Tech Unknown | Episode 1 | Season 2
Featuring Guests Ronald van Loon & Richard Howells with Host Tamara McCleary
For the last few centuries, supply chain has been all about efficiently moving mass quantities of products to places where consumers could come pick them up. But it only took one giant company (hint: They’re named after a South American river) to turn that paradigm on its head.
The modern supply chain is far more complex than it’s ever been. But we have the tools to gain unprecedented visibility into every link in the chain. That flow of data can be collected, analyzed, and activated to drive new efficiencies, better customer experience, and ultimately more successful businesses.
This episode, host Tamara McCleary takes us on a journey of supply chain discovery. It starts at a local coffee shop, but the voyage will take you through a farm in Brazil and a fishing fleet in Indonesia. Along the way, you’ll discover what technologies are driving change in the supply chain, what it looks like when businesses get it right, and ultimately how supply chain transformation is the secret weapon for customer experience.
Listen to Learn
- How IoT technology enables new business models
- How blockchain works to add transparency and trust in the supply chain
- How supply chain digitization can drive stellar customer experience
- How to leverage your intelligent digital supply chain
About Our Guests
Ronald van Loon is the Director of Adversitement, consultant, keynote speaker, and globally renowned digital transformation expert. His work has been published in The Guardian, The Datafloq, Data Science Central, and other sites.
“If we look at intelligent supply chains of the future, they are designed to use data to improve processes, systems, the approach to your business, your marketing, your customer interactions and employee workflows.” – Ronald van Loon
Season 2 Episode 1 Transcript:
Welcome to Tech Unknown, a podcast to prepare your organization for the tech-centered future of business. I’m Tamara McCleary, CEO of Thulium.
Our big umbrella topic this season is data: Operational data from the inner workings of your business, plus experience data from the customer-facing side. When you can share this data across your organization — collect, process and analyze it — you can drive extraordinary customer experience and make your operations more efficient.
This episode, we’re zooming in on how data can transform the supply chain. Here’s the big idea: supply chain is the secret weapon for customer experience.
We’ll unpack that statement throughout the episode. But first, let’s go grab a cup of coffee.
Welcome to my local coffee shop. It’s a small one, independently owned. But they’ve got a fancy, elaborate, VERY expensive-looking espresso machine in the corner. After all, they’ve got to compete with the big guys.
None of the folks waiting for their lattes know it, but that espresso machine is a perfect example of how a digitized supply chain can utterly transform a business. We’ll get to that in a bit.
But first, while I wait for my cappuccino to cool down a little, let’s talk about why supply chain needs transformation. There are a great deal of external and internal forces that are propelling — well, actually, requiring this change.
I think there are four main topics, and it centers around volatility, globalization, complexity, and sustainability.
That’s Richard Howells, Vice President of Solution Management for Digital Supply Chain at SAP.
We’re living in a volatile world, both man-made issues and natural issues, such as the trade wars and Brexit as an example in Europe, from a business standpoint, and we’re also faced with… It seems like increasing number of natural disasters, such as the forest fires in the Amazon and in California, the hurricanes up the East Coast, and they all have effect on how we manage our supply chains and disrupt our supply chains. The second example is globalization. Almost every supply chain now is a global supply chain. Materials are sourced from all corners of the earth, and we are also reliant on partners and contract manufacturers in low-cost manufacturing areas. And this increases the complexity of the supply chain. And increased complexity, I think, means that we need to collaborate better. Whether it’s collaborating across our departments, whether it’s in collaborating across your supply chain, and also importantly, especially in a global supply chain, in a multi-level supply chain, we need to have visibility all the way down that supply chain. And the reason for that is because customers want to do business with sustainable companies. They want to buy sustainable products and be assured that their purchases are free of slave labor. They have sourced ethically and fair trade prices are being paid for it. They’re dealing with companies that are conscious of carbon emissions. They’re looking to eliminate waste and work in a circular economy. And they also want to be assured that the products that they’re buying are ethically purchased and not counterfeit products. So, I think those are the four main factors that are driving supply chain transformation in today’s environment.
