WEBVTT - Smart Talks with IBM: Rethinking Supply Chains 0:00:00.080 --> 0:00:02.080 Robert and I are going to sit down for virtual 0:00:02.160 --> 0:00:05.720 chats with people using technologies developed by IBM to deal 0:00:05.760 --> 0:00:08.840 with the unique challenges the world is facing today. In 0:00:08.880 --> 0:00:12.159 this episode, we'll be focusing on how consumers, retailers, and 0:00:12.200 --> 0:00:15.480 supply chains adapt in the midst of a pandemic. And 0:00:15.520 --> 0:00:18.160 for this subject, we're going to be in conversation with 0:00:18.239 --> 0:00:22.160 Luke Nazzi, the IBM Global Managing Director for Consumer Industries, 0:00:22.200 --> 0:00:25.120 and Carl Holler, who is a partner at the Consumer 0:00:25.200 --> 0:00:28.240 Center of Competency at IBM. If you'd like to hear 0:00:28.240 --> 0:00:31.520 more episodes of Smart Talks, the tech Stuff podcast has 0:00:31.560 --> 0:00:34.479 already released the first four episodes of the series and 0:00:34.560 --> 0:00:36.879 its feed. You can find them on the I Heart 0:00:37.000 --> 0:00:39.319 Radio app or wherever you get your podcast. Just look 0:00:39.400 --> 0:00:41.960 up tech Stuff and click on the episodes labeled smart 0:00:42.000 --> 0:00:45.440 Talks and stay tuned for upcoming Smart Talks episodes. Here 0:00:45.440 --> 0:00:47.479 on Stuff to Blow your Mind, which will be published 0:00:47.479 --> 0:00:49.880 in our feed in the coming weeks. And now straight 0:00:49.880 --> 0:00:54.959 onto our conversation with Luke and Car. All Right, well, 0:00:55.000 --> 0:00:56.880 I guess probably the best place to start off would 0:00:56.920 --> 0:00:59.920 be to have you each introduce yourself, so Luke and 0:01:00.080 --> 0:01:02.760 Carl can you each introduce yourself and just talk a 0:01:02.800 --> 0:01:05.840 little bit about your background. Yeah, Hi, I'm looking as 0:01:06.080 --> 0:01:09.840 I'm the Global Managing Director for Consumer Industries for IBM. 0:01:10.560 --> 0:01:16.360 Consumer industries are retail, consumer products and the agribusiness and 0:01:16.480 --> 0:01:20.560 I have the pleasure of leading that for IBM globally 0:01:20.680 --> 0:01:23.440 across all of the things that IBM does, and that's 0:01:23.440 --> 0:01:27.080 everything from our research, through our technology and our services 0:01:27.120 --> 0:01:30.640 and our industry platforms. And I'm Carl Haller. I'm part 0:01:30.680 --> 0:01:36.280 of Luke's team and lead our Consumer Industry Center of Competency, 0:01:36.920 --> 0:01:41.080 which is part of the IBM Services business unit, and 0:01:41.200 --> 0:01:44.839 we work me and my team, we work with clients 0:01:44.880 --> 0:01:49.160 around the world on um some of the more challenging 0:01:49.280 --> 0:01:55.360 issues that they're facing that require deep industry skills and expertise. Well, 0:01:55.400 --> 0:01:58.280 we really appreciate you joining us today. So one of 0:01:58.320 --> 0:01:59.920 the main things that we were going to focus on 0:02:00.000 --> 0:02:03.520 today was supply chains and how supply chains are adapting 0:02:04.120 --> 0:02:08.280 during a pandemic. And so to start off, I think 0:02:08.320 --> 0:02:11.480 we should think about what supply chains are. They They're 0:02:11.480 --> 0:02:13.160 one of the many features of our world that I 0:02:13.160 --> 0:02:16.600 think can remain mostly invisible to us until they break down, 0:02:16.639 --> 0:02:19.320 you know, it's only by your failure or by their 0:02:19.360 --> 0:02:22.320 failure that we suddenly sort of noticed them. Can you 0:02:22.360 --> 0:02:26.120 provide a little background on how like normal shopping behavior 0:02:26.160 --> 0:02:28.520 like buying a frozen pizza or buying a pair of 0:02:28.600 --> 0:02:32.280 genes relies on supply chains. So so, first of all, 0:02:32.320 --> 0:02:35.880 in terms of the fundamental to supply chains, um, when 0:02:35.919 --> 0:02:40.280 you when you buy something at a store, it's there 0:02:40.360 --> 0:02:44.959 because it's been distributed to the store. That means it's 0:02:45.040 --> 0:02:47.960 traveled from somewhere and it's got to where it needs 0:02:48.000 --> 0:02:52.000 to be. But behind that, it's been made somewhere. That 0:02:52.000 --> 0:02:54.320 means that there's been a factory where it is being 0:02:54.360 --> 0:02:57.160 made and to be able to make it. And let's 0:02:57.160 --> 0:02:59.280 take that pizza example, in the ingredients that have gone 0:02:59.320 --> 0:03:02.120 into that pizza have got to have been sourced. And 0:03:02.200 --> 0:03:04.160 so that's what we start to get into the kind 0:03:04.160 --> 0:03:06.440 of the fundamentals of the supply chain, because that means 0:03:07.320 --> 0:03:11.080 the bits for the dough, the tomato based, the herbs, 0:03:11.400 --> 0:03:13.920 the cheese, the toppings, they all need to come together 0:03:14.080 --> 0:03:17.320 from a range of suppliers, and those suppliers can be 0:03:17.560 --> 0:03:21.359 you know, very broadly distributed, and so you're getting more 0:03:21.400 --> 0:03:26.200 into the unpacking of that product, and then going further back, well, 0:03:26.320 --> 0:03:30.519 actually all of those things need to be either produced 0:03:30.960 --> 0:03:33.480 or grown. If they're natural, they're grown, but if they 0:03:33.480 --> 0:03:36.200 are you know, like artificial flavorings, and they have to 0:03:36.200 --> 0:03:39.400 be manufactured. And so that simple thing of buying a 0:03:39.440 --> 0:03:42.560 pizza and getting a pizza has to go through all 0:03:42.760 --> 0:03:48.160 of those stages of the retail, the distribution, and the logistics, 0:03:48.560 --> 0:03:51.320 the actual manufacturing, all the way through to the sourcing 0:03:51.360 --> 0:03:54.360 of materials. And of course if you then take something else, 0:03:54.400 --> 0:03:57.640 like a pair of genes, um, it's the same concept, 0:03:57.680 --> 0:04:00.360 but of course all of the processes that make prepare 0:04:00.360 --> 0:04:02.200 of genes, and so you've got to get them to 0:04:02.280 --> 0:04:05.360 the store. They've got to be traveled. Often they're traveling 0:04:05.360 --> 0:04:09.360 from very far away because they're made in the lowest, 0:04:09.720 --> 0:04:13.040 most effective cost manufacturing typically UM. And then when you 0:04:13.040 --> 0:04:15.960 think about everything that goes into a pair of genes, well, 0:04:16.480 --> 0:04:19.159 there's all the cotton, but there's all of the dying 0:04:19.200 --> 0:04:21.360 that goes into it, and that's a complex process in itself, 0:04:21.400 --> 0:04:23.080 and you've got to take care of that in a 0:04:23.120 --> 0:04:26.080 in an effective way. UM. And of course then that 0:04:26.200 --> 0:04:28.360 goes back to the source materials. That's what we mean 0:04:28.520 --> 0:04:32.039 by a supply chain. But I'll let Carl explain a 0:04:32.040 --> 0:04:35.720 little bit about the complexities that are in supply chains 0:04:36.400 --> 0:04:39.640 in the retail world. Yeah, thanks, Luke. You know the 0:04:40.040 --> 0:04:43.000 thing that I think most people I would agree with 0:04:43.040 --> 0:04:45.960 you probably understand that, you know, the things that they 0:04:46.080 --> 0:04:51.400 buy are made by someone and grown somewhere in concept, 0:04:51.480 --> 0:04:55.680 but they don't always understand how complex the supply chains 0:04:55.720 --> 0:04:59.839 have gotten. And whether we're talking about a food supply chain, 0:05:00.520 --> 0:05:04.279 or we're talking about a fashion or clothing supply chain 0:05:04.400 --> 0:05:08.440 or a package good supply chain, there are often upwards 0:05:08.440 --> 0:05:12.280 of a dozen different parties, maybe even more, who are 0:05:12.360 --> 0:05:16.520 involved in the work that happens to go from raw 0:05:16.600 --> 0:05:21.440 materials most of which many of which come from a farm, 0:05:21.560 --> 0:05:29.480 UM through the various stages of processing UM, manufacturing, UM, distributing, 0:05:29.560 --> 0:05:34.400 selling to get goods into you know, a refrigerator or 0:05:34.480 --> 0:05:39.159 a pantry or addresser drawer UM and and