what they really want is to get the most bang for their buck, and to get the most brand for their buck. Brand cache and image has a lot to do with buyers, especially young buyers—and especially young buyers in Asia.”

After generations of poverty, they’re just getting some cash, these Asian young people, and they’re looking for tips on how to spend. Consumption bespeaks social status.

“The image of what they have in their hands reflects what their friends and colleagues think of them,” Thomas believes. “In China and Korea in the last 25 years, all those people have seen TV and movies. The rest of the world has luxuries they haven’t had access to—until now.”

GOING GLOBAL OFFERS ADVANTAGES TO ALL companies, but perhaps especially to smaller operations. Building foreign markets is like diversifying your portfolio, Thomas says, “like an insurance policy” against downturns in one market or even several. Because economic downturns are frequently counter-cyclical—China is down when the U.S. is up, for instance—diversifying your sales markets is like building a firewall.

“When China was booming, things here were tight and rough,” Thomas says. “But overseas—the euro? The yuan? They were strong. It was a great time to export and keep the cash flowing. Our product was affordable. They could pick something up from us that seemed to be a huge discount to them. But as things overseas slow, domestically our orders are increasing again.

“Small business exporters are the ones that are most affected by changes in the domestic economy. Most of us don’t have cash stashed away for a rainy day. We live on a basically fixed income. By participating with your district export council, your Department of Agriculture, Commerce Department and with U.S. embassies overseas, you can get a lot of help to get over there.

“By creating opportunities in other markets that involve other currencies, we can always find someone somewhere who can buy our products,” he says. “If you’re solely dependent on the U.S. for sales and the dollar goes sideways, you’re in a tough situation.”

The lessons he learned about exporting, he learned by asking experts, of course, but also through pain. And the key lesson: Keep moving. Even when your leg is on backwards. Even when you’re working from your home office and your home is your car. Even when you’re in a hospital bed—for our fourth or maybe fifth conversation, after yet another post-motocross surgery, this one “like a root canal without Novocain—but all is good.”

In January 2015, just before his collision with the wrong-way truck and then the earth in San Felipe, Mexico, Paul Thomas was standing in the White House. He was being honored for his global business success. The president was actually seeking his advice. And what was he thinking? “I was thinking, ‘How crazy is this? Six years ago I was homeless.’ Perseverance is everything, man.”

Life Or Death Logistics

Wikipedia says Newberg, Oregon’s most notable citizens include just four people—the woman who was Miss Teen USA in 1988, the illustrator who drew Captain America comic book covers, an explorer who helped settle Oregon, and Herbert Hoover, 31st president of the United States.

Edwards_3546
SMOOTH OPERATIONS Andy Tymkiw, Edwards’ vice president of global operations, oversees a logistics program that must ensure life-saving heart valves arrive in operating rooms around the world within 24 hours.

Wikipedia does not list Miles Lowell Edwards, the Newbergian who, in the late 1950s, developed the first artificial heart valve, a device that has helped save millions of lives around the world—and that still drives the global success of the $2 billion California company that bears his name.

Edwards Lifesciences’ line of state-of-the-art medical devices requires an equally state-of-the-art supply chain. It’s fair to say that the fast delivery of a high-quality heart valve is a part of what Edwards sells.

“A patient goes to see a doctor and, in some cases, the next day that patient is on the operating table. You have to have the product in the surgeon’s hand when he reaches for it,” says Andy Tymkiw (pronounced “Tim-cue”), Edwards’ vice president of global operations.

At Edwards, speed is a part of the product. That’s as true in a hospital in Irvine, California, where the company maintains its campus-like global headquarters and a manufacturing plant, as in a distant Indian, European or African hospital.

For a man charged with making sure a valve manufactured in Singapore or Irvine is passed like a baton in an Olympic relay, Tymkiw seems remarkably low-key. A graduate of the New Jersey Institute of Technology, his three-decade resume includes executive-level operations roles at device makers Marquest and Mentor/Ethicon of Johnson & Johnson. Asked about the critical role of his global logistics team, he refers first to the entire company’s life-saving mission or its constant R&D. “Innovation drives sustainable growth,” he says. “That’s the strength of Edwards.”

