Speaker 1: Welcome to tech Stuff, a production of I Heart Radios
Speaker 1: How Stuff Works. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland, an executive producer with How
Speaker 1: Stuff Works in My Heart Radio and I love all
Speaker 1: things tech, And you know, the world of technology can
Speaker 1: be pretty complicated at times, which is part of the
Speaker 1: reason why I think my colleagues at How Stuff Works
Speaker 1: back in the old days weren't really eager to jump
Speaker 1: on that particular category when we were figuring out who
Speaker 1: should be the head writer for each channel of subject
Speaker 1: matter on the website. But I argue that once you
Speaker 1: get past certain thresholds, a lot of the basic principles
Speaker 1: underlying technology become fairly easy to grasp, and it's really
Speaker 1: easy to apply them to different areas. So really there's
Speaker 1: a barrier. But once you get beyond that barrier, things
Speaker 1: are relatively simple. But one thing that is deceptively implicated
Speaker 1: is the supply chain. Now, you may have heard stories
Speaker 1: of companies having to deal with issues involving supply chains,
Speaker 1: but what does that actually mean. What is a supply chain.
Speaker 1: It's not just something that's restricted to the world of technology.
Speaker 1: Supply chains are in all sorts of businesses, but in
Speaker 1: tech we see how these challenges in supply chains can
Speaker 1: play out pretty easily, and it is frequently a matter
Speaker 1: of headlines and tech news. So to answer these questions
Speaker 1: you know, about what a supply chain is, I turned
Speaker 1: to John Bermudez of trace Link. He's the general manager
Speaker 1: of trace links digital network platform, and trace link provides
Speaker 1: many services, including ways to manage a supply chain. So
Speaker 1: here's our interview. John. Welcome to tech Stuff, and thank
Speaker 1: you for joining us today. Very happy to be here,
Speaker 1: thanks for inviting us. Absolutely. So the first question I
Speaker 1: have for you is really a very high level question. Uh,
Speaker 1: and it's simply because a lot of my listeners they
Speaker 1: come at the world as you know, a user slash
Speaker 1: consumer slash customer kind of approach, so they're not necessarily
Speaker 1: thinking about all the moving parts that make business in
Speaker 1: the twenty one century work. So if you had to
Speaker 1: explain to somebody who was completely ignorant of that world
Speaker 1: what supply chain actually means, how would you do that? Well,
Speaker 1: it's a great question. So years ago, my three year
Speaker 1: old son when I was trying to get him to bed,
Speaker 1: which if you have kids, you know that they don't
Speaker 1: really ask you any questions and until you're trying to
Speaker 1: get to brush your teeth. So he asked me, because, Dad,
Speaker 1: where are you going to Marston. I'm going to Cowboy
Speaker 1: to speak about supply chain. He goes, what supply chain?
Speaker 1: He said, well, Eric, this toothpaste tube is almost empty.
Speaker 1: So when we go and buy another one at market basket, Uh,
Speaker 1: the people at market basket need to have one, because
Speaker 1: we bought one there last time. So the process of
Speaker 1: getting that toothpaste to to market Basket from the manufacturer,
Speaker 1: maybe through a ware house, is the process of supply chain,
Speaker 1: of which my three year old looked at me and said, Dad,
Speaker 1: and you grew up, you should be a fireman. Quite simply,
Speaker 1: supply chain is about getting product from its raw materials
Speaker 1: through the various manufactus to the ends to the end consumers. So,
Speaker 1: whether it's a consumer good something relatively simple like m
Speaker 1: bottle a can of coke zero which comes to a
Speaker 1: bottling plant which receives the secret formula from the secret
Speaker 1: coke manufacturing sites and then put in cans and deliver
Speaker 1: it to comedian stores and supermarkets um, or whether it's
Speaker 1: something much more complex like trace link is involved in
Speaker 1: where you have pharmaceutical supply chains that have many participants
Speaker 1: and obviously going to make sure that life saving drugs
Speaker 1: get to the many different points at which they need
Speaker 1: to be, whether it's pharmacies, hospitals, clinics, uh you know,
Speaker 1: shift around the world to uh A deal with emergency situation.
Speaker 1: So supply chain is the process of getting things where
Speaker 1: they need to be. Yeah, and as I understand it,
Speaker 1: it's it's one of those things that can be fairly
Speaker 1: simple or incredibly complicated, depending upon the scale and the
Speaker 1: necessities of any given products. So for example, in my
Speaker 1: sphere in the technology world, when we talk about things
Speaker 1: like personal computers are are a great example, or mobile phones.
Speaker 1: These are things that we as consumers often think of
Speaker 1: as coming from a single source. Right. You get an
Speaker 1: iPhone from Apple, and that's where you go, and that's
Speaker 1: where it comes from, and there's someplace a little Apple
Speaker 1: manufacturing facility, and these come out fully formed after they
Speaker 1: do whatever magical thing it is they do. But in reality,
Speaker 1: what you're talking about is the combination of lots of
Speaker 1: different elements, many of which are coming from different places
Speaker 1: all around the world, that all have to come together
Speaker 1: in order to be assembled into this final product that
Speaker 1: we get our hands on. And that's just in the
Speaker 1: world of technology. This is obviously something that applies across
Speaker 1: the board to lots of different industries. And I would
Speaker 1: imagine that today with the global economy, that we have
Speaker 1: the fact that we have facilities all around the world
Speaker 1: that participate in this economy, maybe they're providing one small
Speaker 1: part of an overall large package that that can get
Speaker 1: very very complex very quickly. Is that a fairly accurate assessment. Yeah, absolutely,
Speaker 1: And your example of iPhone is a great example. Yet
Speaker 1: there are hundreds of little parts in there. If you
Speaker 1: wherever unfortunate to drop and break yours, you'll see that
Speaker 1: there are lots of tiny, very sophisticated parts in there
Speaker 1: that come from dozens of suppliers. And there's also a
Speaker 1: timing element, because if you think about Apple and their
Speaker 1: new iPhone launches, you know they plan these, uh and
Speaker 1: our tract you know, by millions of people. If they're
Speaker 1: gonna have a launch on September or ten, hundreds of
Speaker 1: millions of people expecting product to be in stores around
Speaker 1: the world on September ten. So not only do you
Speaker 1: have to get hundreds of parts from lots of suppliers
Speaker 1: in different parts of the world and then get them
Speaker 1: to a factory. But on top of that, you have
Speaker 1: to maybe make five or ten million of these iPhones
Speaker 1: and then get them to thousands of distributions to stores
Speaker 1: and do it all to make sure they're they're on
Speaker 1: September tent. So there's a timing element which sometimes you
Speaker 1: could say, what in the apple case, somewhat self imposed.
