11-27-2024
When Brent Hagan joined Lob last year, he immediately saw some ways he could add value in his role as vice president of operations of the direct mail marketing company.
“I saw that we were using third parties for a lot of our manufacturing operations,” says Hagan, a 2009 Purdue graduate who returned to campus to speak in the Daniels School’s Executive Forum. “That might be OK, but every time it happened we were paying margins, whether it was ordering envelopes and paper or scheduling trucks. Cash is king, and I’d rather bring some of those activities in-house and spend the extra money on innovation.”
As a result, Lob started buying its own consumables, contracting trucks, and building freight relationships, dramatically lowering variable costs as a result. Hagan also looked at the partner relationships the company had developed.
“I thought our network was overbuilt. We were in the range of 2-6% of our partners’ revenue, which gave us little negotiating power and influence. Our partners told us we were important, but I don’t think we were really that important,” he says.
As a result Lob has gone to fewer partners, now representing 10-15% of those companies’ capacity, providing greater economies of scale and getting a greater voice in operations. “I don’t like people telling me what box I fit in,” he says. “If they tell us no on something, we’ll go out and find another partner.”
Before joining Lob, Hagan was vice president of fulfillment operations at Deliverr, a technology startup that was purchased by Shopify for $2.2 billion. He was also a general manager at Amazon, where he launched a new fulfillment center and managed 150 salaried leaders and 5,000 hourly employees.
Reporting directly to the CEO at Lob, Hagan manages the company’s $250 million global fulfillment network and has helped grow company revenue by 50%. He says one key to success is to think of operations and supply chain initiatives as strategic advantages.
“It’s a superpower for us,” he says. “If we’re insourcing, we need to understand how to utilize fixed assets to control costs. If we’re using a third party, we have to know what our ability is to leverage what they’re best at and find out what we’re better at, and control those variables.
“The bottom line is to do what will give the best benefit to our customers.”
Our next Daniels Insights blog will post on December 2. On behalf of everyone at the Daniels School, Happy Thanksgiving!
