University of Arkansas

Walton College

The Sam M. Walton College of Business

Episode 48: Stephen Rutner

Stephen Rutner is a Professor of Supply Chain at Texas Tech University. In addition to this, Stephen has also served as a Brigadier General for the United States Army Reserve for over 30 years. Stephen has extensive experience in transportation management, strategic leadership, and received his PhD in Logistics and Transportation from University of Tennessee, Knoxville.



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Episode Transcript

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00:06 Matt Waller: Hi, 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.

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00:27 Matt Waller: I have with me today Stephen Rutner, who is a Professor of Supply Chain Management at Texas Tech University. What is extremely unique about him, compared to any other professor I know in supply chain management or business, is that he's a Brigadier General in the United States Army Reserve. This is quite unusual. He received his PhD in Logistics and Transportation from the University of Tennessee, Knoxville. He has an MBA from the University of Alabama, a Master of Strategic Studies from the United States Army War College. I'm careful to not make him mad after I found that out.

[laughter]

01:10 Matt Waller: But he's a great professor, a great teacher and a great researcher. And we're fortunate to have him. I've known you for quite a long time, Stephen. Thank you for joining me today.

01:21 Stephen Rutner: It's my pleasure, and it's always fun to come back to Arkansas and get a chance to visit. And happy to have this conversation and maybe something valuable can be contributed here.

01:30 Matt Waller: You were a visiting professor here for a couple of years, so we got to know each other then. That was almost 20 years ago.

01:37 Stephen Rutner: Make us all both feel old very quickly in the process. But yes. [laughter]

01:41 Matt Waller: Exactly. But you've also been involved with the United States Army Reserve for 30 years.

01:49 Stephen Rutner: So I started as a regular Army officer, right out of college, did the traditional three years on active duty. And let's be honest, I found what I did not wanna do for the rest of my life. I would never trade that experience and the things I learned and the opportunities there, but I was not the classic wanna be an Army Officer for the rest of my life. It was the... Like many of us, you grew up in a family, how do you serve? It was my opportunity to serve.

02:15 Matt Waller: This really... You have a lot of unusual, an unusual combination of skills. You have a PhD, and you are a professor at a major university. You are a Brigadier General. That in and of itself, I doubt there's anyone else in that category.

02:31 Stephen Rutner: Wait. You'd be surprised. I ran into one of the two stars the other day, and I had just met him for the first time. And he is a... I won't say it's mechanical, but he's one of the engineers. He's an engineering professor at Vanderbilt. So there are one Z, two Zs of us, but I think I'm the only supply chain one in the process.

02:51 Matt Waller: And even in business, I could see engineering being more common, potentially. But business I would think would be very unusual. So I remember when you were here around 9/11, you wound up getting involved again in a big way.

03:08 Stephen Rutner: So, again, I was involved. As a typical reservist or guardsman, I was on the reserve side at that point. It was, in those days, one weekend a month, two weeks in summer and that was pretty much it. And so it isn't me. It was all of us got very involved, obviously, after that point. And my unit got fenced and what that meant is, nobody could leave or enter. They kind of protected that unit. And then we went over in '05 and '06. And so again, a couple three years after 9/11, but we went over to the Middle East in '05 and '06. And at that point, I was the S3 of a transportation brigade. And what that means is in Army terms, the three is the operations dude. I was the equivalent of the COO of a very small 400-person transportation unit. And we had the responsibility to bring things in and out. So both times I went, I basically did the same thing just at different levels and in the positions. We ran the strategic lift in and out of theater. So if you sent any heavy equipment to Iraq and probably about 60%, I'm making up the number, but it's a educated guess for Afghanistan. Probably about 60% of the heavy equipment that would go in and out of Afghanistan would go through our seaports. And when I say our seaports, the ones my units were running in the Middle East.

04:29 Stephen Rutner: And so then we would bring it in, and then my unit would hand it off to my sister unit that would then move it inland to wherever it needed to go into Iraq, to this base or that base or that base. Or we would then trans-ship it to Karachi, and then a different unit would move it up through Karachi into Afghanistan. And then, so everything that came in or out of Iraq went through us. And then, like I said, a guesstimate, about 60% in Afghanistan because there were certain things, for security reasons, we did not wanna move on the ground, through certain areas to get to the places in Afghanistan. So it was a case of I did my time in there for a year. And I was incredibly fortunate to have great, hard-working young American heroes that were willing to come to work every day and do supply chain. We ran basically the busiest seaport in the DoD system. Now, if you compared it to Maersk, if you compared it to a terminal, one of the big terminals for UPS, our numbers were tiny. But we're moving 70-ton tanks. We're not moving a pallet of paper towels. Both are important, but very different handling characteristics and processes. So, that was typical of most reservists.