Speaker 1: They like the drama of having people camping out outside
Speaker 1: the stores. But another supply chains, which seems simple. They
Speaker 1: think about, you know, fresh pineapple coming from Hawaii that
Speaker 1: cannot stay on a ship for six months and get lost.
Speaker 1: It needs to move very quickly through the supply chain,
Speaker 1: through distribution centers and end up on a store shelf
Speaker 1: in a relatively short uh segment of time. So even
Speaker 1: the simplest supply chains are not as simple as a seem.
Speaker 1: You know, I spend time in Asia with simple things
Speaker 1: like fashion supply chain. You think, well, how complicated is
Speaker 1: to make a pair of yoga pads? Well, um, you
Speaker 1: know they're made in factories in Malaysia and China. They
Speaker 1: have the many very different sizes and colors. They have
Speaker 1: hang tags destined for hundreds of countries around the world
Speaker 1: with different pricing and different languages on them. Uh and
Speaker 1: then also the fashion industry has gone into a mode
Speaker 1: where it wants to change fashions ten, fifteen, twenty times
Speaker 1: a year. The state of the art in the fashion
Speaker 1: industry as a company that's changing fashions almost fifty times
Speaker 1: a year. So if that product is stuck in the
Speaker 1: supply chain and UH and miss is the fashion window,
Speaker 1: it goes from being a very valuable pair of of
Speaker 1: workout gear that sells for a hundred dollars just something
Speaker 1: that ends up at the discount rack for twenty dollars.
Speaker 1: And obviously nobody makes any money at that. So even
Speaker 1: simple products UM have can have pretty complex elements to
Speaker 1: their supply chain. And then on top of that you
Speaker 1: have all the added complications that come into things like
Speaker 1: whether or not tariffs are a part of it. We
Speaker 1: talk a little bit about pharmaceuticals. Obviously, with pharmaceuticals you
Speaker 1: have very real concerns about validity and quality issues to
Speaker 1: make certain that the the the various components that are
Speaker 1: coming together to make drugs are safe for a consumption.
Speaker 1: This sounds like it can very rapidly become a logistical
Speaker 1: nightmare if you're trying to manage all of this. So
Speaker 1: can you talk to me a little bit about the
Speaker 1: approach to solving this where you're you've got this this
Speaker 1: complex web that if everything is working great, it's fine,
Speaker 1: every smooth sailing. But as we know in the real world,
Speaker 1: it it rarely does everything work great all the time.
Speaker 1: Usually there's going to be some issues somewhere along the line,
Speaker 1: and it's important to know where that's happening and how
Speaker 1: to respond to it in a timely way. So talk
Speaker 1: a little a little bit about that sort of approach
Speaker 1: to solving this very difficult challenge. Well, just providing a
Speaker 1: little history that the approach up until recently had been
Speaker 1: to try to run these problems through very large, complex
Speaker 1: supply chain planning software that we kind of tell you
Speaker 1: where everything needed to be, when to order things, when
Speaker 1: to move things. But as you pointed out, it turned
Speaker 1: out that model is just too complex and these problem
Speaker 1: these solutions would run forever. So the trend now is
Speaker 1: to put these uh and manage the execution these supply
Speaker 1: chains across real time networks so that you can get
Speaker 1: real time information. You know, a real time example is UH.
Speaker 1: You know tariffs. You know, tariff can pop up in
Speaker 1: a week. So a supply chain that was moving running
Speaker 1: smoothly now is sitting waiting for tariff UH documentation to
Speaker 1: get from through from one country to the next. So
Speaker 1: it may add a week to that supply chain, and
Speaker 1: maybe despite chain cannot afford a week. So what you
Speaker 1: might end up doing with that if it was destined
Speaker 1: to go in a container on a container ship. You
Speaker 1: see this the the advantage of having your real time
Speaker 1: network that can reach out and know where that product is.
Speaker 1: You can then route it to UH to air cargo
Speaker 1: and fly it. You can't do anything about the tariff,
Speaker 1: you can't do anything about the time it takes forward
Speaker 1: to get through the inspection center, but you can route
Speaker 1: it to to air cargo and change the amount of
Speaker 1: time and it's going to spend in transit. So it's
Speaker 1: really you're seeing a trend in real time networks to
Speaker 1: provide much more visibility. Because supply chains are complex, many
Speaker 1: things can disrupt them. UH and you know we've leaned
Speaker 1: out supply chains to a point. You know, part of
Speaker 1: the just in time good inventory management practices of the eighties, nineties,
Speaker 1: and two thousands have made for very streamline supply chains.
Speaker 1: But then you know, they can be disrupted pretty easily.
