WEBVTT - Smart Talks with IBM and Malcolm Gladwell - Managing supply chain volatility in the height of the shopping season 0:00:05.559 --> 0:00:08.680 Hello, Hello. This is Smart Talks with IBM, a podcast 0:00:08.720 --> 0:00:12.479 from Pushkin Industries, our our radio and IBM about what 0:00:12.480 --> 0:00:15.560 it means to look at today's most challenging problems in 0:00:15.600 --> 0:00:25.120 a new way. I'm Malcolm Gladwell. For our final episode, 0:00:26.280 --> 0:00:28.640 I bring you an ode to the holiday shopping season. 0:00:29.040 --> 0:00:32.360 Well not just a holiday shopping season. This episode is 0:00:32.400 --> 0:00:34.800 for all of you who waited six months or longer 0:00:35.120 --> 0:00:37.279 for your new couch to arrive, and those of you 0:00:37.520 --> 0:00:40.560 still struggling to buy a car because of the chip shortage. 0:00:43.159 --> 0:00:45.720 It's all about what's going on with the supply chain, 0:00:46.040 --> 0:00:48.040 and we're gonna look at how the supply chain has 0:00:48.080 --> 0:00:51.000 evolved since the late nineteen and why we've seen so 0:00:51.080 --> 0:00:56.320 many hiccups and interruptions over the last two years. No 0:00:56.360 --> 0:00:58.920 one knows the current struggles of the supply chain better 0:00:59.080 --> 0:01:03.160 than Jonathan Wright. Jonathan is the global Managing Partner for 0:01:03.240 --> 0:01:07.200 Supply Chain Consulting at IBM, and I think now what 0:01:07.240 --> 0:01:11.720 we're going to see is uh strategic supply chains, strategic 0:01:11.800 --> 0:01:15.840 relationships which are brought together through technology, and that that 0:01:16.000 --> 0:01:19.280 vertical integration which once was through ownership, will now be 0:01:19.360 --> 0:01:24.200 through technology integration. Together, we'll look at the evolution of 0:01:24.200 --> 0:01:27.800 our modern day supply chain and explore how today's demand 0:01:28.200 --> 0:01:33.280 has created something called a bull whip effect. Jonathan and 0:01:33.319 --> 0:01:35.480 I will get into what all of this means and 0:01:35.520 --> 0:01:38.240 the ways technology can be used to help address current 0:01:38.520 --> 0:01:50.160 supply chain shortages. Let's dive in. Hi, Jonathan, it's a 0:01:50.280 --> 0:01:53.440 pleasure to meet you. It's a big moment for me, Malcolm. 0:01:53.480 --> 0:01:56.360 It's is an honor and it's great to be spending 0:01:56.360 --> 0:01:59.240 some time chatting to you about supply chain. Yeah, so 0:01:59.360 --> 0:02:03.640 this we have chosen a topic that is very much 0:02:03.680 --> 0:02:05.720 of the moment. I am dying for you to explain 0:02:05.840 --> 0:02:08.760 just what is going on right now. So I'm I 0:02:08.760 --> 0:02:10.240 feel like you're one of the few people who can 0:02:10.360 --> 0:02:13.560 actually tell me the big picture. I hope we can. 0:02:13.840 --> 0:02:16.160 I hope we can break that down and get into 0:02:16.200 --> 0:02:19.000 some detail. But it's certainly an exciting time to be 0:02:19.120 --> 0:02:21.520 working in supply chain. Is so much going on, and 0:02:21.560 --> 0:02:24.799 we've got to unpack some some issues to to get 0:02:24.840 --> 0:02:27.440 to the root. Cause I think, yeah, well, let's start 0:02:27.480 --> 0:02:31.520 with you know, three years ago, no one like me 0:02:31.760 --> 0:02:34.840 ever thought about a word about the state of the 0:02:34.880 --> 0:02:38.840 supply chain. Um, now people like me, do we hear 0:02:38.880 --> 0:02:41.400 it all the time. Tell me what has happened in 0:02:41.440 --> 0:02:46.760 the last say two years two to drive this disruption? Well, again, 0:02:46.800 --> 0:02:50.600 I often say to people, it's like welcome to literally 0:02:50.600 --> 0:02:55.520 we we've accelerated UM the kind of thoughts and the 0:02:55.560 --> 0:02:58.320 innovation around supply chain by ten years. And the pandemic 0:02:58.360 --> 0:03:02.160 has driven that. For sure, UM necessity is the driver 0:03:02.240 --> 0:03:06.160 of invention or innovation in this case. And and you 0:03:06.200 --> 0:03:10.000 can't avoid that COVID period because it really did challenge 0:03:10.120 --> 0:03:12.200 It put a shock into the supply chain, a shock 0:03:12.240 --> 0:03:15.520 on the supply side UM when Wuhan went into lockdown, 0:03:15.560 --> 0:03:18.440 and then a shock on the demand side when people 0:03:18.480 --> 0:03:21.720 started buying fundamentally different things than they had been doing. 