So we know that digital transformation is not optional for businesses who are looking to thrive in the future. But what fuels that transformation … I mean, besides caffeine? Data. Here’s Ronald van Loon, Director at Adversitement, to explain:
If we look at intelligent supply chains of the future, they are designed to use data to improve processes, systems, the approach to your business, your marketing, your customer interactions and employee workflows. Supply chains require more efficiencies from companies to manage data, actionalize data. Storage data, inventory data, transportation data, location data of shipments and products, sales data, and IoT type of data from sensors located on factory equipment this can indicate when parts of wearing down. So if you look at all of this data being generated from suppliers, distributors, service providers, you can create an intelligent supply chain using this data.
Ronald was talking about a variety of technologies that all work together to generate, analyze, and securely handle data. Let’s dig into some of them. First: Hey, Smart Speaker, can you ask my smart refrigerator to explain how the Internet of Things works?
I’m sorry. Your refrigerator doesn’t know. But it *did* say you’re low on milk.
Okay, set a reminder to buy milk.
And play the IoT explanation from Ronald van Loon.
Your wish is my command, TaMARa.
The first type of technology we can talk and describe is the Internet of Things. And this is technology that’s really revolutionizing the way that businesses use and the way that business can collect this data. So when we’re talking about a digital supply chain, for example, IoT sensors are used within the factory on equipment, but also on robotics or on devices.
And these sensors, these Internet of Things sensors, they collect massive amount of data that’s used to help for improving your products, that can help for improving your services, your processes, designing and integrating new parts. It can help for predictive maintenance on machines and on robotics. So the Internet of things can really help with the supply chain optimization, it can help with the supply chain availability, it can help with monitoring assets, and also with general supply chain visibility.
So the same technology that can tell when I’m out of milk can make a huge difference in the supply chain. Let’s meet back with Richard for an example. Let’s see… it looks like he’s on a farm… in Brazil?
(fading in)a company called Stara in Brazil, who are a tractor manufacturer. They are the largest tractor manufacturer in Brazil. They have identified the challenge that in Brazil, in particular, there is no more land to farm. A lot of the areas are protected, the Amazon is being protected. And the challenge is to be able to do more and produce more because they’ve got a growing population, but not have any more space to produce the crops. The farmers are really looking for ways to optimize the space that they have. And Stara are an ingenious company, a very innovative company. And they have decided to leverage the Internet of Things, to put sensors on their tractors, so that a sensor can tell a farmer at any time the quality of the soil, the water content, and how fertile that particular field is, and they can then work with their fertilizers suppliers to provide specific strengths of fertilizer for the specific field that they’re getting that data from. So, they may have six different strengths of fertilizer for six different fields within the same area, and thus optimize the productivity of a specific field. And that’s all through capturing real-time information from that tractor that has had smart sensors, Internet of Things sensors attached to it, to capture the salient information to better optimize the land.
So from smart tractors to smart toasters to THEORETICALLY smart speakers…
I heard that.
…Sorry, sorry. But we can see the value in IoT data in our everyday lives. The other technology I want to talk about is a little more mysterious — everybody’s talking about it but hardly anyone knows exactly what it does. I’m referring, of course, to BLOCKCHAIN.
Here’s Ronald again:
Blockchain can address potential issues, like counterfeiting, for discovering all the fake products and removing the fake products in your supply chain, but also for improving the efficiency. It also helps with items like conflict management and identity management. And it can improve the whole traceability and visibility in the supply chain, and helping reduce the expense of all kind of quality issues, and especially if you have, for example, product recalls.
Blockchain technology is all about trusted, secure data. It can enable really specific tracking of data, even in complex systems.
For example, we’ve all heard, “there’s a lot of fish in the sea.” Well, blockchain is helping a tuna company track each one, from fishing boat to supermarket:
And a great example of that is, blockchain being of great use when it comes to anything that requires data from multiple databases. And track and trace across a complex supply chain is a great example of that. Being able to log the raw materials at source and leverage blockchain technology to track them through their supply chain, through sub-assembly or sub-manufacturing, through manufacturing, through distribution, and delivery all the way to the customer’s door.
