John Kent is the Director of Supply Chain China Initiatives at the University of Arkansas. John has experience in both supply chain management and higher education.
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00:06 Matt Waller: I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be Epic, the podcast where we explore excellence, professionalism, innovation and collegiality and what those values mean in business, education, and your life today.
00:27 Matt Waller: Today I have with me Professor John Kent, Director of Supply Chain China Initiatives for the Sam M. Walton College of Business. John, that's an unusual title for a professor to also be the Director of Supply Chain China Initiatives. Do you know of any other professor that has that title?
00:46 John Kent: I do not.
00:49 John Kent: In working with our Department Chair, Brian Fugate, he and I working on my letter of appointment this year, we decided that I was certainly wasn't the Director of Supply Chain Management Research Center anymore. And we felt we needed to have a title that was conducive to our relationships and initiatives in China.
01:14 Matt Waller: Well, yeah, and that I think it's descriptive of what you're doing. Of course, you've been teaching and involved in research, but you also have been Assistant Department Chair, Director of the Supply Chain Management Research Center, and now, you are Director of Supply Chain China Initiatives, which I'm thrilled, 'cause we have a history. You have a long history of working in China, 'cause you started in computer sciences. I know you started your career in Electronic Data Interchange or EDI.
01:49 John Kent: Correct.
01:49 Matt Waller: And you worked for Missouri State for 16 years. You were Professor of Logistics and Supply Chain Management, which is in Springfield, Missouri for Missouri State.
02:01 John Kent: Yes.
02:02 Matt Waller: And we got lucky and hired you in July of 2014. And you're doing some really creative things for us in China, which I'm happy. But I know when you were at Missouri State you were involved in China Initiatives, and now you're here with us involved in China Initiatives. When you think about China and how important it is as a trading partner, especially for a supply chain management group, we need something like this. And you were willing to do it.
02:35 John Kent: To that point of, "I'm willing to do it," not any point in my career, in my life, would I've been able to do this. Both of my children are out of the house now. I have a strong relationship, marriage with my wife. We trust each other [chuckle], and I'm able to travel and to spend almost 100 days a year in China the last three years.
03:02 Matt Waller: 100 days per year in China. Wow. No wonder I'm constantly seeing all of these emails about things you're accomplishing there. And so how many trips per year do you make to China?
03:18 John Kent: This 2019, I think I'm already at six and I have one more trip planned. Six trips a year on average for the last three years, two or three weeks. And I think that aspect is important to where we are today. I don't wanna overuse the concept of relationships or communications, 'cause they're applicable right here in Arkansas. But relationships and communications are consistent, I think have allowed us to accomplish the things that we've accomplished in Walton, because of the frequent interaction and the face-to-face aspect and developing trust and commitment and a long-term relationship, concepts we talk about in supply chain management.
04:09 Matt Waller: The other thing to your point about being there frequently and for two to three weeks at a time in China, guanxi or relationship building is maybe more important than in most countries. Would you mind talking to that for a moment?
04:26 John Kent: And relationships go well beyond or deep, strong trusting committed long-term relationships go well beyond a formal meeting. And a couple of things I'm thinking about. One is just eating lunch or dinner together or at breakfast. I'm not fluent at all in Mandarin or in Chinese, I know about maybe 25 words. But many of the words I've learned have been over dinner, and extended periods of time. And if you have a very concise trip planned, your answer to those sort of informal, "What are you doing tonight?" is always, "You're doing something else," 'cause you're in a hurry. You're in town for a short amount of time. So that building of trust, I think, has helped us to navigate the last 15 months of the geo-political situation in China. If we didn't have a strong footing with multiple, strong, personal, professional and institutional relationships, I think we may have given up. Instead, we haven't hardly missed a beat over the past 15 months with the relationships and research and with other universities in China.
05:46 Matt Waller: I'd like to start out by talking about the cooperative degree and non-degree programs that you've been working on in China. I know you've been working with five or six universities there. Is that correct?