0:03:22.320 --> 0:03:25.000 And and I think you know that's probably the biggest 0:03:25.040 --> 0:03:29.200 shock UM to the supply chaine since the war. In reality, 0:03:29.680 --> 0:03:32.840 is a supply chain system, right that has been disrupted. 0:03:33.360 --> 0:03:35.320 Can you be a little more specific on what you 0:03:35.360 --> 0:03:39.520 mean by disrupted? So you mentioned people started buying different 0:03:39.560 --> 0:03:44.640 things and certain parts of the world were no longer 0:03:44.720 --> 0:03:48.920 as capable of producing or moving products as did before. 0:03:48.960 --> 0:03:51.240 But can you could have drilled down on the on 0:03:51.280 --> 0:03:53.880 all of the sources here, Yeah, for sure, I mean, 0:03:54.040 --> 0:03:56.080 you know, we were running out of of people, We 0:03:56.080 --> 0:03:59.080 didn't have of toilet paper, all of the classic things 0:03:59.120 --> 0:04:02.280 and um, and we went into survival mode and and 0:04:02.320 --> 0:04:04.200 I think, you know, people roll their sleeves up, and 0:04:04.240 --> 0:04:06.480 we're tenacious, and they figured out how to solve some 0:04:06.560 --> 0:04:11.560 of those supply chain issues and keep society running and healthy. 0:04:11.600 --> 0:04:14.240 And then we went into resourceful mode, where we started 0:04:14.240 --> 0:04:17.360 to think about, hey, well we could repurpose some facilities 0:04:17.400 --> 0:04:19.839 and make more ppe, and we could take some fashion 0:04:19.880 --> 0:04:24.400 retailers and start creating new products. So this system, which 0:04:24.400 --> 0:04:27.840 has been very stable and just incrementally growing, now we're 0:04:27.839 --> 0:04:31.479 starting to repurpose things. And then of course we've had 0:04:31.680 --> 0:04:35.120 a rapid recovery. The world has started moving faster and 0:04:35.160 --> 0:04:39.599 coming back, and that recovery has put demand onto the 0:04:39.600 --> 0:04:42.279 supply chain at a time where the supply base is 0:04:42.320 --> 0:04:46.680 not robust because people are still in flex and so 0:04:47.200 --> 0:04:50.000 you know, really we're in a in a situation where 0:04:50.000 --> 0:04:53.800 we've got this very complex supply chain which is started 0:04:53.839 --> 0:04:56.760 to be out of balance, and it's going to take 0:04:56.760 --> 0:05:00.760 some work to get it rebalanced. Really, I was playing next, 0:05:01.040 --> 0:05:04.560 you know, in doing this series with IBM. One of 0:05:04.560 --> 0:05:09.640 the things that consistently been surprised about. Is the things 0:05:09.720 --> 0:05:12.680 IBM now thinks about that I wouldn't have thought they 0:05:12.880 --> 0:05:16.360 thought about ten years ago. Did IBM have people who 0:05:16.440 --> 0:05:19.719 thought about supply chain management? You know, we have or 0:05:19.880 --> 0:05:22.440 always kind of worked in supply chain, We have our 0:05:22.480 --> 0:05:25.400 own supply chain, but I think now it is just 0:05:25.839 --> 0:05:29.240 way more important than ever before. And this is at 0:05:29.240 --> 0:05:32.240 the time where we're seeing convergent technology having a real 0:05:32.360 --> 0:05:36.920 role to play, whether that's kind of blockchain, IoT AI 0:05:37.080 --> 0:05:39.960 and Watson, which will help us with really understanding the 0:05:40.040 --> 0:05:43.520 demand signal and the supply signal. So I think technology 0:05:43.560 --> 0:05:45.640 has got a real role to play, and we did 0:05:45.640 --> 0:05:47.680 see that through COVID. We saw those that we had 0:05:47.839 --> 0:05:51.360 invested ahead of the curve coming out faster, being able 0:05:51.400 --> 0:05:55.200 to respond quicker, being able to understand the supply base quicker, 0:05:55.240 --> 0:05:57.960 and the and the exposures and the risk that they had. 0:05:58.520 --> 0:06:01.520 UM So I think, you know, this is a bit 0:06:01.560 --> 0:06:05.000 of a golden age that we're facing now. At what 0:06:05.040 --> 0:06:09.640 point do we come to conceive of supply chain management 0:06:09.680 --> 0:06:14.560 and splashing problems as as explicitly technological and data problems 0:06:15.400 --> 0:06:19.359 as opposed to what you're talking about earlier relationships, you know, 0:06:20.480 --> 0:06:24.640 practical kind of bricks and mortary kind of questions. When 0:06:24.680 --> 0:06:26.719 does this transition to this notion of it, Oh, it's 0:06:26.800 --> 0:06:30.240 just another complicated data problem. And I sort of said, 0:06:30.279 --> 0:06:32.640 welcome to twenty that was a bit of the point, 0:06:32.760 --> 0:06:35.080 you know, I think this has been a huge acceleration, 0:06:35.120 --> 0:06:39.359 a huge jump forward, and the the interest now of 0:06:39.880 --> 0:06:43.200 corporations to invest in technology to solve some of these problems. 0:06:43.480 --> 0:06:46.080 If you go back to the early early supply chains, 0:06:46.120 --> 0:06:51.080 we had vertical integration right where companies forward rouge, you know, 0:06:51.200 --> 0:06:54.080 kind of they had on site, they made their own steel, 0:06:54.200 --> 0:06:57.440 they had the whole integrated supply chain, and that's the 0:06:57.440 --> 0:07:01.760 way that they built trust and collaborate action and security 0:07:01.800 --> 0:07:04.520 into the supply chains. And I think now what we're 0:07:04.520 --> 0:07:09.640 going to see is uh strategic supply chains, strategic relationships 0:07:09.640 --> 0:07:14.000 which are brought together through technology, and that that vertical integration, 0:07:14.080 --> 0:07:18.040 which once was through ownership, will now be through technology integration. 0:07:19.040 --> 0:07:22.560 A couple of questions, super interesting when you said welcome 0:07:22.600 --> 0:07:27.920 to did you mean that we are doing things because 0:07:27.960 --> 0:07:30.760 of this crisis and especially today that we might not 0:07:30.960 --> 0:07:35.120 have otherwise done until is exactly what I say, exactly 0:07:35.200 --> 0:07:37.920 give me, give me an example, a really concrete example. 0:07:38.360 --> 0:07:40.720 One of my one of my clients was I saying 0:07:41.080 --> 0:07:45.520 it would take them maybe a month to onboard a supplier. 0:07:46.320 --> 0:07:48.640 But if you if I got a new supplier, by 0:07:48.760 --> 0:07:51.400 time I've worked with them, I've done due diligence, I've 0:07:51.400 --> 0:07:54.720 figured out their systems and my systems have integrated them. 0:07:54.840 --> 0:07:57.080 Maybe it takes a month or longer, could take even 0:07:57.120 --> 0:08:01.040 three months. And through the pandemic, um there was this 0:08:01.120 --> 0:08:04.240 necessity to bring in the supply straight away. And guess 0:08:04.280 --> 0:08:07.040 what if you really break down some of those orthodoxes 0:08:07.040 --> 0:08:08.800 of the past and there's some of those practices, and 0:08:08.840 --> 0:08:11.080 you ask why, why why you can do it in 0:08:11.120 --> 0:08:15.120 three days straight away? And you can figure out with 0:08:15.240 --> 0:08:17.720 some technology and with some new processes, you can do 0:08:17.760 --> 0:08:20.320 that in three days. Because of that necessity is driving 0:08:20.720 --> 0:08:26.000 that innovation in the process. On the demand side. You know, basically, 0:08:26.280 --> 0:08:30.160 supply chains have always grown up thinking about what happened 0:08:30.240 --> 0:08:35.720 last yesterday, last week, last month, last year, will happen 0:08:36.000 --> 0:08:40.760 next month, next week? Right? And and now what we 0:08:40.840 --> 0:08:43.719 see is, um, that's not not the case. You know, 0:08:43.840 --> 0:08:46.240 the last two years are not a good proxy for 0:08:46.280 --> 0:08:48.320 what's going to happen in the next two years, We've 0:08:48.320 --> 0:08:51.520 got to really start thinking about what are the drivers 0:08:51.559 --> 0:08:55.280 that impact demand. The drivers could be a people working 0:08:55.280 --> 