When pressed, he acknowledges that innovation in products is as important as innovation in the firm’s complex global web of logistics providers—in sourcing the organic material that goes into a heart valve as well as in distribution of the final product, even, it seems, in site selection and human resources.

In that effort, the company has partnered with such major players as FedEx, UPS, DHL, Dutch giant Rhenus and Japan’s KWE. Through them and a host of related smaller carriers, Edwards can promise delivery of a product that must be handled in sterile, temperature-controlled environments.

Edwards_3456
PARTNERS IN PRECISION To meet the time- and temperature-sensitive delivery demands of its heart valves, Edwards Lifesciences works with such logistics partners as FedEx, UPS and DHL.

The valves themselves are small, not much bigger than the cap on a bottle of water. Though the tissue is processed for longevity, it’s not immortal. “What’s most important is microbiological integrity,” says Tymkiw. “We have to control for environment, for durability during shipping,” so the company pays attention to terrain and changes in local weather conditions. The heart valves travel in jars with serious label warnings about the contents—sterility and gentle handling are everything—as well as a temperature tag-alert. A bad reading on one of those tag alerts may mean simply trashing the shipment.

Then, too, there’s the carrier’s own system. In the case of FedEx, that means SenseAware, “a device that fits inside a package or a pallet, and monitors environmental factors such as location, temperature, humidity, barometric pressure, shock and even exposure to light—which could indicate a security breach—in near real time,” says Craig Simon, president and CEO of FedEx Supply Chain. “Customers can monitor their shipments through a web interface that will let them know if their products are exposed to adverse conditions along the way.”

On the front end, Edwards is sourcing the pericardium—the protective sac surrounding the heart of a cow, tissue that’s essential to the heart valve. For years, that material was sourced in the U.S. But following the Mad Cow outbreak that began dramatically in Britain in the mid-1980s and then spread throughout most of the world by the early 2000s, the firm pivoted “out of an abundance of caution,” it said, and in response to the requests of some countries—imposing rigorous standards on U.S. suppliers while also sourcing tissue from Australia where the disease never appeared.

Whether its source is the U.S. or Australia, that material is flown overnight for processing in the company’s manufacturing facility in Irvine, California. (The company also has manufacturing facilities in Utah, Puerto Rico, Singapore, Switzerland and Dominican Republic.) There, the material is trimmed into what they call leaflets, bathed in a proprietary chemical bath that stops organic activity, and moved quickly into production.

HOME IS WHERE THE HEART VALVES ARE
Located minutes from Orange County’s John Wayne Airport, in a brightly lit space the size of three or four NBA basketball courts, hundreds of Edwards workers in white smocks, gloves and blue hairnets stitch together the bovine tissue and composite metals of an Edwards heart valve. Peering through what look like microscopes powerful enough to see into the future, the workers are themselves part of the global flow of people and things: mostly women, “they’re generally from countries or cultural backgrounds where they know sewing or do some other dexterous work, mostly Asian, and some Hispanic,” says Tymkiw. And they’re very committed, he says. In a hallway leading to the clean room, scores of plaques mark employee anniversaries of up to 35 years. The average worker leaves with about 25 years at the plant.

They stay for a variety of reasons, often because they’ve been thoroughly vetted in the application and early training phases. Tymkiw says just 6 percent of applicants are accepted for training on a kind of provisional status. Some 60 percent of those trainees survive boot camp, and move through up to six months of additional training, learning to meticulously sew bovine (cow) tissue to delicate-looking metal frames. The result is something that resembles an extraordinarily detailed crown for a very diminutive king.

With that kind of investment in people, it’s “extremely important for us to sustain a culture that retains employees,” says Tymkiw.
And they do retain them—through salaries and benefits that make it possible for manufacturing workers to live in staggeringly expensive Southern California, Singapore and Switzerland, but also through unique softer programs. One such program unites grateful heart-valve recipients with the people who hand-built the valve prosthesis that keeps them alive. It’s not surprising that the company’s best source of new job applicants is current clean-room staff.

Nor are those workers stuck in a silo, relegated only to a single piece of the product-development process. It’s common, Tymkiw says, for a clean-room employee to participate in product design at the ground level, making certain that the final product is not only medically effective, in other words, but that it can be mass produced.

