Interview with John Lund of Walt Disney Parks and Resorts

John LundBy Andrea Kostelas - Editor of the GSC Review Magazine.

As Senior Vice President, Supply Chain Management, John Lund is responsible for optimizing the performance of supply chains across Disney's Parks and Resorts. A family vacation business with over $11 billion in sales, Disney's Parks and Resorts span three continents and include five world-class vacation destinations, a top rated cruise line and the most popular resort locations in North America, Europe and Asia. Lund oversees the supply chain functions for these operations, with particular focus on merchandise, food & beverage, and costuming.
Lund began his career with Disney in 1992 as Transportation Development Manager for Euro Disney in France. His responsibilities continually expanded and, by 1995, he was named Director of Telecommunications, Transportation, and Multimedia. He proposed and launched Euro Disney's first online services in 1995. From 1996 to 1998, while serving as Secretary to the Executive Committee, he led a largescale effort to improve back-of-house productivity, reducing support costs by over 20%. From 1998 through 2000, he returned to operations as Director, Operational Labor Management, creating a centralized organization for labor force planning of Euro Disney's 8000 operational employees. He negotiated with the French government and the company's unions an innovative, on-the-job training program whose graduates are certified with diplomas granted by the French ministry. In January 2001, he was named Vice President and Chief of Staff, with responsibility for corporate organization and productivity; revenue management; and the external relations of the Chairman. Following the nomination of Euro Disney's chairman, Jay Rasulo, as President of Walt Disney Parks and Resorts in September 2002, Lund assumed interim leadership of marketing & sales and of strategic planning.
In September 2003, Lund moved to California to serve as Vice President, Process Improvement and Sustainability at Walt Disney Imagineering. He was responsible for promoting productivity within WDI and improved maintenance for Disney Parks and Resorts. He also served as business manager for Disney Creative Entertainment, creators of live entertainment for Disney's parks and cruise ships. In September 2004, he was promoted to Senior Vice President, Strategic Asset Management, providing global oversight and strategic direction for all aspects of Walt Disney Parks and Resorts' physical assets, including sustainment and safety strategy and processes.

Prior to joining Disney, Dr. Lund worked 8 years at the RAND Corporation in Santa Monica, California, an internationally renowned non-profit research center for public policy. He advised the US government on national security strategy, political-economic affairs, military force structure planning, and logistics. While at RAND, he authored or co-authored numerous books and reports.

A native of Philadelphia, Lund holds a Doctorate in policy analysis from the RAND Graduate School, a Masters in international affairs from Columbia University, and a Bachelors in international relations and economics from Saint Joseph's University. He is an American citizen, married to a French national. They have two children.

Lund serves on the Advisory Board of the College of Arts and Sciences of Saint Joseph's University, and has served on the Board of Directors of the International Association of Amusement Parks and Attractions, and is past Chair of its Audit Committee.
How would you define supply chain at Disney?
We define supply chains as "the flow of material, information, and currency between our suppliers and our guests." Within Disney Parks and Resorts, we have multiple supply chains supporting different elements of our business, from fireworks for our nighttime spectaculars, to costumes for our cast members. However our largest and most complex supply chains, and where I devote most of my energy, are the retail and the food and beverage businesses.
How important is supply chain management to Disney Parks and Resorts' overall business strategy?

When Walt Disney created Disneyland, his vision was to offer a place families could experience and enjoy together, immersed in an atmosphere rich in detail and storytelling, the place "Where Dreams Come True." Everything that we do must contribute to that vision, in a way that is transparent to the guest. For our guests, the supply chain should be invisible, almost magical. When our parks open each morning, everything that you would need or want will already be there. The attractions are ready to welcome the guests, the shelves in the shops are full of attractive products, and the restaurants are ready to serve great meals.

What primary areas of focus is Disney Parks and Resorts looking at for Supply Chain Management?