Speaker 1: Um and it can cost you know, millions of dollars
Speaker 1: to a company that, um, just depending on something being
Speaker 1: there what it's supposed to be. So the network allows
Speaker 1: you to see where it is, provide real time collaboration
Speaker 1: with the various parties to get it, you know, so
Speaker 1: it's not just the supplier who made it and the
Speaker 1: finished goods manufacturer or the consumer that wants it, but
Speaker 1: the logistics providers people provide customs documentation or making sure
Speaker 1: that the two countries have a training agreement. You know,
Speaker 1: there are countries that will not take products sourced in
Speaker 1: other countries, so, um, you need to make sure it's
Speaker 1: not destined for a country that's going to block it
Speaker 1: at the port. And real time networks are helping company
Speaker 1: these deal with that. Yeah. I I've often I've done
Speaker 1: episodes in the past about a lot of of like
Speaker 1: crowdfunded campaigns for physical products and how I think a
Speaker 1: lot of people who go into that they don't have
Speaker 1: this background in the manufacturing world. They have a clear
Speaker 1: idea of what it is they want to do. They've
Speaker 1: built a prototype in the prototype works, but they don't
Speaker 1: necessarily have a full appreciation of how complicated this can get,
Speaker 1: and UH in inevitably these end up being some of
Speaker 1: those stories that end up in the top ten lists
Speaker 1: of failures and crowdfunding. Right like you see stories about
Speaker 1: companies or or would be companies that crash and burn
Speaker 1: because they encounter these these problems that U can quickly
Speaker 1: throw off a timeline, and as we've seen in crowdfunding,
Speaker 1: often people who back them are not the most forgiving
Speaker 1: of of UH investors in a company. So to me,
Speaker 1: it's it's having this understanding is key of how this
Speaker 1: is UH something that people have to keep in mind
Speaker 1: if they're getting involved in any sense in in manufacturing,
Speaker 1: because it allows you to build in those buffers and
Speaker 1: to also be able to communicate in a transparent way
Speaker 1: to perhaps a group of investors in the case of
Speaker 1: a crowdfunding campaign, about what is going on and why
Speaker 1: it is UH something that is taking more time than
Speaker 1: was anticipated. I'm also curious I know that there's been
Speaker 1: a lot of talk about using blockchain technology in UH
Speaker 1: in an effort to manage things like supply chains and
Speaker 1: blockchain I think is one of those those words that
Speaker 1: a lot of people have heard a great deal about,
Speaker 1: but they don't have a very deep understanding of what
Speaker 1: it means, and they it's hard to visualize how that
Speaker 1: is useful in UH management of a supply chain, verifying
Speaker 1: when and where UH products have left particular facilities. Can
Speaker 1: you speak a little bit about the use of block
Speaker 1: chain in supply chain management and why it is so promising? Yeah,
Speaker 1: you're right. There's a lot of talk about it in
Speaker 1: supply chain, and I spent a lot of time looking
Speaker 1: at it, and you know, there's a lot of pilots
Speaker 1: that I think will go nowhere because they don't really
Speaker 1: have a value proposition that there is an easier way
Speaker 1: to solve the same problem. You know, where blockchain does
Speaker 1: apply and actually at trade Link we have a pilot
Speaker 1: with a number of companies and also involves the FDA.
Speaker 1: Is where train where supply chain makes sense or blockchain
Speaker 1: makes sense in supply chain is where you need to
Speaker 1: share um information between multiple parties, and you may not
Speaker 1: want all parties to know where the information came from,
Speaker 1: but you want to make sure that every party on
Speaker 1: the who gets the information can trust it. So the
Speaker 1: example UH is and I'm gonna have to get a
Speaker 1: little technical here on the pharmaceutical supply chain, but about
Speaker 1: seven eight years ago, there was a requirement that all
Speaker 1: lots and and serial numbers be tracked throughout the supply
Speaker 1: chain so that we could combat mostly counterfeit drugs, diverted drugs,
Speaker 1: to make sure that the medicines everybody receives are what
Speaker 1: they think they are. So there's actually legislation going in place,
Speaker 1: UH in three in the United States and it will
Speaker 1: fast follow throughout the rest of the world. So that
Speaker 1: UM a pharmacy, if you go to UH your neighborhood
Speaker 1: pharmacy and you're concerned about where that medicine you would
Speaker 1: just received came from, they would be able to call
Speaker 1: up a history of all the steps that it went through.
Speaker 1: So UH, the pharmacutical supply chain, it is pretty complicated.
Speaker 1: I won't get into the details of that, but it
Speaker 1: goes through multiple parties, from where the original ingredients come from,
Speaker 1: to the manufacturers, wholesalers and every in various part reeason between.
Speaker 1: So blockchain is we're actually piloting a blockchain UH project
Speaker 1: with about twenty other players in the pharmaceutical industry, you know,
Speaker 1: to meet this FDA requirement that the pharmacy to be
Speaker 1: able to tell you, uh, you know, when each stage
Speaker 1: of the of the supply chain process happened, uh, and
Speaker 1: that and validate the data that there was no um
Speaker 1: that it can be traced back to an origin because
Speaker 1: often with counterfeit drugs, even things that are serialized, when
Speaker 1: you try to chase trace them back, you find that
Speaker 1: they just magically appeared somewhere. So magically appearing is good
Speaker 1: for lepre cons, but it's not it's not good for
Speaker 1: anything you want to put in your body to help
Speaker 1: you with the illness. So so that's a great example
Speaker 1: how blockchain can be used in the supply chain because
Speaker 1: it's it's shielding the information and I won't get into
Speaker 1: the detail, but various parties don't necessarily want to be UM.