0:08:58.640 from home or not. You know, have I got another 0:08:58.679 --> 0:09:01.720 spike happening at school? Is open? Are? You know? Where 0:09:01.720 --> 0:09:06.280 are we maybe even hospitalizations in people movement, Whether all 0:09:06.320 --> 0:09:09.199 of these different aspects come into play to really understand 0:09:09.200 --> 0:09:11.880 at a zip code level, at a skew level, at 0:09:11.880 --> 0:09:15.720 a product level, you know, what is the demand and 0:09:15.720 --> 0:09:19.640 and so now we can use AI and analyze the data, 0:09:19.800 --> 0:09:23.360 refine the data that we have from new sources, not 0:09:23.520 --> 0:09:25.560 just from within my four walls of what did I 0:09:25.600 --> 0:09:29.559 sell yesterday, last month, last last quarter. I can now 0:09:29.640 --> 0:09:32.880 start thinking about all the external data. I can look 0:09:32.880 --> 0:09:35.160 at social media, I can look at you know, kind 0:09:35.200 --> 0:09:38.840 of data from the state and from local authorities and 0:09:39.160 --> 0:09:43.400 use that to actually inform what's happening on the ground 0:09:43.440 --> 0:09:46.320 and what people's behaviors are and what will that mean 0:09:46.400 --> 0:09:50.800 for demand. Those kinds of much more sophisticated forecasting models. 0:09:52.360 --> 0:09:55.720 Three years ago, we could have built them, but we 0:09:55.720 --> 0:09:58.360 didn't see the need. Correct, And what you're saying is 0:09:58.640 --> 0:10:00.720 all of a sudden, we now see the need and 0:10:00.720 --> 0:10:03.280 so we're building. The capability was there but not but 0:10:03.360 --> 0:10:06.240 not a motivation? Is that what you're saying, Absolutely, when 0:10:06.240 --> 0:10:08.320 you invest in technology, you want to make sure that 0:10:08.360 --> 0:10:11.160 there's a return on that investment, right, that you can 0:10:11.160 --> 0:10:18.520 actually drive real value and pre pandemic. From a forecasting perspective, 0:10:19.280 --> 0:10:22.760 it was less less important. Let's go back to two 0:10:22.840 --> 0:10:26.040 years ago as a as A for example, was three 0:10:26.080 --> 0:10:28.920 years ago? What have you? How many people would have 0:10:28.920 --> 0:10:32.319 had a deep map of their supply chain back then? 0:10:32.920 --> 0:10:38.080 Very few of the fortune the top two did not 0:10:39.000 --> 0:10:42.840 have the picture and the map that they needed. And 0:10:42.880 --> 0:10:44.680 what percentage now and have the picture of the map 0:10:44.679 --> 0:10:47.200 I needed? I say, it's a good question. I don't 0:10:47.240 --> 0:10:49.040 know certainly. All of the clients that I work with, 0:10:49.080 --> 0:10:52.160 there's a top priority for them, particularly now as many 0:10:52.200 --> 0:10:55.280 of them have got exposures to semiconductors and the like, 0:10:55.480 --> 0:10:58.880 so they're now having to go at much much more 0:10:58.920 --> 0:11:02.040 detailed analysis of their supply chain. So I think they've 0:11:02.080 --> 0:11:05.560 really had to, you know, kind of up the game. Ye, 0:11:06.679 --> 0:11:10.319 your phone must have been bringing off the hook for 0:11:10.360 --> 0:11:15.240 the last two years. How crazy has your life been? 0:11:15.600 --> 0:11:19.120 I mean, I'm fortunate that I work in supply chain 0:11:19.160 --> 0:11:21.800 and This has absolutely the most exciting time to work 0:11:21.800 --> 0:11:25.360 in supply chain, and whether it's you know, supporting clients 0:11:25.360 --> 0:11:31.040 with vaccine distribution and working through the issues of transparency 0:11:31.040 --> 0:11:33.200 and making sure that we understand how how to do 0:11:33.320 --> 0:11:37.959 that through too just supply issues and um and and 0:11:38.000 --> 0:11:41.120 helping clients navigate this volatile PERIODI is certainly one of 0:11:41.160 --> 0:11:43.600 the one of the positives that I think will come 0:11:43.600 --> 0:11:47.120 out of this is is more interesting supply chain and 0:11:47.160 --> 0:11:50.719 therefore us being able to attract new talent because one 0:11:50.760 --> 0:11:52.800 thing that we have got to do to solve these 0:11:52.880 --> 0:11:58.480 complex issues is have diverse talent. And I I personally 0:11:58.520 --> 0:12:03.520 believe that and we bring in more diverse talent cognitive, ethnic, 0:12:03.840 --> 0:12:08.160 gender diversity, we're much better able to solve for the 0:12:08.200 --> 0:12:11.880 world's most complex issues, and we'll see a much richer 0:12:11.960 --> 0:12:15.559 ability to solve for the future. How long does it 0:12:15.600 --> 0:12:19.599 take to build one of these maps. Let's say I 0:12:19.720 --> 0:12:24.040 come to you unfortunate for one reason another though I 0:12:24.120 --> 0:12:28.240 have simply neglected, I have the the most kind of 0:12:29.920 --> 0:12:34.800 plain vanilla supply chain map, and I'm freaking out, and 0:12:34.840 --> 0:12:36.760 I call you up and I say I want to 0:12:36.800 --> 0:12:40.560 go gold standard as fast as possible. I'm a company 0:12:40.600 --> 0:12:44.520 with sales of I don't know, fifty billion dollars. Okay, 0:12:44.960 --> 0:12:51.800 let's assume complex international, you know, like not an easy kisse. Um, 0:12:51.880 --> 0:12:55.280 how tell me how long? Tell me how many people 0:12:55.280 --> 0:12:58.040 would work on this problem? Tell me tell me how 0:12:58.080 --> 0:13:02.679 you would start? Yeah, it's actually, um, it's a bit 0:13:02.720 --> 0:13:05.120 of a trick question, right, because it's a lot easier 0:13:05.160 --> 0:13:07.480 than you think. And the reason it's a lot easier 0:13:07.480 --> 0:13:10.000 than you think is because many of the suppliers out 0:13:10.040 --> 0:13:13.439 there are already supplying other companies who already have mapped 0:13:13.440 --> 0:13:17.280 their supply chain. So we work with platform companies that 0:13:17.320 --> 0:13:21.679 are able to accelerate this journey towards critical risk modeling. 0:13:22.600 --> 0:13:26.720 We map the tier one suppliers, we prioritize the supply base, 0:13:27.160 --> 0:13:30.680 and in weeks, yes, weeks, we're able to get onboarded 0:13:30.760 --> 0:13:35.640 companies a view, a view of their deep supply chain, 0:13:36.280 --> 0:13:40.320 that's of their key suppliers in their supply chain. People 0:13:40.360 --> 0:13:43.439 are willing to share that kind of data. Yes, absolutely, 0:13:44.080 --> 0:13:47.600 that's the business model for these platform providers. You know, 0:13:47.679 --> 0:13:51.160 we partner with them. They make sure that we have 0:13:51.280 --> 0:13:55.880 the visibility, and that visibility is permissioned and restricted. Um, 0:13:56.320 --> 0:13:58.480 we use that in our own supply chain, and it's 0:13:58.480 --> 0:14:02.960 an incredibly powerful tool for getting into the deep supply chain. 0:14:03.160 --> 0:14:06.480 And then over time we can continue to build out 0:14:06.559 --> 0:14:09.640 and the richness of that data and the modeling, and 0:14:09.679 --> 0:14:11.800 then you have to start looking at how am I 0:14:11.960 --> 0:14:15.640 organized so I can use that data um and use 0:14:15.720 --> 0:14:18.760 that much more effectively. So what are my internal processes? 0:14:18.800 --> 0:14:22.000 And that's actually where the potentially the harder piece comes, 0:14:22.040 --> 0:14:26.600 which is reorganizing and getting people to to use data 0:14:26.640 --> 0:14:28.800 in a different way. I have a view that we 0:14:28.840 --> 0:14:31.560 should all have a virtual assistant by the side of 0:14:31.560 --> 0:14:34.200 our desks. In the same way that you you have 0:14:34.920 --> 0:14:37.200 a virtual as system at home, we should all have 0:14:37.240 --> 0:14:39.840 one in the supply chain. We can interact with natural 0:14:39.920 --> 0:14:42.320 language and we can ask what's and hey, you know, 0:14:42.400 --> 0:14:45.160 tell me what happens if if there's an issue at 0:14:45.200 --> 0:14:47.960 Malaysia Airport, what are my suppliers are going to be affected? 