When the COVID-19 pandemic disrupted supply chains in March 2020, The Master Lock Company had many questions to answer: How do we continue to get our customers the products they need? How do we do so in a manner that keeps our employees safe from the COVID-19 virus? How do we support our suppliers and allow them to continue to produce the components that are needed for our products?
Master Lock, the No. 1 padlock brand in North America, manufactures thousands of stock-keeping units (SKUs) that are used in a wide variety of applications for consumer, commercial, and industrial end-users. Its customers include home centers, hardware stores, retailers, wholesale distributors, and specialty dealers.
Materials are sourced both domestically and internationally for the company’s U.S.-based lock manufacturing business. When materials were in short supply in March 2020, Master Lock took quick and decisive actions to continue to manufacturer and deliver products to its customers.
Empowering a dedicated response team
Immediately, Master Lock launched a cross-functional COVID response team, referred to as the Project Management Office (PMO). Justin Matuszek, director of product management, was appointed to lead the effort. The PMO had representation from product management, sourcing, demand planning, manufacturing, sales, production planning, customer service, and finance.
The objective of the PMO team was to make real-time decisions about how product would be prioritized and delivered to Master Lock’s customers. To manufacture and deliver product in a worldwide pandemic, though, employee health and safety had to be the No. 1 priority, so the PMO team was also responsible for making real-time decisions that kept Master Lock employees safe from the COVID-19 virus.
The PMO’s leaders knew that for the newly formed response team to be successful, it needed dedicated staff across business units as well as executive support. Instead of overloading employees by asking them to contribute part-time to the PMO and cover their normal responsibilities, Master Lock dedicated cross-functional resources to the team. This strategic decision maximized everyone’s focus on the PMO’s objective and removed any competing priorities that would hinder Master Lock’s ability to react.
It was crucial that the PMO establish the right operating rhythm. To begin each day, the response team met for a deep dive into its supply chain activities of the last 24 hours and to set goals for the next 24 hours. Task lists, sometimes down to the hour, were created so PMO team members could hold each other accountable. This structure provided the decision-making speed and agility that was necessary to make real-time supply chain decisions. Matuszek recalls, “There was no waiting for executive summary meetings. We had the authority to make decisions and, if needed, executive leadership was brought in to make sure we remained aligned.”
With the objective defined for the cross-functional response team and the daily operating rhythm in place, the PMO could focus on protecting employees from the COVID-19 virus, protecting Master Lock’s customers, and supporting its suppliers.
Protect the employees
A top priority for the PMO was to ensure that employees could continue to rely on a clean and safe work environment every day. Following U.S. Centers for Disease Control and Prevention (CDC) and local guidelines, Master Lock implemented strict protocols around testing and tracing for COVID-19. Employees were required to wear a face mask and a face shield at facilities where associates worked in close proximity to each other and to maintain social distancing where possible. Clear barriers were also installed to protect associates in offices, cubicles, the cafeteria, and other places where social distancing was difficult to maintain.
Communication also played an important role in keeping employees safe and informed. As market uncertainty increased, the leadership team realized that the frequency and transparency of communications needed to increase. Employees needed to know what decisions had been made about protecting their health and safety and about how to continue to service customers. Leadership shared not only what was known but also what was still unknown in the supply chain. This transparent communication allowed employees to focus on the company’s most critical objectives while also keeping the door open for questions or for employees to voice concerns.
The physical threat of COVID wasn’t the only thing affecting employees. Master Lock’s leadership understood that some employees needed extra support. The company launched a wellness program in 2020 for all employees. The program included additional counseling, daily live-streamed fitness classes with certified instructors, yoga sessions, talks by nutritionists and psychologists, and initial consultations with certified counselors to help employees set personalized mental-health and well-being goals.
Protect the customer
In a time of supply and demand uncertainty, one of the primary concerns was the potential for panic buying. To help address customers’ concerns and protect supply, Master Lock regularly held conference calls with key customers to review the company’s supply chain recovery plan. Master Lock shared supply constraints and recovery plans with those customers and kept them apprised of changes to plans that were based on evolving safety procedures.