Speaker 1: You want the fact that they're just part of the
Speaker 1: supply chain disclosed for competitive reasons or other reasons. So
Speaker 1: the blockchain will allow us to validate that this is
Speaker 1: a legitimate product. And there's an entire chain of custody
Speaker 1: history here that the blockchain application can validate without having
Speaker 1: to disclose you know which distributor supplied the pharmacy, because
Speaker 1: you might be uh, you know, Brand B distributor using
Speaker 1: your local pharmacy, thinking Brand B is supplying this pharmacy,
Speaker 1: only to find out that this product came from Brand
Speaker 1: c UH wholesaler and you're questioning why that is. Well,
Speaker 1: you you wouldn't know that, but you will know that
Speaker 1: this is an an active product. So you'll see a
Speaker 1: lot of the A lot of the successful blockchain projects
Speaker 1: and supply chain I think will be oriented around the
Speaker 1: chain of custody and being able to validate um from
Speaker 1: source to consumption that this uh that the product has
Speaker 1: pedigree without having to know, you know, without you having
Speaker 1: to know where exactly it came from. Now, the you know,
Speaker 1: the FDA currently requires the pharmacy to know where it
Speaker 1: got it from, and they could tell you that, but
Speaker 1: one step back, there's no current requirement that the pharmacy knows, say,
Speaker 1: for example, where the wholesale about it from. And the
Speaker 1: new law is not going to change that, but it
Speaker 1: will require this pedigree history, so you'll see a lot
Speaker 1: of that. You see uh IBM and MIRSK have been
Speaker 1: working on a similar blockchain effort to uh provide chain
Speaker 1: of custody of globally shifted items. UM, you know where
Speaker 1: I don't see some of the other projects and supply
Speaker 1: chain UM transfer big pieces of information like entire contents
Speaker 1: of containers or bills of lading. Uh. That's a lot
Speaker 1: of information to be replicated across many notes in the
Speaker 1: supply chain. And um, those projects you know are that
Speaker 1: they're out there, but their success is still people still
Speaker 1: questioning storing that much information the story of bitcoin, information
Speaker 1: which is actually very much tiny, is consuming our computer
Speaker 1: power than anybody would like to admit. We're going to
Speaker 1: take a quick break from the interview and come back
Speaker 1: with the rest of it, uh in just a moment,
Speaker 1: But first let's listen to this word from our sponsor. Okay,
Speaker 1: let's get back to my interview with John bermudas of
Speaker 1: trace Link. We're picking up with a quick overview of
Speaker 1: blockchain technology and how it helps parties verify data. So
Speaker 1: basically the whole process in case people out there are
Speaker 1: wondering about this whole validation idea is that the block
Speaker 1: chain technology stores information in what are called blocks, and
Speaker 1: you can think of it as the name of the block.
Speaker 1: Is the result of a mathematical process that's done on
Speaker 1: all the information that has been inputed into that block,
Speaker 1: and then the succeeding block has that name incorporated into
Speaker 1: its process of generating its own name. So, in other words,
Speaker 1: each block in the chain has a reference to a
Speaker 1: previous block, meaning that making any alterations trying to change
Speaker 1: the chain is incredibly difficult because not only do you
Speaker 1: have to change the information in the block that you're
Speaker 1: interested in, but every block that follows after. And because
Speaker 1: the blockchain is a distributed ledger, not necessarily across as
Speaker 1: large a network as say bitcoin, but is a distributed
Speaker 1: ledger that multiple parties can see, it is very hard
Speaker 1: to do that on enough uh machines where you can
Speaker 1: alter that in a way that is undetectable. You have
Speaker 1: to essentially have control of more than half of all
Speaker 1: the machines on the system in order to do that,
Speaker 1: and it's that's not an easy task. So that is
Speaker 1: sort of the thought process. I agree with you. I
Speaker 1: think that blockchain certainly has its usefulness in things like
Speaker 1: the pharmaceutical field, perhaps in things like food chain supply also,
Speaker 1: can you can see some applications there potentially. I do
Speaker 1: think as well, that it is not going to be
Speaker 1: the universal UH solution to all supply chain issues, but
Speaker 1: I think that in a few cases it it certainly
Speaker 1: will will meet the requirements that a lot of people
Speaker 1: have in order to verify Yes, in fact, this is
Speaker 1: exactly what it claims to be. This is an a counterfeit,
Speaker 1: especially for something as important as medication. Obviously, we want
Speaker 1: to be absolutely certain that that stuff is valid and
Speaker 1: will do what it is uh it claims to do well.
Speaker 1: This is really interesting to me because, again as someone
Speaker 1: from the other side of it, where I get to
Speaker 1: enjoy these various products that uh that I I don't
Speaker 1: have to spend a whole lot of time thinking about
Speaker 1: what actually was required to bring it to the point
Speaker 1: where I could get my grubby little hands on it.
Speaker 1: It is nice to be able to reflect for a
Speaker 1: moment how complicated this process is and how much work
Speaker 1: has to go in in order for me to enjoy
Speaker 1: that amazing privilege. I get a deeper appreciation for it.
Speaker 1: And it also really reinforces the idea that I am
Speaker 1: never going to have a crowdfunded campaign to launch a
Speaker 1: product ever, because I just can't deal with that level
Speaker 1: of stress. UH John, thank you so much for joining
Speaker 1: our show and and describing this process. I think it
Speaker 1: really has helped open up my eyes and hopefully the
Speaker 1: eyes of many of my listeners too. You know, the
Speaker 1: work that you do and how you are able to
Speaker 1: tackle this very large and and sometimes confusing issue of
Speaker 1: managing these supply chains. It's been fascinating. You're quite welcome,
Speaker 1: happy to participate. Thank you for inviting me. Now, at
Speaker 1: this point the interview was technically over, but John had
Speaker 1: a really good point about the food supply chain that
Speaker 1: I wanted to share with you guys. So this little
Speaker 1: bit came after our initial conversation, but I think it's
Speaker 1: worthwhile including here. I have concerns over the fresh food
Speaker 1: block chains that are out there. Oh yeah, because you know,
Speaker 1: what one of the things think about is what makes
Speaker 1: the pharmaceutical supply chain. Actually, what Tracer plays a big
Speaker 1: part on is the serialization and digital you know, digitally
Speaker 1: tracking each serial number through its entire life cycle. The
Speaker 1: challenge that I see with you know, the the fresh
Speaker 1: tomato example, is, um, we all hear about these I E.