0:14:48.320 --> 0:14:51.240 Guess what? We internally already have that for our own 0:14:51.320 --> 0:14:55.000 supply chain system. But my vision is that every supply 0:14:55.080 --> 0:14:58.120 chain professional will have that virtual assistant and that they 0:14:58.120 --> 0:15:01.480 can access the data. But that acquires a different way 0:15:01.480 --> 0:15:04.240 of working. But if we get that right to me, 0:15:04.320 --> 0:15:06.880 he can have a cool, cool environment. We can attract 0:15:06.880 --> 0:15:12.200 more talent because instead of doing mundane, dull tasks transactional task, 0:15:12.200 --> 0:15:15.880 they can actually be doing value adding tasks. Do you 0:15:16.280 --> 0:15:20.160 walk me through this? You mentioned this little bit about 0:15:20.400 --> 0:15:24.200 what you do with the information. So I'm I'm the 0:15:24.360 --> 0:15:28.800 same company with this large, complex business. You've not given 0:15:28.840 --> 0:15:33.800 me this much more detailed, accurate map of what my 0:15:33.840 --> 0:15:37.560 supply him looks like. And we see a problem one 0:15:37.560 --> 0:15:41.800 of my suppliers, suppliers, supplier deep somewhere on the other 0:15:41.800 --> 0:15:44.520 side of the world. Who this is one of my 0:15:44.560 --> 0:15:49.400 critical components. And I see, Oh, it's supposed to come 0:15:49.440 --> 0:15:51.320 next week. I don't think it's going to come for 0:15:51.480 --> 0:15:56.320 two months. What what do I do with that information? 0:15:56.320 --> 0:15:58.480 How do I react to it? Well, that back in 0:15:58.680 --> 0:16:01.800 the year two thousand not here and Ericsson, if you remember, 0:16:01.800 --> 0:16:05.920 they were market leaders in mobile phones UM before before 0:16:05.920 --> 0:16:10.680 the world changed. They had two two very different strategies 0:16:10.680 --> 0:16:17.000 here around supplier management and UM. And actually Ericsson failed 0:16:17.440 --> 0:16:20.200 big time when there was a fire in Albuquerque, in 0:16:20.480 --> 0:16:24.760 New Mexico at a Philip's chip manufacturing point. And so 0:16:24.800 --> 0:16:27.400 this was all to do with internal processes. How you 0:16:27.440 --> 0:16:30.720 handle the information. The information came through that there was 0:16:30.760 --> 0:16:33.280 a fire, a lot of the chips had got you know, 0:16:33.440 --> 0:16:36.960 soaked and saturated and smoked damage, and UM and a 0:16:37.000 --> 0:16:40.560 mid manager at Ericson had had kind of got in 0:16:40.600 --> 0:16:45.360 contact with Phillips and had taken a risk assessment that 0:16:45.560 --> 0:16:47.200 the place was going to be up and running quite 0:16:47.240 --> 0:16:51.800 soon and there was no major action required, no major disruption. Nokia, 0:16:51.840 --> 0:16:55.400 on the other hand, had much more collaborative approach and 0:16:55.440 --> 0:16:57.840 they said, no, this, this could be a real issue here. 0:16:57.880 --> 0:17:00.800 I don't trust that information. I'm not going to be 0:17:00.880 --> 0:17:05.320 too complacent and and literally flew over, went down, did 0:17:05.320 --> 0:17:07.439 the risk assessment, said no, this, this is not going 0:17:07.480 --> 0:17:10.520 to be up and running in any near term. Um 0:17:10.600 --> 0:17:14.560 and went and triggered some other contracts they had and 0:17:14.640 --> 0:17:18.280 basically soaked up all of the supply of those chips. 0:17:19.080 --> 0:17:23.320 Long story short, Ericsson were unable to supply the market 0:17:23.480 --> 0:17:27.600 and ultimately failed and the company who were no longer 0:17:27.640 --> 0:17:30.840 making mobile phones and Nokia went from strength to strength 0:17:30.920 --> 0:17:36.480 until another technology evolution took place. But the processes and 0:17:36.520 --> 0:17:40.560 the strategies around how to handle the supply signal will 0:17:40.600 --> 0:17:44.480 handled very differently, and so so you had both of 0:17:44.520 --> 0:17:47.680 them had the same quantitative information. One of them though 0:17:47.840 --> 0:17:50.760 added a qualitative layer on top of that where they 0:17:50.800 --> 0:17:55.520 went and made an assessment of whether the the supplier 0:17:55.840 --> 0:17:59.960 was was being trustworthy in their assessment of how to 0:18:00.200 --> 0:18:02.879 interesting to work correct. And this is this is where 0:18:03.520 --> 0:18:08.440 the organization design and the