05:35 Stephen Rutner: Somehow you got your job, you now had to go do it. And of course in mine, it was a supply chain position. So it was kind of a fun to be able to apply both ways. Learn from the Army to apply in the classroom, and learn from our side to try to apply it to the Army as well.

05:50 Matt Waller: So as a Brigadier General now, you're a leader in the United States Army. I know you've been working your way up, you've been in this for over 30 years. But you've had leadership positions in the university, and in the military. But your responsibility now is big.

06:00 Stephen Rutner: Well, each position you get, you really and truly have a limited span of control. You only can control 6-8 people whenever that... We both, neither of us are management professors. I'm sure somebody could quote me the exact number from that department. The reality is you control those six or eight folks. And they then control six or eight. And it's a pyramid. And, the thing that you learn as you go through is, and interesting is your management style changes as you go through the process, too. And when you're a young lieutenant with 16 or 20 people working for you, you do A, B, and C. And then all of a sudden, you're a Major or Lieutenant Colonel with 400 or 500 people working for you, you do D, E, and F. Then as Senior Colonel, you do yet it's something different. As you go through this process, your leadership skills change, evolve. And you have to evolve with them. And I think one of the biggest challenges that many of my peers had, and I just kind of locked into it and got some good coaching and mentoring along the way, is that as a one star, I have very different responsibilities than I had as a Captain or a Major Lieutenant Colonel going through the process. But the fundamental basic leadership skills are still the same. Treat people properly. And the way that I've learned is you take good people and put them in a position where they can be successful. And if they're successful, then everybody around them is successful.

07:37 Matt Waller: Values are important in leadership. And when I think about excellence, professionalism, innovation and collegiality, two things that really stand out to me... You were talking about how Walmart had a number of senior people, and not just senior but a lot of people, especially in logistics and supply chain. They're from military. The one that came to mind when you mentioned that was Chris Sotomayor, he was Executive Vice President of Logistics. And to your point earlier about the new sort of culture that you have to lead with in the military, it's changed over time. A lot of times when you think about those four values, collegiality isn't one that comes to mind for military.

[laughter]

08:29 Stephen Rutner: Well, think about this. They've done many studies about why soldiers fight. Private Matt and Private Steve sitting in a foxhole somewhere fighting a war. Why do they fight? And at that point, it has nothing to do with patriotism. It has nothing to do with the salary. It has nothing to do with the benefits that they can go to college for free later. Those are all great things that got them interested to have the conversation to join the military. They fight for the guy sitting next to them in the foxhole. Every study has reaffirmed something, it's that guy next to him is the reason. It's that collegiality although we don't word it that way in the military. It's that that spirit, that brotherhood, that loyalty to the guy next to you, is the reason the soldier fights. And that part is true in 1775 when the army was formed all the way through to 2020. I have a duty to every one of my people that works for me to do the very best I can to take care of them, to put them in position to be successful. Because if I put them in a position to be successful, there's a better chance that if we go to fight with that unit, I have fewer casualties and I bring everybody home.

09:38 Stephen Rutner: Why? Because they've gotten all the training they need. They have got all the equipment they need, etcetera, etcetera, etcetera. But like any organization work, we're constrained by money, we don't have enough money to do everything. We don't have enough time to do everything. Real world, right? Every company in the world doesn't have enough money, time, to do everything. So the balancing act and the challenge of how do you prepare that person to go fight or in our case supply chain? How do you prepare that unit? Think about it. In Iraq for a while, I don't remember the statistics any longer, but for a while, the truck units were taking the highest casualty rates of any units in Iraq because the enemy's not stupid. Why attack a tank that can shoot back and kill everything in the universe if I can attack a truck convoy going up and down the road that's got all the fuel to make the tank move? So for a while, the transporters, my guys, were taking the biggest beatings in the process and having the highest overall casualty rates. So, I owe it to them. How do I put them in a position to be successful? And it goes back to your core values. Because they are part of my family, how do I protect them?