Speaker 1: Coli problems and all these other things, and quite often
Speaker 1: they start in the field. So um, getting that digital
Speaker 1: uh blockchain update that it came from this particular field.
Speaker 1: You know, nobody has provided me with an idea how
Speaker 1: that's going to happen. We're picking the tomatoes are hand picked, um,
Speaker 1: and they go in boxes and then the boxes go
Speaker 1: on trucks and they probably go to a packing center
Speaker 1: and that's probably where they enter the blockchain. So what
Speaker 1: happened between the field and the packing center um or
Speaker 1: maybe you want to was loaded on the truck. It
Speaker 1: was scared, but still UM. So that part I think.
Speaker 1: One I think is that you'll see blockchain applications, blockchain
Speaker 1: supply chain where we can. And this is why bitcoin
Speaker 1: works so well because everything is digital, so there's no
Speaker 1: way to fake it. There's no tomato growing on a
Speaker 1: there's no bitcoin growing on a tomato bush. And Selina's
Speaker 1: valley right. I want to thank John Bermudez again for
Speaker 1: coming on the show and talking to me about supply
Speaker 1: chain management, and he does make an excellent point for
Speaker 1: blockchain technology to work effectively as part of a supply chain,
Speaker 1: you really need it to be a part of the
Speaker 1: whole system from the very beginning. If there is any
Speaker 1: ambiguity about the origin for a specific component, such as
Speaker 1: a particular piece of fruit in the food supply chain example,
Speaker 1: then the best you can do is say, well, we
Speaker 1: can trace this particular piece of fruit back to this
Speaker 1: specific warehouse or distribution center. But you can't go back
Speaker 1: for either if you didn't have a means of entering
Speaker 1: in the information from the very beginning. So if you're
Speaker 1: looking to identify the source of a particular outbreak in
Speaker 1: something like E. Coli, that becomes a problem. So it
Speaker 1: falls to supply chain and blockchain experts to figure out
Speaker 1: a practical way to implement the technology so that it
Speaker 1: actually accomplishes the goals set out for it. The same
Speaker 1: thing can be said for counterfeit products, or whether or
Speaker 1: not something is truly organic for whatever worth that word
Speaker 1: happens to be in a case by case basis, or
Speaker 1: even things like free range chicken or grass fed beef.
Speaker 1: At some point you need some form of certification process
Speaker 1: to verify that yes, the claim being made is in
Speaker 1: fact verified and it is true, and then that goes
Speaker 1: into the blockchain. Otherwise you could have a situation where
Speaker 1: someone tells you that it's true, it gets entered into
Speaker 1: the information that becomes part of the blockchain, and according
Speaker 1: to the block chain, yes it is true, but if
Speaker 1: you were to actually go and visit the site you
Speaker 1: might find otherwise. These are issues that have to be
Speaker 1: worked out for blockchain to truly be useful in those
Speaker 1: supply chain implementations. Now, I thought to round out the
Speaker 1: rest of this episode, we could talk a bit about
Speaker 1: some stories of companies and products that encountered challenges due
Speaker 1: to supply chain issues, and you may already have some
Speaker 1: ideas about likely candidates. One of them which I was
Speaker 1: thinking about specifically while I was talking with Mr Bermudez,
Speaker 1: was The Coolest Cooler, and I've talked about this product
Speaker 1: in episodes about crowdfunding before. I also have an upcoming
Speaker 1: episode of The Brink about the Coolest Cooler, and I
Speaker 1: don't want to harp on it too much because I
Speaker 1: think that Ryan Grabber, who is the guy who came
Speaker 1: up with this idea, was truly sincere about this project.
Speaker 1: The issue was not with his desire to deliver upon
Speaker 1: his promises. It's not like he was trying to suggest
Speaker 1: a product with no intent on the of ring. Rather,
Speaker 1: I think he just underestimated how hard and expensive it
Speaker 1: was going to be to make the product he had
Speaker 1: in mind. So, for those of you unfamiliar with this
Speaker 1: particular product, the Coolest Cooler is a beverage cooler, you know,
Speaker 1: an ice cooler with lots of bells and whistles. A
Speaker 1: fully kitted out version of Grabber's design included a blender
Speaker 1: for drinks, a Bluetooth speaker, a USB charger and LED
Speaker 1: light built into the lid, cutting board, storage for plates
Speaker 1: and cutlery, a bottle opener, and more. He launched his
Speaker 1: project twice on Kickstarter, and the first time it failed
Speaker 1: to get really any attention, but the second time, which
Speaker 1: he launched in July two thousand fourteen, it got a
Speaker 1: lot of attention. It became one of the best funded
Speaker 1: Kickstarter campaigns of all time. His goal was initially to
Speaker 1: raise fifty thou dollars, but by the end of that
Speaker 1: campaign it had raised more than thirteen million bucks. And
Speaker 1: if you were early enough, you could pledge at the
Speaker 1: one d sixty five dollar level to qualify for a
Speaker 1: Coolest Cooler of your very own, And even if you
Speaker 1: didn't get one of those seventy spots, you could still
Speaker 1: pledge at one eight five dollars plus fifteen dollars for
Speaker 1: shipping and handling for that privilege. Now, Grepper estimated that
Speaker 1: the final retail price of the cooler would be two
Speaker 1: so you get it at a substantial discount. However, as
Speaker 1: it would turn out, his estimation was actually a gross
Speaker 1: underestimation of how much it would cost to produce those
Speaker 1: coolers at scale and sell them at a profit. Grepper
Speaker 1: ran into supply chain problems fairly early into the process.