skills and the capability will 0:18:08.480 --> 0:18:11.880 always be super important. And I think, yes, we've got 0:18:11.880 --> 0:18:14.800 to make sure that we have the right um that 0:18:14.920 --> 0:18:17.119 the number of suppliers and we've got kind of the 0:18:17.160 --> 0:18:20.640 balance of de risking a suppliers by having a number 0:18:20.640 --> 0:18:23.160 of contracts in place, and we haven't got sort of 0:18:23.359 --> 0:18:28.000 an exposure of one supplier. But then have I got 0:18:28.000 --> 0:18:32.640 the right skills and capability and a culture that that 0:18:32.760 --> 0:18:35.960 listens to risk and risk management and and is is 0:18:36.000 --> 0:18:40.800 absorbing that versus a culture of maybe complacency and trust 0:18:40.880 --> 0:18:45.200 which could lead to some failure. M hmm. I think, 0:18:45.280 --> 0:18:47.800 I think, I think you do get some are hard moments. 0:18:48.040 --> 0:18:50.000 I do think, you know, particularly when you start to 0:18:50.800 --> 0:18:54.400 look into um as you say, the deep supply chain map, 0:18:54.440 --> 0:18:56.800 you start to realize where those bottom necks are and 0:18:57.000 --> 0:18:59.960 they're not obvious. They're not obvious because when you start 0:19:00.040 --> 0:19:01.800 to model out and you start to see where those 0:19:01.840 --> 0:19:03.720 flows are. You might say, hey, I've got I've got 0:19:03.720 --> 0:19:07.200 too much risk here because of your one one location. 0:19:07.320 --> 0:19:10.439 So I think it's when you do that modeling of 0:19:10.520 --> 0:19:14.480 the supply chain um both in terms of physical flows, 0:19:14.560 --> 0:19:18.399 network modeling and the deep network, that you you start 0:19:18.480 --> 0:19:23.240 to see those vulnerabilities and nobody. The way that organizations 0:19:23.080 --> 0:19:25.400 are set up, you you tend to have people focusing 0:19:25.400 --> 0:19:29.000 on one category or one product line. You don't necessarily 0:19:29.000 --> 0:19:31.720 have people looking all the way across. What is the 0:19:31.800 --> 0:19:35.159 hardest problem to solve on this? In these kinds of 0:19:35.560 --> 0:19:37.080 you said one part of it you already said, well, 0:19:37.280 --> 0:19:40.800 it can be surprisingly easy if your suppliers have maps themselves. 0:19:41.320 --> 0:19:45.480 What's the hard part? I think that there's there's to 0:19:46.200 --> 0:19:50.800 the two hardest parts. M One is is the cleanliness 0:19:50.800 --> 0:19:55.199 of data. Right, It's it's very it's very typical in 0:19:55.280 --> 0:19:59.440 large organizations for the data to be dirty. And like oil, right, 0:19:59.520 --> 0:20:02.680 if you've get dirty oil, it's a problem. Right, if 0:20:02.720 --> 0:20:05.280 you get nice refined oil, it's valuable. I think the 0:20:05.320 --> 0:20:07.639 same for data. When you refine it and you clean 0:20:07.680 --> 0:20:09.120 it and you use it in the right way, it's 0:20:09.240 --> 0:20:12.480 very valuable. But if it's dirty UM. Then it's a 0:20:12.520 --> 0:20:16.119 problem I have. You know, a client, a retailer couldn't 0:20:16.160 --> 0:20:20.600 understand why they couldn't UM have on shelf availability. They 0:20:20.640 --> 0:20:24.679 couldn't they couldn't replenish the shelf quick enough. And the 0:20:24.720 --> 0:20:27.200 reason was that in the system it was recorded as 0:20:27.320 --> 0:20:31.160 the shelf was recorded as ten centimeters not not a meter. 0:20:31.720 --> 0:20:34.119 So who you know, when I send one product, I 0:20:34.160 --> 0:20:38.320 fill the shelf up I need because the system thinks 0:20:38.359 --> 0:20:40.159 that the shelf is this big. Actually the shelf is 0:20:40.200 --> 0:20:45.320 this big. So you you why how long had that 0:20:45.520 --> 0:20:47.600 error existed in? There have been going on for a 0:20:47.640 --> 0:20:50.600 while for a while, and and then they have sort 0:20:50.600 --> 0:20:53.600 of manual workarounds. But but you know, if you lose 0:20:53.640 --> 0:20:56.520 that tribal knowledge, you use that manual work around, then 0:20:56.560 --> 0:20:59.600 you start to realize, you know, what's actually happening, and 0:20:59.640 --> 0:21:03.840 then to find the systemic solution. How how long into 0:21:03.880 --> 0:21:11.360 COVID before you realized that your world was going to explode? Well, actually, 0:21:11.920 --> 0:21:14.240 pretty early on some of the leaders were coming to 0:21:14.320 --> 0:21:19.120 us saying we need help. It was one consumer products company. 