these these 0:05:39.200 --> 0:05:46.360 different companies tend to involve multiple geographies. Sometimes goods go 0:05:46.520 --> 0:05:50.720 back and forth around the world once or twice UM 0:05:50.760 --> 0:05:56.000 as they get from raw materials into finish goods UM 0:05:56.040 --> 0:05:59.600 and and that's usually done in order to get goods 0:05:59.640 --> 0:06:06.520 to consumers in the most efficient and lowest cost manner possible. Um. 0:06:06.800 --> 0:06:11.320 The thing that the supply chain relies on today is 0:06:11.360 --> 0:06:15.599 it relies on a couple of basic assumptions um. One 0:06:15.720 --> 0:06:21.000 that goods and capital flow freely across borders um. And 0:06:21.160 --> 0:06:27.719 second that most consumers are willing to make the trade 0:06:27.720 --> 0:06:33.720 off of really knowing and understanding how, where, and by 0:06:33.760 --> 0:06:38.160 whom goods are made in exchange for getting the goods 0:06:38.200 --> 0:06:41.640 whenever they want, wherever they want, and of a low 0:06:41.680 --> 0:06:45.359 and attractive price point. Well, that actually brings to mind 0:06:45.680 --> 0:06:47.800 a question I wanted to ask about some of the 0:06:47.800 --> 0:06:51.960 ways that values guiding the formation of supply chains could 0:06:52.000 --> 0:06:55.160 actually be in conflict. So, uh, the idea of like 0:06:55.279 --> 0:07:00.520 cost and convenience versus energy efficiency or sustainability or just 0:07:00.640 --> 0:07:03.320 in time philosophy, and if you can explain what that 0:07:03.440 --> 0:07:08.480 is versus like a supply chain being robust against interruptions, 0:07:08.560 --> 0:07:10.559 could you talk about that a little bit? Yeah, sure, 0:07:10.720 --> 0:07:13.920 So there's quite a few parts to that. Joe's are 0:07:13.960 --> 0:07:17.160 trying to unpack them in various pieces. So so, so 0:07:17.200 --> 0:07:20.440 the first thing is that you know, if we if 0:07:20.440 --> 0:07:23.560 we cast our minds back over the last twenty years 0:07:23.920 --> 0:07:28.080 in the consumer industries, you know, particularly around food and 0:07:28.120 --> 0:07:33.080 you know fashion, we've kind of accelerated through an environment 0:07:33.080 --> 0:07:36.200 where people can kind of get pretty much whatever they want, 0:07:36.920 --> 0:07:40.600 wherever they want, any time of the year, and so 0:07:40.720 --> 0:07:43.440 you can get fruit all the year around, and you 0:07:43.440 --> 0:07:45.920 can get your berries all around. What's what's occurring around that, 0:07:46.000 --> 0:07:48.160 of course, is that they're coming from many different places 0:07:48.200 --> 0:07:50.200 to be able to get those berries or the year round. 0:07:50.720 --> 0:07:54.840 And we've, through the digitization of commerce, learned to expect 0:07:54.880 --> 0:07:57.320 that if I want something that is shown on my 0:07:57.400 --> 0:07:59.240 tablet that I can search on, that I can get 0:07:59.280 --> 0:08:02.760 it delivered to my home at a you know, a 0:08:02.760 --> 0:08:07.200 reasonable time, and so you know, the what's undergone the 0:08:07.200 --> 0:08:10.200 supply chains, of course is a is a is a 0:08:10.320 --> 0:08:15.800 drive to efficiency and cost reduction and a value delivery, 0:08:15.840 --> 0:08:19.400 and so you know, we as consumers have been honestly said, 0:08:19.400 --> 0:08:22.200 a little bit selfish in terms of expecting anything any 0:08:22.240 --> 0:08:25.160 time anywhere in the world at the lowest kind of 0:08:25.200 --> 0:08:31.600 price point and without really having due consideration of the 0:08:31.640 --> 0:08:34.640 consequences of what it's taking to get that piece of 0:08:34.679 --> 0:08:38.880 food into the supermarket or that garment you know, into 0:08:38.920 --> 0:08:41.480 the store that I'm looking to buy. From all on online. 