06:00 John Kent: The first cooperative relationship, the one we've had for the longest amount of time, actually started in 2013. It was my first trip to China while working for the University of Arkansas, was in the summer of 2015 to teach a 3-week course, Introduction to Supply Chain Management at the Soochow or I think most of us now call it Suzhou University, even the Chinese, Suzhou University. And we're in our fourth year of cohorts of students in that relationship.
06:36 Matt Waller: It's hard to believe it's been that long.
06:39 John Kent: Fourth year. We just came to Fayetteville six weeks ago was our third cohort that come to campus, but we also have recruited... We have three cohorts that are still in China. So each year, we had a new cohort, very similar to a freshman class. And then when those students become seniors, in between their junior and senior year, they have the opportunity to attend the University of Arkansas and receive a degree, an undergraduate Degree in Supply Chain Management from the Walton College and from their home university in China.
07:15 Matt Waller: Why are these students interested in that?
07:18 John Kent: I think it's primarily the parents. And the parents planning from... Similar to what I did, I started saving for my children's college education the month they were born, and putting in a few dollars each month for 18 years. And it works. And I think the parents in China do that as well. So they're creating this college savings account with the intent of their newborn of getting a degree in the United States. And they know they need to save money for that. And they can do that without going through a cooperative relationship. But the cooperative relationship, it's much more efficient. The parents don't need to spend as much of the money they saved, because similar to a transfer credits that we would allow from a two-year college in the US or from another four-year university into the University of Arkansas, they can take one or two years up to about 20 courses or 60 hours and transfer those in. So those can be taken at the Chinese university, transferred to the University of Arkansas, similar to what we do in the United States.
08:25 Matt Waller: One program or a set of programs that we offer in the Walton College that I continually hear are transformative. When you look at the mission of the Walton College, part of it has to do with globalization of our students and our faculty. But about half of our vision has to do with us serving as a catalyst for transforming the lives of our students. And when I talk to students, we have over 6,000 undergraduates in the college, and the percentage of the students who participate in study abroad during their time here continues to go up, which I'm very grateful for, because I do think it's important. As you know, I used to lead Study Abroad to China over 10 years ago. I could see it. And those students that I would take to China, back then we went just to Beijing and Shanghai. I know you do a lot more than that. But some of these students when they're graduating, say that their study broad was one of the most transformative parts of their program. Tell me a little bit about how you're running China Study Abroad now.
09:43 John Kent: You and I both see students' lives transformed almost continuously. However, over the period of a four-year academic career, that's a relatively slow transformation. So if we met the student, young in their freshman, sophomore year, and then they were a Supply Chain major, we can certainly see that transformation happen when they post on LinkedIn about a job they just accepted. And we're very happy for them. In Study Abroad, you can see that in two weeks. You can see the transformation, and I'll use the term worldview, in just their perspective, both literally and figuratively on worldview. Over the last three-and-a-half years of what I call just along the journey of the research journey or the cooperative education journey, I've met many people in industry in China and developed relationships. So much so, now I have contacts in many different corporations, both multinational and China domestic cooperations, that I send a text to my contact at Alibaba and asked if our Study Abroad trip could come to visit Alibaba. And they replied back, "Yes."
11:05 John Kent: And their twist was, not only do we want you to come visit us and for you to learn about us, but we want to learn about retail in the United States. And so it turned into an opportunity for six of the students to make presentations during our day at Alibaba about retail in the United States. And so our students were making presentations which was excellent for their development, but also, I'm using that as an anecdote of a relationship that did not exist at all three-and-a-half years ago.
11:45 Matt Waller: Congratulations.
11:47 John Kent: And now I firmly believe when I send that text again for 2020 to Alibaba, that we'll do a similar... We already know the format of what works. So two weeks, we combine business along with cultural aspects of China on the Study Abroad trips.
12:11 Matt Waller: So you mentioned that the Ministry of Transportation introduced you to some of these universities, which is nice. That certainly helps in relationship development. But you mentioned that there's also a research project associated with it, I remember when you were first starting this, I was pretty excited about it because it reminded me of a study that had been done in the US that was published every year, that I've actually used data from for some of my research a long time ago. Would you mind talking about that?
