Corporate Vice President of
Global Supply Chain Management
By Bill McBeath
Roy Perry is a miner. He quickly spots improvement opportunities
and knows how to mine for gold. He has a knack for unearthing
the gems—those employees within the organization who
have the knowledge and the conviction to rapidly transform
their company, even if they are working at different levels
of the company. Since taking over StorageTek's operations
two years ago, Roy has overseen some impressive improvements
in performance: cutting inventory levels in half, increasing
turns from 2.8 to 7.3, and releasing cash in excess of 120
million dollars. (See last month's case study on StorageTek for
I had the privilege of visiting with Roy recently and was
struck by his unique blend of warmth and humanity combined
with an intense, uncompromising approach to improving performance.
He always puts people first and sees the value of relationships,
yet he doesn’t accept mediocrity or complacency. We
can learn a lot from Roy's humility, his ability to soak
in the lessons of life, and his determination to apply them
at each stage of the journey to improve himself and those
ChainLink – What in your career and in your
life enabled you to accomplish the things you did when
you came to StorageTek?
Roy Perry – Growing up as an African-American in the
60's, society expected very little of me. But my mother,
father, people in the church, my teachers and other people
I respected said I could do anything I wanted, and more.
Their encouragement and words stuck with me.
As I progressed through my career, I learned some valuable
lessons. At IBM, I learned from people like Dick Garino,
Bob Corrigan, Abe Clay and Thomas Thigpen. I was taught to
hire the best people, give them the best training, the best
opportunities, and get out of their way. At Allied Signal
when I was VP of the Commercial Avionics Systems Operations
Group, Larry Bossidy, Dan Burnham and Chuck Miller would
ask me each quarter "Did you meet your numbers?" If
you made your numbers, your review with Larry was kept short.
I learned from them that you keep your commitments and make
At Dell, I worked with the Dell Senior Leadership team often.
They taught me that it was all about velocity, not only for
the process of moving parts and equipment, but speed to make
a decision. ‘Get enough data, make a decision, get
it done,’ was Dell’s trademark. I am able to
do that. I remember that I was asked to develop a plan in
a few days to open a new plant in Nashville the next quarter.
We worked night and day, presented our plan, and more importantly,
we executed the plan and brought that plant up in 62 days.
ChainLink – Great story. Our CEO, Ann Grackin, coined
the phrase "Return on Decision." The time spent
analyzing a decision to death delays benefits. Velocity in
decision-making and execution—you lived it when you
brought up that plant in Nashville.
Roy Perry – A core team of twenty-four people opened
the plant in record time. Facilities and real estate worked
24 hours a day. HR hired and trained around the clock. That
factory was built and was shipping products 62 days from
the start of construction. The lines were up before the construction
was completed; therefore everyone had to wear hard hats.
That was a great experience; it is still a record at Dell.
If I had to do that again, I would look for the same skills
and qualities found in those 24 people. It's all about the
ChainLink - When you came to StorageTek, what did you find
and what did you do with it?
Roy Perry – I saw an excess of parts, idle machines,
more employees outside the building than inside. I saw lots
of opportunity. StorageTek had transformed quality in the
disk drive business a few years back, but former senior leadership
let that slip away. The employees below middle management
never lost those skills. They were extremely intelligent,
well read, and they knew all the new techniques and processes.
Once I realized I had all this talent, it was relatively
easy to fix. Get the barriers out of their way and they will
make it happen.
Let me tell you a story about Jeff Begalle. He was reading
books on lean [manufacturing] and getting excited about it,
even though the company wasn't practicing lean. I started
asking him tough questions. He would do some research and
come back with the answers. I knew, ‘he was going to
be my lean leader’.
ChainLink – What was your overall strategy
for transforming StorageTek to realize the opportunity
that you saw?
Roy Perry – Eliminate waste. We had waste in capacity,
low yields, too much rework, and waste in inventory. We had
finished goods everywhere, and we had a lot more capacity
than we needed.
I outsourced card manufacturing to a supplier who had the
volume and scale to provide a lower price and higher quality
than our existing card shop in Puerto Rico. Then we transferred
the Colorado manufacturing operation to Puerto Rico, since
we now had extra space in Puerto Rico.
The employees in Louisville were excited. They knew this
needed to be done. They developed a plan and executed it.
The barrier was really the comfort level of middle management,
accepting things the way they were. Reducing inventory on
critical products…that took a bit more courage than
the managers at the time were willing to put on the table.