10:43 Stephen Rutner: It goes back to this whole supply chain. Sometimes people forget the supply chain is on the battlefield. And we have developed incredibly bad habits of fighting for the last 18 years in Afghanistan and Iraq. What I mean by bad habits is we learned how to fight in that specific environment. We learned how to fight what we call FOB to FOB. And a FOB is a Forward Operating Base. And so taking... And I'm totally making up an example. We've got a fictional unit of tankers that need to move from FOB A to FOB B. We know how to do that incredibly well. We've done it for 17 or 18 years. We know all the battle drills. We know how to get all the unit in together. We know how to put the convoy together with the correct protective things. We know how to sweep for mines. We know everything you need to do to move that unit safely from point A to point B to the best of our ability. The enemy gets a vote, but to the best of our ability. We are not gonna fight that again in the next war. We're thinking much more World War Two like, big armies on the battlefield, linear lines with you on one side, us on the other side, but they're gonna be breakthroughs where the enemy gets through our lines and is running around in the rear area where... And the rear area to us might be four kilometers to 18 kilometers behind the front where we're moving all these logistics units.

12:00 Stephen Rutner: So we have to break the bad habits and retrain a whole another generation of super young men and women that have proven they know how to fight, to fight in a non-FOB to FOB situation. And the problem is only the old guys like me are old enough to remember the Cold War. And here's how we're gonna fight the Soviet Union. And here are the rule, not the rules, but here are the tools, the techniques and all that will work on a linear battlefield as opposed to the Iraq and Afghanistan situation. And so, in the summers now, we have a couple big, four big exercises where we bring somewhere between 6000 and 10,000-12,000 reservists together and sometimes some guard folks there too that are almost all supply chainers in some cases. And we move them around, and we teach them how to move on this kind of battlefield. And they get attacked in the middle of the night because now they're not living on some Forward Operating Base with 22 layers of security. It's, "Guys, you're out in the wilderness, and who knows what's over that next hill and they're coming to find you. And, oh, by the way, you turn your cell phone on, we can detect you in a heartbeat where you are and all of a sudden artillery starts falling on you." But it's that relearning the skills that we kind of lost in the '90s to the 2000 timeframe because we fought the fight we had to fight.

13:12 Stephen Rutner: And so it goes back to this core values of every night, how do I go to bed knowing I've put that young man and woman and got them all the possible training I can get them so that they know not only how to move the fueler... I have great confidence that if I took a medium truck company, they can drive those trucks up and down the road all day long and pick up stuff and move it and do all the logistics pieces. I'm not comfortable they know how to survive on what the next generation battlefield is gonna look like. And so that's... You talk about loyalty, the core values. How do I ensure that I again go back to put them in a position that they can be successful? How do we train that generation that all grew up fighting in Afghanistan and Iraq, how to break those bad habits so that they can be the great leaders of that next generation Army that can fight in any environment because, God forbid, nobody wants to fight another war? And we all know who kind of our peers and near-peer enemies could be. We have to prepare. How do we fight in that environment? And again, it goes back to the core values so that young man and woman has every chance to be successful and come home in that situation.

14:20 Matt Waller: You know, that kind of leadership challenge where you're gonna have to fight in a new way is happening in the private sector. Because if you're a consumer products company of any type, it's very easy for a company to build an audience through digital marketing, contract manufacturing and distribution, and start selling a product that nips at the heels of all these CPG companies and apparel companies. And the CPG companies, the big ones, they have trouble re-training people to think, "How am I gonna do this?" They're still wanting to run coupon in the newspaper and put up billboards. And there's a different approach to marketing now. It's more inbound rather than just outbound. And you see brick-and-mortar retailers have had to learn ecommerce. So clearly, what you're talking about applies... I think leadership in general can apply to just about anything.

15:36 Stephen Rutner: Oh, I agree. I think the challenge, though, is we tend to... Senior leaders sometimes think, "Well, I'm a leader. I can do it all." You kind of asked me at the beginning, "Look at the civilian versus the military and the commercial sector from the military." I think the bigger the organization, the harder it is to transform. And let's be honest, the Army is a gigantic organization. But some of the key leaders get it, and they are trying to transform it. And so, this giant ball rolling down the hill, boulder of supply chain in the military, we have a way of doing it and it's so hard to push it one way or the other. One of the challenges that we have in the DoD is what I would describe as golden handcuffs. We have all these rules on what we can purchase and how we have to purchase and all the rules that come with it. So you talk about purchasing, part of supply chain now. So if you were to define the difference between military logistics and civilian logistics, I'd say two things. I would say up until about 1980, the military Logistics was superior to the civilian logistics world. Somewhere around Desert Storm, 1991, was kind of the zenith of military logistics. And I don't mean we didn't get better after that, but it was kind of the high point where everybody went, "Oh, look at this logistics stuff. We wanna get some of this logistics stuff."