Speaker 1: At one point, workers at the Chinese factory that produced
Speaker 1: the blender motor that Grepper needed for his coolest cooler
Speaker 1: they went on strike, and as we heard in the interview,
Speaker 1: when one piece of the supply chain goes wrong, it
Speaker 1: can affect everything else with the coolest cooler. This cascaded
Speaker 1: into a pr disaster for Grebber, who was trying hard
Speaker 1: to fix things, but was then over his head. Currently,
Speaker 1: because of a class action lawsuit, he is under a
Speaker 1: mandate from the court system of the state of Oregon
Speaker 1: to get backers their coolers by the middle of or
Speaker 1: else he'll have to send each backer who has yet
Speaker 1: to receive a cooler a certain amount of money. I
Speaker 1: believe it's twenty dollars. He'll be obligated to do that
Speaker 1: even if the company itself were to go into bankruptcy.
Speaker 1: So even if the coolest Cooler company dissolved, he would
Speaker 1: still be held liable for sending that money out to
Speaker 1: each of those backers, and there are thousands of them. Again,
Speaker 1: from everything I've read, it seems like Grebber has tried
Speaker 1: to meet his obligations. It's just that the promises he
Speaker 1: made were too grand and the process to achieve those
Speaker 1: goals too arduous, and there were other problems besides the
Speaker 1: supply chain itself that would come into play. But I
Speaker 1: think that's one of the examples that really illustrates just
Speaker 1: how hard this is. And it's not just small startup
Speaker 1: businesses that can run into these issues. I evoked the
Speaker 1: name of Apple in my talk with Mr Mudaz, and
Speaker 1: that's for a reason. The company has had problems with
Speaker 1: its supply chain a few times in its history. For example,
Speaker 1: in Apple unveiled the Apple air Pods, and that's the
Speaker 1: company's bluetooth connected wireless earbuds, and at the time, Apple
Speaker 1: estimated that the product would be ready to ship by
Speaker 1: late October. But even at the end of finding air
Speaker 1: Pods was really really hard. Nobody had them in stock.
Speaker 1: Apple stores would often receive fewer than a dozen boxes
Speaker 1: of air pods, not crates of boxes, but actual just
Speaker 1: samples of air pods. They would just get maybe twelve
Speaker 1: or fewer at a time. There were a lots of
Speaker 1: reasons and a lot of speculation as to why there
Speaker 1: were so few units available, why the supply was so low.
Speaker 1: The Wall Street Journal published a piece that stated that
Speaker 1: was largely because of some technical issues with the air
Speaker 1: pods themselves, that Apple needed to work out that that
Speaker 1: they just weren't working properly, and so it was delaying shipments.
Speaker 1: But John Gruber, who has written a lot about Apple,
Speaker 1: wrote that based on his unnamed sources at Apple, the
Speaker 1: real reason was that the company encountered an quote unexpected
Speaker 1: manufacturing problem at scale end quote. Typically that points to
Speaker 1: a supply chain issue. Now, when we come back, I'm
Speaker 1: going to cover a couple of other stories with some
Speaker 1: similar problems. But first let's take another quick break. So
Speaker 1: I've talked about coolers and earbuds, but supply chain problems
Speaker 1: can affect all sorts of things at different sizes, even
Speaker 1: commercial jets. Back in the mid two thousand's the airline
Speaker 1: industry was eagerly anticipating the arrival of Boeing's seven eight
Speaker 1: seven aircraft a k a. The Dreamliner, and this was
Speaker 1: a new approach to large commercial aircraft. The airframe was
Speaker 1: made out of composite materials rather than the metal based materials.
Speaker 1: This actually made the aircraft much lighter than earlier models
Speaker 1: like the seven sixty seven, and that meant that the
Speaker 1: seven eight seven had better fuel efficiency as a result.
Speaker 1: It's not as heavy, you don't need as much fuel
Speaker 1: to keep it in air. So Boeing estimated that they
Speaker 1: would be able to deliver the seven eight sevens to
Speaker 1: the various airlines by May two thousand eight, but in
Speaker 1: reality the planes would not be ready to enter service
Speaker 1: until October two thousand eleven, so you're talking about three
Speaker 1: year delay three and a half year delay. Many factors
Speaker 1: contributed to that delay, but the two big ones, according
Speaker 1: to most analysts, was that Boeing had tried to overhaul
Speaker 1: its supply chain and it's assembly process all at the
Speaker 1: same time, and that this particular decision created complications that
Speaker 1: took way longer to work out than the company had
Speaker 1: and to a pated and every analyst or expert that
Speaker 1: I read about or read their work while researching this.
Speaker 1: They all essentially said the same thing, which is that
Speaker 1: if you're going to make changes, it's good to make
Speaker 1: changes to one system first before you make changes to
Speaker 1: the other. Uh. If you're making changes to two integral
Speaker 1: systems at the same time, you are essentially doubling the
Speaker 1: risks you encounter for delays and losses. Sometimes supply chain
Speaker 1: problems aren't centered around not being able to get the
Speaker 1: components you'll need when and where you need them. Sometimes
Speaker 1: supply chain problems manifest in a way where you receive
Speaker 1: way too many of something then you actually need. You
Speaker 1: end up with a surplus of stuff because the supply
Speaker 1: chain is not keeping an accurate record of where things
Speaker 1: need to go at any given time. This was the
Speaker 1: case for Target with their stores that were in Canada.