We differ in critical ways from a traditional retail or a restaurant chain that manages hundreds or even thousands of stores or restaurants scattered around their markets, each store very similar to the next. We have a concentration of hundreds of shops and restaurants operating in very close proximity at just a handful of large resorts, in Orlando, Anaheim, Tokyo, Paris and Hong Kong. Whereas other companies achieve much of their efficiencies through the standardization of assortments and of the store or restaurant layouts, we need to differentiate our shops and restaurants to fit with the theme of the environment where they are located. A shop located on Main Street should have a look and feel that is very different from one in Frontierland, and the assortment needs to fit the theme of each location. A similar challenge faces our restaurants which must stay true to the theme of their location.

Therefore, our primary focus is to balance the need for a rich diversity of offering, so critical to that uniquely Disney experience, with the need to operate as efficiently as possible. Specific initiatives include:

  • Optimal item assortments
  • Optimal sourcing
  • Optimal product flow
  • Optimal packaging
  • Improved risk assessment tools

We have a very talented group of specialists who have developed specific decision-making models and tools to assist our teams in making the best choices in each of these areas.

We need to achieve these high levels of performance while fully respecting Disney's commitment to having a socially responsible supply chain. It no longer suffices to have "the right product, at the right place, at the right time, at the right price, and in the right condition". We must ensure that we do all that in "the right way."

How does Disney address the issue of proper working conditions in factories?

Our goal is to have a supply chain that mirrors Disney's own desire to operate as a responsible business. Disney launched its International Labor Standards program in 1996. Disney is committed to the promotion and maintenance of responsible international labor practices in its licensing and direct sourcing operations throughout the world. Toward this end, we have implemented a wide-ranging International Labor Standards (ILS) program that includes policies, practices and protocols designed to support common, safe and fair labor standards for workers engaged in the manufacture of merchandise bearing the Disney name and characters.

How is Disney addressing the market's increasing focus on safe products and testing products at the manufacturing site?

The safety of products bearing Disney characters and other intellectual property is of crucial concern to us. Contractually, Disney requires that licensees and manufactures comply with all applicable legal and regulatory safety requirements and that they have procedures in place to verify such compliance. Our Product Integrity professionals monitor and confirm that manufacturers and licensees are conducting safety tests by independent, certified third-party testing laboratories or equivalent procedures. They also seek to verify that product manufacturers are complying with, and keep abreast of current and changing product safety standards.

How is Disney addressing the market's increasing focus on 'green' supply chains and reducing a company's carbon footprint?

At Disney, we seek to establish and sustain a positive environmental legacy for Disney and for future generations. The company is committed to minimizing its overall impact on the environment while encouraging and activating environmentally responsible behavior on the part of cast members and employees, guests and business associates throughout the world. Specifically, Disney aims to conserve water, energy and ecosystems; to reduce greenhouse gas emissions; to minimize waste; and to inspire public consciousness in support of environmental sustainability. The company seeks to identify, measure and understand the direct and indirect impact of its operations and develop innovative and realistic solutions for mitigating those impacts. It also complies with, and in some cases exceeds, environmental laws and regulations. Finally, the company is committed to communicating regularly its progress in implementing the policies and achieving the targets that it has established.

What do you think is the key Supply Chain Management priority for the coming 2-3 years is for Disney Parks and Resorts?

The key areas of focus are:

  • Implementing process and tools to achieve optimal total delivered costs
  • Attracting and retaining top talent throughout the supply chain organization
  • Ensuring that we operate compliant, socially responsible supply chains

What do you think is the key Supply Chain Management priority for the coming 5-10 years?

The key priority for the future is the same as it is today: creating truly global, seamless, socially responsible supply chains that actively drive the growth of the company. As companies grow and push into new markets, supply chain professionals offer a special and often unique perspective. Our teams see the new trends in manufacturing and in consumer tastes. We can often see changing consumer behaviors as they begin to affect the supply chain. The challenge for us will be to leverage that knowledge and understanding to help shape corporate strategy and growth.