COMING TO LIFE
Like many American success stories, Edwards Lifesciences was born in a workshop, this one behind the Portland home in which Edwards lived with his wife, beginning in 1947. He was by then a retired engineer with industrial patents in which you can track the evolution of his interest in the technology that would one day replace rundown human heart valves. In the 1930s, he designed a water pump so powerful it flayed the bark off trees in Northwest sawmills. In 1940, with German and Japanese militaries on the move, Edwards struck again, designing for Boeing’s B-17 a fuel pump that worked as well at high as low altitudes.

Even retired, Edwards tinkered in his workshop, hoping now to solve a problem that bedeviled him: his own hinky heart valves, damaged like so many others’ by a bout of childhood rheumatic fever. His goal: the manufacture of a completely mechanical heart.
In a meeting of almost mythic quality, Edwards in 1958 showed up uninvited at the office of a much younger man, the improbably named University of Oregon heart surgeon Albert Starr. Edwards was looking for a business partner.

Starr was himself a product of the global economy—his parents came from Eastern Europe and England—and driven by remarkable ambition. He entered Columbia University as a 16 year old and graduated as a surgeon just six years later, in time to enter the Korean War as a U.S. Army combat surgeon. “My greatest fear was anonymity,” he once told a reporter. “I wanted not only to accomplish something important but also to have the world recognize me for my accomplishments.”

Starr was instantly engaged, but persuaded Edwards to focus smaller—not on the construction of an entire mechanical human heart but the relatively simpler valve that controls the flow of blood into and out of the heart. People were dying because of dilapidated heart valves, and they could be saved now, Starr told Edwards. Two weeks later, the story goes, Edwards returned to Starr with a prototype. In September 1960, just two years after their first meeting, the pair had their first—the world’s first—successful mechanical valve replacement surgery. Writing in The Oregonian in 2010 on the occasion of the 45th anniversary of that event, reporter Joe Rojas-Burke said patient “Philip Admunson, a 52-year-old truck dispatcher from Spokane, lived for 15 years with his valve and died after falling from a ladder at home.”

DON’T SKIP A BEAT
Tymkiw says again and again, if in slightly different ways, “the product must be there” when the patient needs it. “The product must be available at all times,” he says. “There can’t be any backorders.” Any breakdown in the supply chain can mean delays for a patient headed for surgery. The heart valves have a shelf life of up to five years, but they’re typically used within 12 months of entering the supply chain.

But for businesspeople accustomed to thinking of the supply chain only as vulnerability—like a single phone line into a cabin in the woods in a horror movie—Edwards’ approach is illuminating. Edwards’ multi-centered manufacturing—in Singapore and Switzerland; in Irvine and Draper, Utah; in Puerto Rico and the Dominican Republic—is built as much on cost and service considerations (wages and taxes, shipping time to regional markets, and local government regulation) as bet-hedging against regional business interruptions. The unlikely reappearance of Mad Cow in one place would leave untouched Edwards’ sources in another; a disaster—a weather event, earthquake, major regulatory change, war or civil unrest—that hits one part of the company’s supply chain isn’t likely to bring down the entire enterprise.

Edwards’ Swiss unit is critical to new-product rollout—for reasons that may surprise Americans who look skeptically at European regulation. That’s because the EU’s standard for new medical products is more consumer-friendly than the American standard. European regulators measure the safety of medical devices, and allow practicing physicians to determine clinical efficacy. The U.S. Food and Drug Administration (FDA) measures both safety and effectiveness—a much tougher standard. Edwards points to its long slog through the first U.S. clinical trials of the Edwards transcatheter aortic heart valve, the device that allows for a less-invasive implant of the company’s heart-valves in patients. The EU approved the first Edwards transcatheter aortic valve in 2007; FDA approval came four years later.

(An FDA staffer not authorized to speak on the agency’s behalf told Global Trade that Edwards’ recollection of the approval process is correct. He said the FDA recognizes the problem and is working to speed approvals, but that, in the meantime, he believes “most Americans are probably happier we really take the time we need” to investigate new products. An Edwards spokesperson said the company “recognizes the FDA’s progress in this area.”)

Because of the historically huge disparity in time-to-market, Tymkiw says, California-based Edwards has operated on a “Europe-first strategy.” That means the company’s most innovative products go to Europeans first, via the company’s Swiss operation.

