December 2006 | Case Studies | Reader Profile

Michael Mahon: Rolling in Dough

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When the music store he managed went out of business, Denver jazz bassist Mike Mahon needed a new day job. He found one driving a delivery truck for Otis Spunkmeyer, a manufacturer and distributor of frozen cookie dough and ready-made bakery products.

Soon, Mahon spotted an opportunity that looked too good to pass up. Otis Spunkmeyer was expanding fast, and needed people to manage its new local distribution centers.

"The company was opening 10 sales centers a month," Mahon recalls.

Having worked in music distribution as well as retail, Mahon had the necessary experience. So, in 1987, he packed up his family and headed off to manage Otis Spunkmeyer's product distribution from its Eden Prairie, Minn., facility.

Today, Mahon directs the flow of sweet temptations throughout the entire United States. As director of distribution operations logistics, Mahon is responsible for all finished goods as they pass from the company's four manufacturing facilities to its foodservice, retail, and fundraising customers.

The network includes four 3PL-owned inventory centers and 56 route distribution centers. Now based in the company's Norcross, Ga., headquarters, Mahon reports to the vice president of supply chain.

Transporting baked goods and frozen cookie dough means relying on refrigerated carriers. Such carriers are not abundant, and finding the right ones isn't always easy. "The challenge is getting to know as many people as you can in the market," Mahon says.

Otis Spunkmeyer's broad spectrum of customers—restaurants, schools, groceries, convenience stores, and others—makes transportation scheduling a particularly difficult puzzle. "Each customer has unique requirements," Mahon says.

The fixed runs from a 3PL's inventory center, for example, might not match every customer's needs. "A customer may say, 'That's great, you will deliver on Tuesday, but I need the product on Monday,'" Mahon explains.

TMS on the Menu

To satisfy customer demand, Otis Spunkmeyer might have to pull some product from the 3PL and haul it using its own equipment. A transportation management system, which Mahon plans to implement next year, should help in those situations, he says.

Like many other shippers, Otis Spunkmeyer has been wrestling with tight capacity and volatile fuel prices. When trucks and drivers grew scarce in 2004, "we started sourcing carriers that ran reciprocal routes, so they weren't using a lot of out-of-route miles when they did pickups at our plants," Mahon says.

A new challenge arose when fuel prices shot up after Hurricane Katrina in 2005, and motor carriers started proposing surcharges that bounced "all over the board," Mahon says. To take control of the situation, he and his team started doing their own calculations.

"We developed a fact-based analysis of fuel consumption, and what fuel surcharges we thought would be fair. And we held the line in carrier negotiations," Mahon says. "As a result, we were able to get the majority of our carriers to comply with our fuel surcharge program."

For the jazz man, the sound of those reasonable increases locking into place was sweet music, indeed.

The Big Questions

What do you do when you're not at work?

I play music and volunteer with my son's high school band. After Hurricane Katrina, I volunteered at a Red Cross service center to help people who evacuated to Atlanta.

Ideal dinner companion?

John F. Kennedy. He dealt with and initiated a lot of fundamental changes in his time.

What's in your briefcase?

An analysis on an inventory center in the Southwest, and a transportation management system proposal.

If you didn't work in supply chain management, what would be your dream job?

If I knew I couldn't fail, I would perform and produce jazz, focusing on finding musicians who put their passion on hold to pursue a career and raise their families. There is a lot of untapped talent out there.

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