A key means of driving growth will be for supply chains to enable new customer experiences and services. Today's consumers expect increasing levels of immersive, personal, customized and interactive experiences in every facet of their lives, including their entertainment choices. For Disney, the quickening pace of daily living, advances in personal technology and the rapidly changing media landscape are combining to reshape our guests' expectations of a Disney experience. Supply chain management will need to play an active role in meeting guest expectations in this arena.

What are the biggest INTERNAL challenges to achieve supply chain excellence?

The single biggest challenge I see is effective communication. A world-class supply chain operation requires a high degree of collaboration between many different functions and organizations. We are fortunate in that we have smart, strongly motivated, and hard working teams, people who are eager to do the right thing.

What are the biggest EXTERNAL challenges in achieving supply chain excellence?

Just as effective communication is a significant challenge internally, timely and accurate information should be a priority externally as well. As supply chains become ever more extended, actionable information is critical to effectively managing costs and risks.

A closely related challenge is the lack of common standards and metrics. I think we are all interested in benchmarking with each other, but we are frequently hampered by significant differences in definitions and processes despite years of efforts by various organizations. Although common standards and metrics may exist within certain industries or parts of the supply chain, I have found it very difficult to uncover such commonality across the variety of supply chains that we operate.

Finally, the supply chain profession needs a pipeline of strong leaders with skills to succeed in today's business environment. Technical expertise is not enough. We need leaders with a global mindset and global experience, leaders that excel at cross functional relationships, and leaders that know how to make change happen in an organization.

What are the main skills and personal attributes that have helped you reach your current position?

I have been fortunate at Disney to have had a wide range of experiences in both operational and staff positions, working with front line cast members and with senior executives. Prior to Disney, I worked on numerous cross functional research teams at the RAND Corporation. These experiences provided me with both the expertise and, perhaps more importantly, the mindset to succeed in the cross functional relationships so critical to supply chain management.

Beyond that, I would say that I have always been extremely curious to learn new things and master new skills. I have regularly sought new professional experiences and responsibilities, and Disney has been a great place for providing those possibilities. I have a deep respect for the professionalism and commitment of my peers across the company. Finally, I always strive to maintain the highest levels of integrity.

During this economy, how do you keep your entire organization motivated?

People who work for Disney, our cast members, have a passion for what we do. Many of my fellow cast members have been with Disney for many years. They provide the signature Disney quality service to guests around the world every day. We have an obligation to make their experience the best it can possibly be. Our mission doesn't change: to provide great guest service every day to every guest. My role as a leader is to keep that mission top of mind for everyone on the team, and the team will do likewise with me.

I also keep the organization motivated by reminding them about what a great job they are doing. I frequently get compliments from other parts of the organization on the cutting-edge work the supply chain team is doing, and I always share that feedback with the team.

What have you learned as Senior Vice President, Supply Chain Management that has surprised you or changed the way you do business?

I am always amazed at the incredible complexity of supply chain operations and the sophistication of the tools that our teams have developed to manage the business. Each time I have moved into a new area of the company--be it attractions operations, maintenance and engineering, marketing, Imagineering -- I have been amazed by that same thing. I have been impressed by the great care that the team takes in carefully managing every element of the process so that the guest experience is as perfect as it can be.

What are the top three factors you use to measure effectiveness of a supply chain program / model?

I would group the top three factors under business growth, customer satisfaction, and compliance.

We measure a wide variety of cost and revenue metrics but gross margin return on investment (GMROI) has proven to be the best all encompassing metric.

Customer satisfaction metrics will depend on the supply chain, the objective is to get as close to the final guest experience as possible.

For compliance, we track a variety of metrics, including: safety metrics (employee safety; product safety; food, etc), and international labor standards metrics, among others.

February 2010
See the recipients of the 2009 Top 25 Supply Chain Executives Award.