ChainLink – Why did you decide to move to
Roy Perry – To make the largest impact on the use
of cash, we first had to attack gross inventory levels. Jeff
Begalle’s lean team was challenged to get WIP levels
down. They were actually putting parts back into the warehouse
just to get space on the plant floor. We needed to manage
the in-flows and get controls on the parts coming into the
business before we could do much about WIP, finished goods
stock, and field stock.
ChainLink – I hear StorageTek talk about win-win
VMI. I did a large research project on VMI in high tech
every supplier told me they hated VMI. I've never heard a
supplier call it win-win.
Roy Perry – We're not that large that we can force
a supplier to "take it or leave it." I have to
show my suppliers what the advantages are to them. Our "hockey
stick" demand curve [50% of StorageTek's orders are
shipped in the last two weeks of the quarter] without visibility
was really tough on our suppliers. In the past, we would
purchase six months of parts at a time and never talk to
them again until we'd have one day of parts left. Then we'd
say, "quick, quick, you have to give me four weeks worth
of parts." The supplier is thinking, "Where have
you been for the last six months?"
So, the visibility we provide to our suppliers makes their
lives a lot easier. For them being able to see our pull rates
is the best thing that could have happened. At our recent
supplier conference, Volex and others stood up and said how
well this worked for them.
ChainLink –You’re right, traditionally VMI has
been all about power. If you're a Dell or an HP, you just
tell your suppliers, "You're going to do this. If you
don't, we'll get someone else." Manufacturers who don't
have that power position need to make it palatable for the
supplier. Even Dell and HP have to take cost out of the supply
chain or it is going to come back to them one way or another.
There is no free ride here.
Roy Perry – Exactly. Sure, you can always go to the
next supplier, but we want that win-win relationship. At
the end of the day, the one making the decision to run their
line two extra hours to get you the extra parts is another
person. It's real easy for them to say, "It's not in
our contract. We've met your forecast. We're going home." But
if they know you, they say, "Bill's a good guy. He needs
50 more parts. Can you work two more hours today folks? Lets
do it for Bill." It's all about the people and the relationships.
ChainLink – What major benefits have you seen
from freeing up cash?
Roy Perry – We just hand all that extra cash over
to Bobby Kocol, our CFO [laughs]. Our improved cash position
gives us the flexibility to consider acquisitions and other
opportunities to grow revenue.
In this area, what drives us is improving working capital.
That's our challenge. We're closing the gap. We want to go
beyond the storage industry numbers and set new benchmarks.
ChainLink – Where do you see things going
next for StorageTek?
Roy Perry – How can we service customers faster? How
can every order ship in two days or less? How low can we
get the inventory? How high can our turns get? How can we
deliver to customers the same way everywhere in the world?
These are the things that the Global Supply Chain is reviewing.
I asked Randy Schneider, Senior Director of World Wide
Logistics, how can we get products to Eastern Europe two
days from receipt of the order. Randy responds to me and
says, "it takes three days to get it out of Amsterdam." I
responded, " but that’s not the question." So,
we started working on it. We looked at the pipeline, the
salesperson's conversion rate, and the customer's buying
history. If we've done the site survey, responded to the
RFP and now are negotiating price, we can make a calculated
decision to build the order and put it in our Toulouse,
France facility. When the order closes, we do final configuration
and ship it.
We hosted our first e-auction recently and saw significant
savings. We'll move quickly on more e-auctions for some
of our commodity parts. Beyond that, we're talking about
in-transit merge or cross-dock merge. Other parts of our
team are reviewing ways to increase our customers’ leverage
of their IT resources and data center management. We have
a few more challenges. We are not done.
ChainLink – Storage hardware is becoming more
and more of a commodity. You mentioned StorageTek managing
centers. That is a transformation of StorageTek from hardware
to total solution provider. It seems that part of your job
is putting in place the supply chain capabilities to support
Roy Perry – Exactly. If we're going to manage cross
vendor gear in the customer's data center, I need access
to cross vendor service network or need to stock those parts
myself. For my logistics team, that's the big challenge.
We view management as managing cross platforms, cross vendors,
performing remote based management by utilizing intelligent
tools. This management capability is designed to provide
customers with increased up time in a cost effective manner.
My black belts and green belts are taking their lessons
learned from operations out to the other parts of the business—finance,
legal, and HR—and out to our supplier base. We map
all the processes and discuss potential improvements with
the process owners. Projects on the top of the list get black
belts and IT resources. We're constantly looking for ways
to make the processes better, get to market faster than the
next guy, and continue to make StorageTek the best in the
ChainLink – Thank you so much for your time.
Roy Perry – Glad to do it. I've learned a lot from
the people I've had a chance to work with throughout my career.
I have a great team here at StorageTek—people who understand
what we are trying to do and are committed to getting the
ChainLink Research, Inc.