Relying heavily on the engineering and product teams, the company identified alternative solutions for customers. In some cases, a similar product was in stock (or the components to manufacture it were in stock) and could be substituted to meet the customer’s needs. In other cases, product had to be reworked at Master Lock’s manufacturing site to support the customer’s requirements.
Finding alternative solutions for customers’ orders created ripple effects throughout Master Lock’s supply chain. Plans that showed the effort, capital, lead time, resources, and material required were quickly pulled together. The team worked cross-functionally to drive quick actions, often with customers’ input and partnership.
“We were given resources from all areas of the business, and if input was needed from a specific discipline, they dropped everything to get the answers needed and respond back to the team,” Matuszek says. “We transitioned from ‘how can our supply chain team fix this’ to ‘how can I help fix this?’ ”
The daily rigor of the PMO and the priority given to customer-focused activities proved to be key to Master Lock’s ability to quickly respond to changing needs. This responsiveness was critical to ensuring that customers could continue to count on Master Lock as a business partner.
Support the suppliers
Master Lock also met regularly with suppliers of the key components in its products. These suppliers shared what they knew about labor, raw materials, and product availability, and Master Lock did the same. They also shared information about new government regulations, methods for protecting employees from COVID-19, and changing business practices. As the suppliers navigated the pandemic and started to ramp up production, the meetings transitioned from information sharing to Master Lock working collaboratively with its suppliers on a daily production schedule. This daily communication was critical to ensure the right product was produced to meet changing customer demands.
One of the options the PMO considered was to vertically integrate manufacturing of the components that were in short supply. Master Lock’s analysis showed that vertically integrating would not allow the company to react quickly enough to supply chain disruptions. To adapt as quickly as possible to the changes in supply and demand, Master Lock instead focused on increasing its suppliers’ surge capacity and reducing their lead times. Toward that end, the company partnered closely with its suppliers, engaging in data-driven discussions around commodities, materials, labor, transportation, and other factors impacting product cost and service levels.
In one instance, Master Lock worked with a key supplier to increase production capacity by 25% in about eight weeks. The supplier shared information on how quickly capacity could be added and whether constraints were a matter of labor and/or equipment. Master Lock and the supplier laid out a plan to optimize the investment in additional capacity. Some of these discussions were already in motion prior to the pandemic, but with the immediate need for surge capacity, the project was able to be fast-tracked at this supplier.
Creating a path forward for 2021
Largely because of Master Lock’s experience during the pandemic, risk assessments and discussions are now part of the company’s “daily huddle,” a cross-functional standing meeting designed to update all employees on key business operations, including safety, quality, cost, orders, shipments, and supply. Each functional team provides an update on key performance indicators, obstacles, and situations that may impact revenue or growth so that employees and leadership keep their finger on the pulse of the business.
Prior to the pandemic, Master Lock had launched a “Next Generation Sourcing” initiative, but the pandemic environment provided additional guidance for the sourcing strategy. Through this initiative, Master Lock continues to strengthen supplier partnerships with surge capacity in mind, assess make vs. buy decisions, and find ways to reduce lead time for critical products and components.
The company also continues to prioritize finite resources using an “80/20” approach. In general, 20% of a company’s products create 80% of the value; accordingly, 80/20 principles are emphasized throughout the organization so that finite resources are used to manufacture and deliver the 20% of the products that drive 80% of the value. These principles are proving especially valuable as the company decides which components warrant increased spending on airfreight and which components should be shipped via the standard ocean freight. This approach ensures that key product inputs can be delivered in time to meet customers’ needs.
Master Lock was able to successfully adapt its supply chain amid the challenges of the pandemic. Today, the company continues to benefit from what it learned in 2020, and many of the practices put into place during that time continue to help the business. With all the progress it made, the supply chain team is staying agile to be able to meet customers’ needs—no matter the environment.
Mark Kosfeld is associate director of the Supply Chain Management Institute at University of Wisconsin-Milwaukee.
Leah Westpfahl is director, global supply chain for the Master Lock Company.