12:45 John Kent: I think you're talking about the State of Logistics Report. Annual State of Logistics Report currently sponsored by Council Supply Chain Management Professionals. This is a report, the longitudinal report, we call it. I think since about 1980, we've collected data in a very similar format in the United States. So we're in our third year of producing a benchmark or a comparison of the US State of Logistics Report and the primary components of cost of logistics, which would include inventory, carrying cost, and cost associated with the primary modes of transportation. We're comparing those costs with information from China, the two largest economies in the world. Actually, the first year we started this, the graduate student that was helping me told me that this was impossible, Dr. Kent. We were not gonna be able to do this because of the ways of measuring transportation, specifically in China or by pieces in weight, and we need it a financial measure. However, we're in our third year. We're finishing up the report for 2019, which compares the cost of logistics in the US and in China.
14:04 Matt Waller: If you look at total logistic costs in the US, as a percentage of GDP. I remember, I think when the analysis first started, it was like over, was it over 20%?
14:17 John Kent: No, I would say upper teens, maybe over 20, but certainly upper teens.
14:20 Matt Waller: And then it dropped down to under 10%.
14:23 John Kent: Single digits, 8% or 9%
14:27 Matt Waller: Where is China right now?
14:29 John Kent: The numbers we're reporting this year are in that 8.5%, 9% of total GDP for the US, and about 14.5%. If you were to go back in years and look at, when was the US in that 14%, 15%, and this is off the top of my head, but it would be in the late '80s or in the '90s maybe. That is when you and I first started down this path of... I believe you were in the doctoral program at Penn State in that time frame, I was at University of Tennessee. And we were seeing education in supply chain evolve from transportation... Actually from logistics to supply chain is what you and I would have experienced. That's happening in China now. And I attribute the talent, the education, the awareness of the... Not only the competitive advantage, 'cause that's not really the aspect of supply chain we're talking about here, we're talking about the efficiency aspect that can be gained by better managing your supply chain. Once we started doing that in the United States, we started to see those numbers go down.
15:47 John Kent: And that's where China realizes now. And I think they have the past maybe three to five years, that whether it's undergraduate education, Master's education or non-degree executive education, the demand for that education and how that will help China to reduce that expense in their economy or that cost in their economy, as they're seeing labor costs and other costs go up. So 14.5 to 8 and trying to put that in a little bit of perspective from an education standpoint, because this helps to define the market. In a lot of ways, China and the US have this interesting relationship. We're customers of each other and we're suppliers for each other. And from my perspective, China is a customer for our intellectual property and they're willing to pay for it in part of our endeavors.
16:47 Matt Waller: You've been involved in a really substantial funded research project in China with the Walmart Foundation, and looking at their supply chain food safety issues. Would you mind talking about that?
17:09 John Kent: Okay. I think the first thing to emphasize, and you said this, the Walmart Foundation. So this is a philanthropic grant that the University of Arkansas receives. This is research to make the supply chains more safe for all people in China, and there are competitors of Walmart that are involved in the research as well. We focus on poultry supply chains. So there are multiple poultry suppliers in China that are involved, and there are multiple agriculture universities in China that are involved, in addition to Poultry Science at the University of Arkansas, Industrial engineering at the University of Arkansas, and Supply Chain Management in the Walton College. But also it's important to note, for phase two, the Blockchain Center of Excellence is also included in phase two of our research.
18:09 Matt Waller: Oh, my goodness. In some ways yes, it's clearly gonna benefit consumers in China, but it's benefiting the University of Arkansas in a big way too, because it's getting inter-college collaboration going. So tell me a little bit about that research.
18:30 John Kent: Okay. So they started in, like I say, in the fall of 2016. For two-and-half years, we put together the team. We have bio-sensing engineers. So we have veterinarians that know how to program computers that can create a device that you can plug into your smartphone, and that you can test a poultry for microbial, salmonella is a very common microbial, I hesitate to say disease 'cause I don't think it's a disease, but contaminant for food safety and the supply chain.