0:21:19.960 --> 0:21:24.520 I remember literally in in that March April time, we 0:21:24.560 --> 0:21:28.760 had a project running where we were doing this data 0:21:28.880 --> 0:21:32.600 driven demand forecasting, and we created a dashboard for them. 0:21:32.840 --> 0:21:36.560 Within a month, they could see all of their products, 0:21:37.080 --> 0:21:40.720 all of their customers retailers at a zip code level, 0:21:40.920 --> 0:21:42.879 and we had a map of where we thought the 0:21:43.000 --> 0:21:46.159 demand would go. In Minneapolis. They were not going to 0:21:46.200 --> 0:21:50.639 be a significant drop off of buying single chocolates on 0:21:50.680 --> 0:21:53.919 the way to work as a snack because there's nobody 0:21:53.920 --> 0:21:56.840 going to work. Instead, they would be their family packs 0:21:56.880 --> 0:21:59.680 were going to go up by because people would be 0:22:00.080 --> 0:22:03.240 would be gorging on them at home. So that signal 0:22:03.359 --> 0:22:08.119 was super important for that consumer products company, um of 0:22:08.480 --> 0:22:12.600 Food Food Company to to then repurpose their manufacturing lines 0:22:12.680 --> 0:22:15.919 to move from singles to family packs. And if they 0:22:15.920 --> 0:22:19.120 could get that signal ahead of the retailers giving them 0:22:19.119 --> 0:22:21.600 that signal, they could get the ground truth. Then they 0:22:21.600 --> 0:22:25.720 could they could proactively sort out that was happening in 0:22:26.040 --> 0:22:30.440 April time. But it was new technology and new new analysis, 0:22:30.600 --> 0:22:32.760 and within a month they had that new analysis. It 0:22:32.880 --> 0:22:35.840 was it was an incredible piece of work. Well, so 0:22:35.880 --> 0:22:39.960 within a month they had they had reconfigured their manufacturing 0:22:40.000 --> 0:22:43.719 lines to do more family packs than singles, absolutely and 0:22:43.760 --> 0:22:46.479 with and within a month they had the data and 0:22:46.560 --> 0:22:49.639 the facts behind it to to help them, you know, um, 0:22:50.080 --> 0:22:52.320 get them to get the balance right, to stay with 0:22:52.320 --> 0:22:55.199 that example that over the last let's just say six months, 0:22:55.680 --> 0:23:00.480 they would be monitors and gradually readjusting their mix as 0:23:00.880 --> 0:23:04.080 people start going back to work. Well, and then and 0:23:04.080 --> 0:23:06.159 then we come back to this this problem which is 0:23:06.160 --> 0:23:09.840 the bullwhip effect, right, and the bull whip effect is 0:23:10.560 --> 0:23:13.960 a real problem that we have at the moment um. 0:23:14.000 --> 0:23:17.520 What is the bullwhip effect? The bullwhip effect says that 0:23:17.680 --> 0:23:24.440 I can see a demand signal for maybe extra five units, 0:23:24.520 --> 0:23:27.240 so I forecast I'm gonna sell an extra five units. 0:23:27.280 --> 0:23:29.760 But my distributor says, oh, they're going to sell an 0:23:29.760 --> 0:23:31.879 extra five units, but they typically get it wrong. So 0:23:31.880 --> 0:23:33.800 I'm going to say an extra ten units. So they 0:23:33.840 --> 0:23:36.520 put that back onto their supply and say, hey, you 0:23:36.560 --> 0:23:39.280 know this company is now gone, is gone extra ten years. 0:23:39.359 --> 0:23:41.920 They say, oh, we'll make that twenty and then their 0:23:41.960 --> 0:23:44.000 supplies says, oh, they typically, you know, I don't want 0:23:44.000 --> 0:23:46.320 to go short here, so we'll make it fifty. Before 0:23:46.359 --> 0:23:49.200 you know it, my five units of demand further down 0:23:49.200 --> 0:23:53.600 the supply chain is fifty units. Now this happens where 0:23:53.640 --> 0:23:56.400 you have a lack of trust in the demand signal, 0:23:57.520 --> 0:23:59.560