For the moment, like many global companies, Edwards is eyeballing escalating wages in Asia. For millennia, the region was labor-rich and jobs-poor. That’s changing in the course of a few generations.

“Singapore [where the company hosts two business units] and Hong Kong are in a race to produce billionaires, and [are] among the most expensive places in the world to do business. So companies are fleeing,” says Tymkiw. But even as Singapore’s government shuns new offers of low-wage jobs, it apparently delights in the presence of Edwards, with its offer of high-end, value-added manufacturing jobs.

Tymkiw predicts that California could see fewer Edwards manufacturing jobs for the same reason: The high cost of living drives demand for higher wages. But there will always be pilot-level manufacturing jobs at the company’s headquarters, in part because of the critical role of clean-room workers in product design, in part because the company will always want to remain decentralized, Tymkiw says.

“We don’t run into many instances where we’re caught flat-footed,” he says.

LEARNING FROM HEARTBREAK
The importance of decentralization was brought home painfully during the 1990s. In 1996, just a few weeks before Christmas, a private plane heading into the nearby Orange County airport slammed into a warehouse near one of the company’s clean rooms. The plane’s three occupants were killed. No one on the ground was hurt.

NEW LIFE After being diagnosed with endocarditis, an infection that destroys the heart’s valves, Diane Graf needed replacements and received two from Edwards Lifesciences, her employer.
NEW LIFE After being diagnosed with endocarditis, an infection that destroys the heart’s valves, Diane Graf needed replacements and received two from Edwards Lifesciences, her employer.

It was a Saturday, with fewer workers on site, and those 80 or so people escaped the crash and resulting fire without injury. With only modest alteration of those facts, the crash might have been a catastrophe for the company. The lesson was clear: A truly global supply chain could reduce the risks of a devastating supply chain and distribution interruption.

Wherever it manufactures or distributes, Tymkiw says, Edwards runs disaster scenarios. In California, that means earthquake studies in which Singapore becomes the hypothetical primary global manufacturer. In distribution, Tymkiw points to “multiple inventories held in multiple locations” the company can tap in the event of an impediment somewhere else.

But where else? He runs down an ominous list: Of the 177 or so countries around the world, most are challenging for one reason or another—the absence of intellectual property protections, or the problem of crime, war, rising wages, or civil unrest, for example. What remains, he figures, are about 15 truly stable countries. Even then, real stability is fleeting.

“You think you’ve got it figured out, and then things change,” Tymkiw says—Russian soldiers show up in eastern Ukraine; refugees from Syria, Iraq and Afghanistan pour into Europe; Ebola explodes in Africa.

By 2010, Edwards was perhaps better prepared than many when the volcanic eruptions of Eyjafjallajökull in Iceland sent a plume of ash into the sky over Europe. Air-traffic officials dropped the lid on flights over most of the continent for much of April and several days in May.

Edwards’ supply-chain partners—UPS and FedEx in North America, Rhenus in the Netherlands, DHL in most of Europe and elsewhere—routed inventory around the plume and onto ground delivery.
From the patients’ perspective, there was likely no hint at the logistical complexity that concluded when they awoke to their own enlivened heartbeat.

LIFE MEETS SCIENCE
There may be few greater coincidences than the fact that Diane Graf needed a heart valve.

Four years ago, Graf was diagnosed with endocarditis, an infection that destroys the heart’s valves. The coincidence: Graf was by then an eight-year veteran of Edwards Lifesciences (now an executive assistant in the company’s public affairs group).

She knew something of the process and requested—and received—her company’s heart valves by name. Her recovery from surgery was relatively fast. In six weeks, she was back at work.

“Two years later, I was invited to travel to Singapore with my husband to meet the sewing team that made one of my valves,” Graf recalls. “I was introduced to the 15 people who actually hand stitched my valve. They had never met someone whose valve they made. They wanted to hug and touch me—which was great, because I wanted to do the same. My husband and I were brought to tears and so grateful to each one of the sewers. I think it brought home to them how truly lifesaving and important their work was. This was such an emotional experience for all of us. Over lunch we talked about our families, children, and our jobs at Edwards and found we had so much in common. For me, this trip was an emotional and humbling experience that I will never forget.”