And a great example of that, we’ve worked with a company called Bumble Bee. And Bumble Bee are a fish processor. And they are leveraging blockchain to track their inventory of tuna all the way from the fishermen in a little boat with a single line in Indonesia, all the way through their manufacturing process, right to the supermarkets in California at the moment. And that means that a customer, when they take a piece of tuna out of the freezer in California at the retailers, can scan a code, and they can see exactly where that tuna was caught, by which fisherman it was caught, and whether it was caught through a fair trade and paid through a fair trade approach. So, it’s both improving visibility of sustainability and it’s giving value to the customer. And it’s also assuring that the fisherman at the start of that supply chain gets paid a fair price and in a timely manner.
Blockchain, IoT, all the way to artificial intelligence and machine learning — these are all transformative technologies. But it’s not just about the technology. According to Richard, it’s about identifying and solving the right problems:
You don’t lead with technology, you need…you lead with a business problem, which business problem you’re trying to solve, and then leverage the technology to help solve that problem. Industry 4.0, I think, is changing everything. Industry 4.0 means we have smarter assets and equipment and smarter devices. And we can have more information to make better decisions. All of these smarter IoT enabled devices generate a huge amount of data, but it’s just data, a raw data at that point. It’s putting that data into the business context, and having visibility at individual roles within an organization to turn that data into information and to be able to provide the data I need in the format and level of granularity I needed to do my job, and even better, leveraging the data to predict outcomes and make recommendations and prescribe how to solve certain problems before they become a problem, in many cases, to better do my job.
And what does it look like to solve a problem before it becomes a problem? Well, to answer that, we need to go back to the coffee shop.
Imagine you own a hundred of these massive, expensive espresso machines. Now, you could sell them to coffee shop owners. But they’ll need to get a loan to buy it, and they’ll worry about who fixes it if it breaks down, and they’ll drag their feet on this massive purchase… and then when you want to sell them a new one in a couple of years, they’re not going to jump on buying the latest model. It’s just such a huge investment for a small shop.
Or instead, you can take those machines and sell “espresso machine as a service.” You’re charging for an outcome–the capacity to sell coffee–not the machine. So now you need to make sure that those coffee machines…
…coffee machines are working because I sell that on a subscription model, and people pay per month for the use of coffee machine. They may even pay by the amount of coffee that they drink, the number of cups of coffee that get produced. So, I need to make sure that those machines, those 100 machines are running all of the time. Because if they’re not running, the customers are unhappy because they can’t have their brew in the morning, and I’m unhappy because I’m not earning any money because I don’t get paid because the coffee machine isn’t working. So, it’s not producing any coffee, which means I’m not paying based on per cup that is that is poured. So, I want to be able to have visibility of how those 100 pieces of equipment are performing.
If I put Internet of Things sensors in the right places on those pieces of equipment, I can get data back about how things are trending, if something is trending out of calibration, if something is blocking that will cause a problem that will stop the machine producing the coffee. If I can predict that it’s going to break down in two days’ time, I can send somebody out to maintain it before it breaks down. Thus, the customer is happy because their machine continues to run, and I’m happy because I continue to get paid based on the number of cups of coffee that are produced. So, that’s an example, predictive maintenance is a great example of leveraging real-time data and then having the ability to fix a problem, fix a small issue before it becomes a major problem. The other advantage there is, I have now a visibility of all of these 100 coffee machines. I can see that 15 of them are having a problem at this point in time. I may decide to maintain all 100 of them because I can see that those 15 have been used for 20 hours longer than the other ones. But when they reach that 20-hour point, that extra 20 hours, the others may break down as well. So, why not send a maintenance technician out to fix those machines or maintain those machines and do a small service instead of a major overhaul when I have to repair it because it breaks down based on probability?
You know, the most important word I kept hearing in our coffee shop story was “Happy.” Happy business owner, happy customers, happy end users. Remember I promised at the beginning that I’d show how “supply chain is the secret weapon for customer experience?”
Well, it’s time for the big reveal. Here’s Ronald and Richard, performing for the first time, our very own Supply Chain CX duet:
So the question is really, “Why are we creating this digital supply chain in the end?” We do it for the customer, and we do it to improve the customer experience because that really drives your innovation and drives your improvement and why clients stick with you.
So if we look to the digital supply chain, it really has a major impact on this customer experience. And we have been discussing the data in more detail, and the digital supply chain generates tons of data, as I explained. And this data ultimately drives major innovation in the customer experience. So digital supply chain helps to innovate when…in regards making new products or when you’re defining new services, but also with redesigning existing services and redesigning existing designs that suit better to your customers. Or you can think about improve equipment and processes that result in better customer interaction, all driving this customer experience.