19:15 John Kent: Temperature is also very important, both ambient temperature and the control temperature. Humidity is important. So we're involved in the farm to the store shelf. We like to say farm-to-fork 'cause it sounds so good to describe a food supply chain, but it's really from the farm to the store shelf. And we have members of our team that are specialists in different areas of the supply chain. Our role during the first phase in supply chain, was just to be sure that there was a supply chain orientation at the table in all our meetings. You get the veterinarian and the poultry science. They understand very well what goes on on the farm and through the production facility. But then beyond the production facility, and if you draw it out, the downstream to the retail aspect of the supply chain, it was almost an unknown part of the supply chain in China.
20:20 John Kent: And so the work that I've done, specifically from a supply chain perspective, is primarily using an application called Power BI, which is a data visualization tool where we took the data that was being collected throughout the supply chain, whether it was salmonella microbial test, or whether it was humidity or temperatures, and pull that information together in an interactive visual way for a manager anywhere in the supply chain to be able to understand key factors associated with food safety. And so, phase two is to take that... Now, I would call us a mature team, so we don't have six months, 12 months of just getting to know each other and building the team, that mature team. And we've added some regulatory, legal investigators, co-PIs as we're called, to the grant and also the blockchain component, so those are two new areas. That our goal for phase two is to have an adoptable. So when we think of entrepreneurship and innovation and plug and play and the different terms and aspects of innovation and entrepreneurship, our goal was to have an adoptable technology for supply chain food safety.
21:48 John Kent: Now, adoptable could be an investor that would want to come in at the end of the project, or it could be one of the companies that are participating. And that's how I think we'll measure success at the end of phase two, is taking a team two-and-a-half years ago that were interdisciplinary, international, multiple organizations and getting that team mature enough to have made some significant accomplishments in phase one. But I think one of the indicators of success for Phase 1 was the fact that the Walmart Foundation asked us to apply for a phase two and... So, enough said, probably.
22:30 Matt Waller: So in some ways, you're doing this research on some macro-economic variables. You're doing research on a really tactical food supply chain, safety and food supply chain. That's a broad spectrum. You're working with universities to create programs. You're taking our students to China and study broad. You're getting a very broad perspective of China. And of course, our students are getting a huge benefit because these programs you're developing in China, you bring the students over here eventually. And then you're bringing our students over there. What are some observations that you've noticed? What do you know now from a high-level perspective that you didn't know before you engaged in this way, either about China or about doing business in China?
23:48 John Kent: To most listeners for this podcast, there are obvious differences between the two economies and the two countries. I think there are more similarities than differences. And as I mentioned earlier in our conversation, the last 15 months just from a geo-political... Trade wars is a term we use frequently, living through that. I don't call myself a trade warrior, I call myself a trade peacemaker. But living through that with the relationships and understanding that in my mind, there are many more aspects of what we're trying to accomplish, is that the world's two largest economies that we have in common than the differences. Sometimes people, I will have conversations with them, as you and I are having, and they will learn different aspects of what I've been working on, and they will label me as an expert. And they'll invite me. On November 7th, I'll be in Little Rock talking about China, US. This is sort of what I've labeled as service along the journey aspect of China. I never knew that this situation was gonna occur in 2018 and 2019. The difference is being highlighted from a trade standpoint.
25:21 Matt Waller: Right.
25:23 John Kent: That is, I think, how I would sort of summarize the journey, the three year or so journey with Walton College and China Initiatives. And being able to look back 20 years from now, hopefully, I can look back 20 years from now, and see how lucky I was to have a career that I could participate in, that I think will be a very transformative time frame in the global economy. As business professionals, certainly as supply chain professionals, we'll look back at this time and it will be a point in the history, in the business history anyway, of our two countries that I could be so involved with and pay so close attention to.
26:11 Matt Waller: Thanks for listening to today's episode of The Be Epic podcast from the Walton College. You can find us on Google, SoundCloud, iTunes or look for us wherever you find your podcast. Be sure to subscribe and rate us. You can find current and past episodes by searching BeEpic podcast one word that's B-E-E-P-I-C podcast. And now, be epic.