Speaker 1: In two thousand fifteen, the company announced it was going
Speaker 1: to leave Canada entirely because this problem was so bad.
Speaker 1: So what exactly was going on? Well, again, there were
Speaker 1: many problems. Supply chain was just one of them, but
Speaker 1: it was a big part of it. Targets distribution centers
Speaker 1: in Canada, we're getting overwhelmed by more products than they
Speaker 1: could handle. So a distribution center is sort of a
Speaker 1: way point for a product. The companies will typically bring
Speaker 1: in products into a distribution center. They're brought there, they're
Speaker 1: ordered from vendors throughout the world, and those products go
Speaker 1: into the distribution center, which then will send those products
Speaker 1: out to specific stores based upon their inventory needs. So
Speaker 1: if you have one target where their sprockets are getting low,
Speaker 1: the distribution center should send more sprockets to that target
Speaker 1: and keep track of how many sprockets are being sold
Speaker 1: over a given amount of time so that the supply
Speaker 1: better matches the demand. Well, that was not happening with
Speaker 1: targets Canadian distribution centers. They were receiving tons of stuff
Speaker 1: even before they could send anything else out, and so
Speaker 1: things were getting very messy. It was coming in faster
Speaker 1: than it was shipping out, and rather than keeping an
Speaker 1: eye on demand and managing supply, the supply was coming
Speaker 1: in like a fire hose on full blast, even if
Speaker 1: the outgoing products to target stores were moving a little
Speaker 1: more than a trickle. Reuters reported on this matter and
Speaker 1: specified a particular product to illustrate the problem that made
Speaker 1: it somewhat amusing. The product was a toddler sized pink
Speaker 1: suv branded with Barbies trademark. Apparently the distribution centers were
Speaker 1: getting overwhelmed by the pink toy vehicles among other products.
Speaker 1: Reuters went on to say that the real issue was
Speaker 1: that Target tried to launch a coast to coast launch
Speaker 1: of stores throughout Canada, which created a monstrously complex supply chain.
Speaker 1: They tried to go from zero to one hundred in
Speaker 1: an instant rather than build out their presence gradually to
Speaker 1: grow more organically and manage thing in state stages, you know,
Speaker 1: trying to to grow province by province as opposed to
Speaker 1: going nationwide in in one go. And as a result,
Speaker 1: it became a massive headache and lead to Target pulling
Speaker 1: out the country completely. So you could call that a
Speaker 1: massive supply chain failure. Another cautionary tail is in the
Speaker 1: form of Adidas, the shoe manufacturer, which had a major
Speaker 1: problem with its distribution center in Spartanburg, South Carolina. In
Speaker 1: the company wanted a new warehouse management system that in theory,
Speaker 1: would streamline processes and make things run more efficiently when
Speaker 1: processing shipments to various stores throughout the US. So again
Speaker 1: another distribution center. Adidas partnered with a company called Integrated
Speaker 1: Software Logistics Engineering to make the system, but Adidas also
Speaker 1: insisted that this particular software package be made compatible with
Speaker 1: the distribution centers existing computers, and that proved to be
Speaker 1: very difficult to do. In fact, the software vendor would
Speaker 1: go out of business in the middle of the project
Speaker 1: while trying to get it to all work out because
Speaker 1: they could never deliver a product that Adidas was satisfied with,
Speaker 1: So without the money coming in from that project, because
Speaker 1: they weren't able to deliver anything, the company went out
Speaker 1: of business. Now, on top of that, the distribution center
Speaker 1: itself had a lot of automated components that were worked
Speaker 1: into the design, and all of those needed to be
Speaker 1: fully integrated into the warehouse management system in order for
Speaker 1: it to work properly. And before all of that could
Speaker 1: be sorted out, Adida's decided to essentially flip the switch
Speaker 1: and go into business before this warehouse management system was
Speaker 1: actually ready, and as you might expect, that led to
Speaker 1: the company encountering a ton of problems with processing and
Speaker 1: shipping orders. It got so bad that the company was
Speaker 1: only able to meet twenty percent of the fifty million
Speaker 1: dollars in North American orders it had actually received. And
Speaker 1: on top of that, most of that twenty percent didn't
Speaker 1: come from the Spartanburg distribution center. It came from overseas
Speaker 1: plants that were shipping their products directly two stores bypassing
Speaker 1: the distribution center entirely. Because that's how big of a
Speaker 1: mess it was, Adida saw its market share drop and
Speaker 1: had to work super hard to regain lost ground, all
Speaker 1: because of a faulty supply chain management system. One of
Speaker 1: the biggest supply chain disasters I read about happened that
Speaker 1: same year in this was with a company called fox Meyer.