We live in the experience economy now. You have omnichannel sales. And as a consumer, I’ve been conditioned to expect to purchase something anywhere on any device at any time. And I think that’s becoming true in the B2B world as well. And the challenge is that a great customer experience doesn’t end once you place the order. It’s all about having a great supply chain then to deliver on that promise and to deliver that customer desire. As I said, it doesn’t end with placing the order. I don’t think it even starts with placing the order because you want to have a great design experience. You want to make sure that you deliver the products that that customer or consumer is wanting. We have to listen to what the market is saying, what individuals, customers are saying through social media for sentiment analysis, and we have to listen to market trends. Whether it’s to individualize or personalize a product or develop smarter products or which additional features need to be added, all of this leads to a great designing the product that that customer wants and delivering a great experience.
It also improves the speed and the accuracy of creating more…delivering products in the supply chain. And let me give some examples of this. So it ensures, for example, that demands can be accurately predicted, and shipments of products can be delivered on time. Any inventory issues can be really addressed, which improves the customer experience.
Another example is when customers want easier B2B interactions and simplistic purchasing and product tracking. So data supply chains help make everything run much more smoothly with great visibility. A third example is when you have the digital supply chain, they help with companies to better adapt to all the changing demands.
Of course, the order experience is important. I still want to place that order anytime on any device and anywhere, but I also want a great delivery experience. If I place an order in a few minutes on my iPhone, I don’t want to wait six weeks for delivery. I’ve been conditioned to expect it in two days by Amazon or one day now, they’re moving to. So my expectation is higher around the delivery experience. I want it delivered at my house between 12:00 and 2:00. I want it delivered individually to me at my office at a certain time.
And demands are changing much faster in different areas, and managing the expectation of the demand forecasting capabilities that are available in supply chain management. So if we look to the supply chain touchpoints, they can help, really, the companies to improve the services and to allow manufacturers to go directly to the customers and to minimize any delivery delay.
So if I want to conclude, I think the digital supply chain really empowers omnichannel experience, and this is because of the supply chains that can be planned, that can be monitored, that can be expedited, and can be really changed throughout the entire life cycles. And it allows companies to cater new customer dynamics of having what they want, when they want it, and where they want it. And I said, the customer experience improvement is one of the key reasons why we create this digital supply chain.
So, whether you’re farming in Brazil, fishing in Indonesia, or slinging java in Seattle, digital supply chain management is all about using data to improve efficiency, remove bottlenecks, smooth out wrinkles and deliver to the customer.
But it doesn’t start and end with the supply chain, of course. Otherwise there would only be one episode of the podcast this season. Here’s Ronald again, dropping some major hints on what we’ll be exploring in future episodes.
So it’s not only the supply chain data that’s required to improve this customer experience, but all the different types of data. In the end, this data needs to be collected, it needs to be governed, it needs to be of proper quality. It needs to be all combined within the right governance, within the right procedures. It needs to be stored, whether it’s in the clouds, whether it’s stored and processed in the edge. It needs to be retrieved, and retrieved can be either, let’s say, hot type of data that you really need now in real-time processing, or it can be cold type of data which you do not often use.
Then you want to process it, you want to analyze it, and you want to define applications on top of it. And this is where the customer experience really improves, is, if you have an application with multiple streams of data and where supply chain data is really a part of this data that improves the experience…
Hopefully this episode has given you a taste of how supply chain digitization can create these streams of data that flow into the larger data structure of the organization. And how, once we have the data collected, analyzed and activated, it can drive better business decisions, better customer experience… even new business models, like our Coffee-As-A-Service example.
Stay caffeinated and stay tuned, because our next episode will dig even deeper into what customers are demanding in terms of exceptional experience, and how businesses can meet and exceed those demands.
Thanks for listening to Tech Unknown. You can find transcripts and more at The Digitalist, that’s digitalistmag.com. And make sure to subscribe wherever you listen to podcasts. I’m Tamara McCleary, and until next time: Stay sharp, stay curious, and keep exploring the unknown.