16:55 Stephen Rutner: And about that point, Walmart was taking off and some other great logistics organizations were taking off. And they don't have the golden handcuffs. They don't have a 1.2 million-man DoD to kind of massage and get parts all over the world. And at the end of the day, I think about that point the civilian side started to outpace the military side in terms of skills, abilities, technologies, things like that. So prior to that, companies would steal military people to get their ideas and their technology, our technologies, into their corporations. We can't do it backwards just because of the way our personnel system works. But I think today you see a lot of organizations like Defense Logistics Agency, Big Army, Army Material Command, taking trips to FedEx to go watch, "How how does FedEx do this?" Because they're able to move a million something packages a night, and we're going, "How do you do that?" The military is still incredibly effective at doing supply chain, incredibly effective. If you need a widget in an Antarctica tomorrow, there's somebody in the system that can get it there tomorrow.

18:00 Stephen Rutner: One of the weird ones I had at the Defense Logistics Agency is, we would send out all the flu shots to everybody in the world because it's a little spike time, and we have to push it out. So they bring reservists in to beef up and send out all the flu shots. So we would be sending flu shots to submarines out on station in the Pacific. How do you get a flu shot to a submarine sailing around hiding underneath the water in the Pacific? We have a process, incredibly effective. We are not efficient. We may look at it a little differently. So we put much greater stress on effectiveness. We're probably more like the medical industry. The surgeons have to have, fill in the blank. And hence the cost of that scalpel is 17 times more than it really should be if you just went down to Walmart and bought a scalpel. But the cost of failure, millions of dollars. It's lawsuits and the humanitarian cost if you're a surgeon, that type of thing. But at the end of the day, the two biggest differences is, I think, personally around 1991, '95, somewhere in there. By the '80s the industry was catching up, and at the end of Desert Storm, everybody went, "Oh, give me some of this logistics stuff." And the civilian sector just exploded. And guys like you come in to help with the various pieces, and you go, "Wow, that's amazing." And then the second is the changed... Talking about the change.

19:20 Stephen Rutner: We know we have to change, we continuously strive to improve. But the golden handcuffs make it so hard to do truly transformational change on our supply chains and how the way we operate, and so we continuously make incremental improvements and incremental improvements, which is good. Because every one of those saves dollars and it means maybe we get six more widgets that we put in a stock that goes on the F whatever airplane flying out of Japan to do the right missions at the right time. We continuously improve and everybody works hard to continuously improve, but we don't have that ability to do almost that systematic change of, we're now gonna do delivery curb side and we're trying. We're looking at cyber, we're looking at things like drones, they're all unmanned vehicles, not only just the drones all kind... Unmanned delivery, all those kind of things. But it's really, really hard to change an organization that big and there's always the classic, "Well, it's worked for the last 18 years." Again, going back to my point, "Yes, it has." But that was in these two specific environments. How will it work? Fill in the blank. And I'm not gonna name a country, 'cause I don't want anybody to think we're targeting one specific country but we have to be prepared.

20:36 Stephen Rutner: What do we do? Other one good example, so I use one that's very politically correct and acceptable, is every year, we do a very large exercise in the middle of nowhere, Indiana for DSCA, Defense Support of Civilian Authorities. DSCA D-S-C-A Defense Support of Civilian Authority. So I gave you the example of how DLA, Defense Logistics Agency, will help FEMA. Well, this is what if we ever have God forbid, the worst case scenario, a nuclear strike on a city in the United States or a chemical attack on the city in the United States. It was actually very comforting to me to find out we do these exercises and so every summer we bring all these units together and there are certain regular army units that are tasked every year to be at. And they're the chemical first responder dudes and they can come in and provide chemical environment, medical supplies and help very quickly, because we know it's the responsibility of the civilian agency to do this but we also know that if it ever happened in a large city that civilians organizations would be rapidly overwhelmed. So then the army comes to do it. Just like when we have a hurricane, right? You see the guard and the reserve and the active army fly in helicopters and bring in food and preposition all those things, so it's not only to prepare us for the war time battle field, it's to prepare us for natural disasters, attack on the homeland, those types of things.

21:55 Stephen Rutner: So it's also very comforting if you didn't know this and most people don't, there's somebody in the Pentagon planning, what do we do if this happens on civilian soil? Whatever. If a volcano came up in the middle of the United States tomorrow, what do we do? How do we respond? How do we apply our forces? And so it goes back to that loyalty. We have a pact with the population of the United States to not only fight for the guy next to us but take care of our families and our friends at every citizen of the United States. How do we protect them and prepare just in case?

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22:31 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 podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching BeEpicPodcast one word, that's B-E-E-P-I-C-podcast. And now, Be Epic!