Speaker 1: Not at the time, fox Meyer was one of the
Speaker 1: biggest wholesale drug distribution companies in the United States. It
Speaker 1: posted sales revenues in the billions of dollars. This is
Speaker 1: one of those companies you should think about when you
Speaker 1: hear the phrase too big to fail and you wonder
Speaker 1: if that's true. Well, at least in the case of
Speaker 1: fox Meyer, it was not true. The company had had
Speaker 1: an incredibly ambitious plan. It was overhauling its information technology
Speaker 1: systems and installing tons of automated systems into its distribution centers,
Speaker 1: including stuff like conveyors to move products to where they
Speaker 1: needed to be within a facility, and carousels that would
Speaker 1: make orders move around so that packers could grab the
Speaker 1: orders easily. It all made sense from a theoretical standpoint,
Speaker 1: and the company estimated that these improvements and efficiency would
Speaker 1: mean much lower costs in production. And based upon that estimation,
Speaker 1: they started to put in bids on contracts, and because
Speaker 1: they thought, well, it's gonna cost a lot less, they
Speaker 1: could be really aggressive with those those biddings. And they
Speaker 1: just assumed that the estimates were entirely accurate. And you
Speaker 1: can probably see where this is going. So on paper,
Speaker 1: the automated systems worked like a dream. When the actual
Speaker 1: high volume orders began to pour in, those systems could
Speaker 1: not keep pace. There was no one system that was
Speaker 1: performing at such a poor level that you could say
Speaker 1: that's what caused doom for fox Meyer. But there were
Speaker 1: problems throughout the entire management system. And these problems, even
Speaker 1: if they were small, all started to add up and
Speaker 1: all those automated systems weren't working properly either. In fact,
Speaker 1: they were causing more work because when they weren't working
Speaker 1: as designed, a human being had to step in and
Speaker 1: bypass this. So fox Meyer actually had to dedicate more workers,
Speaker 1: not fewer, to compensate for the problems that the automated
Speaker 1: systems were causing. And as I'm sure you guys know,
Speaker 1: that's kind of the opposite of what you want when
Speaker 1: you start incorporating automated systems. I mean, the whole goal
Speaker 1: is to reduce the workload on a human workforce, not
Speaker 1: to increase it. On top of all that, the shipment
Speaker 1: tracking system for the distribution center wasn't sufficient, So there
Speaker 1: were a lot of cases where a customer places in
Speaker 1: order and that order might involve a certain number of
Speaker 1: doses of a drug or maybe a couple of different drugs,
Speaker 1: and the distribution center, because of its problems, would ship
Speaker 1: a partial order to the customer and the rest of
Speaker 1: the order might go out in a slightly later shipment.
Speaker 1: And this was just to try and get stuff out
Speaker 1: of the distribution center to the customer's hands. But on
Speaker 1: the customer side, the customer would receive a partial order
Speaker 1: and look in and say, well, this isn't this is
Speaker 1: only part of what I needed. And these customers might
Speaker 1: be things like, you know, a drug store, so they
Speaker 1: look at an order and say, well, this is like
Speaker 1: half of what I was promised, And they would call
Speaker 1: up a customer representative and say, well, what, where's the
Speaker 1: rest of my order? The problem was that the management
Speaker 1: system was not adequate. It did not actually show the
Speaker 1: customer representatives that the rest of that order had already
Speaker 1: been shipped out. So the customer representatives would do what
Speaker 1: you would imagine they would do. They would place in
Speaker 1: an order to send the rest of that to the customer.
Speaker 1: So essentially that customer would get twice that part of
Speaker 1: their order because the the later shipment would get to
Speaker 1: them and then the reshipment would get to them, and
Speaker 1: this would all be resulting in losses for fox Meyer
Speaker 1: the company. In fact, the problems were so bad that
Speaker 1: they totally destroyed fox Meyer. The company never bounced back,
Speaker 1: and it ultimately had to file for bankruptcy. Then a
Speaker 1: competitor called McKesson came in and purchased all the assets
Speaker 1: of fox Meyer for eighty million dollars. Now that's a
Speaker 1: lot of money, but it's a paltry sum compared to
Speaker 1: the billions of dollars of business that fox Meyer had
Speaker 1: been doing before it overhauled all these systems Now, the
Speaker 1: reason I'm telling you all these stories is really to
Speaker 1: frame how hard these supply chain challenges can be. I
Speaker 1: think it gives us a deeper appreciation for the effort
Speaker 1: that goes into bringing products to market. And that's not
Speaker 1: to say that there aren't tried in true ways to
Speaker 1: keep track of a supply chain and to manage it properly.
Speaker 1: It's entirely possible, and more importantly, it's necessary. Also, I
Speaker 1: think for the right person, supply chain management can be
Speaker 1: a really lucrative career. It's a tech related job that
Speaker 1: is in high demand, even in industries that you wouldn't
Speaker 1: associate with technology. It itself is a tech job. I
Speaker 1: frequently here that among the mani tech jobs out there,
Speaker 1: it's one of the most sought after in the industry.
Speaker 1: So if you're someone looking to be in demand and
Speaker 1: you're incredibly detail oriented and you're really interested in solving
Speaker 1: these kind of logistical problems, this could be a really
Speaker 1: good path to look into. It's something that I would
Speaker 1: really stress that young people who are wondering about where
Speaker 1: they want to go into business, you know, where would
Speaker 1: they fit in that world? It's a good one to
Speaker 1: explore because there is a definite demand for that kind
Speaker 1: of talent um. In fact, some people would argue that
Speaker 1: there is a shortage of that talent right now. So
Speaker 1: that wraps up this episode. I know this was a
Speaker 1: little bit outside of what I usually cover on tech Stuff,
Speaker 1: but because supply chain issues are so important in every industry,
Speaker 1: but in technology in particular, I thought it warranted an episode.
Speaker 1: Thanks again to John Bermudez of trace Link for joining
Speaker 1: the episode and giving us his perspective on things. I
Speaker 1: really appreciate him taking the time to talk with us.
Speaker 1: And if you guys have any suggestions for future episodes
Speaker 1: of tech Stuff, I invite you to send those ideas
Speaker 1: to me. The email address is tech stuff at how
Speaker 1: stuff works dot com, or pop on over to our
Speaker 1: website that's tech stuff podcast dot com. You will find
Speaker 1: links to where we are on social media. Over there,
Speaker 1: you'll find an archive of all of our past episodes,
Speaker 1: and you'll find a link to our online store, where
Speaker 1: every purchase you make goes to help the show. And
Speaker 1: we greatly appreciate it, and I'll talk to you again
Speaker 1: really soon. Text Stuff is a production of I Heart
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