0:08:41.960 --> 0:08:47.320 Now what is interesting is that UM and so by 0:08:47.320 --> 0:08:49.720 the way, that's called convenience you know, it's all about 0:08:49.760 --> 0:08:53.600 convenience retailing. UH, and we we we've had the decades 0:08:53.679 --> 0:08:56.640 of convenience retailing. What's interesting is that at the beginning 0:08:56.679 --> 0:09:00.880 of this year, Carl and members of my team, working 0:09:00.960 --> 0:09:06.120 with the National Retail Federation and our IBM Institute of 0:09:06.120 --> 0:09:10.360 Business Value, did a piece of research with over nineteen 0:09:10.720 --> 0:09:13.719 consumers in I think it was twenty eight countries. Ever 0:09:13.720 --> 0:09:16.960 I remember, of course all demographics and we try to 0:09:17.040 --> 0:09:21.960 understand what was occurring in buyer behaviors and what the 0:09:22.240 --> 0:09:25.280 study showed, and it's available you can download it is 0:09:25.360 --> 0:09:28.960 that there are kind of three major categories, and the 0:09:29.000 --> 0:09:32.880 convenience category is still the biggest category. Of the respondents 0:09:32.920 --> 0:09:37.559 were convenience buyers looking for value, looking for cost effectiveness, 0:09:37.559 --> 0:09:39.960 looking for that fulfillment wherever they needed at the lowest 0:09:39.960 --> 0:09:44.640 price point. But for almost the same number, we're in 0:09:44.640 --> 0:09:47.920 a category that we called purpose driven consumers. These are 0:09:48.400 --> 0:09:52.640 consumers who care about where things have come from, the 0:09:52.760 --> 0:09:56.760 journey that they've been on, how they've been made, what 0:09:56.960 --> 0:10:00.600 kind of energy was used in them, what's the carbon footprint, 0:10:01.240 --> 0:10:06.880 whether they are sustainable in nature, and what we're seeing 0:10:07.080 --> 0:10:11.440 is this rise of the purpose driven consumer. There are 0:10:11.480 --> 0:10:14.000 a couple of other categories. But in the other categories 0:10:14.000 --> 0:10:16.120 are you know, those that follow the kind of the 0:10:16.200 --> 0:10:19.200 brand and the higher segments and they kind of are 0:10:19.360 --> 0:10:24.360 more aligned to the that pure brand brand value. But 0:10:24.840 --> 0:10:28.240 I believe in twenty twenties we are really at the 0:10:28.360 --> 0:10:31.640 point in time when we're in a decade where in 0:10:31.760 --> 0:10:35.520 the main people are starting to care much more about 0:10:35.520 --> 0:10:37.559 where things have come from and how are they made 0:10:38.200 --> 0:10:43.520 and what are some of the implications to the planet 0:10:43.600 --> 0:10:48.280 and society around that sourcing. We're becoming more responsible in 0:10:48.360 --> 0:10:54.080 our consumption. So in terms of that rise of the 0:10:54.080 --> 0:10:58.240 purpose driven consumer, what we're now seeing is that in 0:10:58.280 --> 0:11:00.559 the respondence that we surveyed about and out of ten 0:11:00.600 --> 0:11:05.240 are prepared to make choices and decisions that are reflect 0:11:05.320 --> 0:11:09.360 their drive for whatever their purposes, sustainability, lower use of plastic, 0:11:09.640 --> 0:11:14.640 evidence of re use in their purchasing, and even more 0:11:14.679 --> 0:11:18.000 fascinating is that we're seeing that they're prepared to pay 0:11:18.200 --> 0:11:21.719 more for those companies that are able to demonstrate and 0:11:21.760 --> 0:11:26.640 improve that their products have been made in a more 0:11:26.679 --> 0:11:30.600 sustainable or environmentally friendly way. The survey actually showed that 0:11:31.040 --> 0:11:32.920 people are prepared to be up to a third more 0:11:33.520 --> 0:11:37.360 for that. What's also interesting is this, this trend of 0:11:37.360 --> 0:11:42.760 that group is across age profiles, So it's not just 0:11:42.840 --> 0:11:45.640 a certain age profile, it's you know, all age profiles 0:11:45.720 --> 0:11:53.080 are showing that tendency. And it's not just a highly 0:11:53.080 --> 0:11:57.320 developed Western economy type of perspective. It's actually per permeates 0:11:57.360 --> 0:12:03.320 across a globe context and different stages of economic development. 0:12:03.360 --> 0:12:06.400 So so we believe that we are absolutely in the 0:12:06.520 --> 0:12:11.160 era of um what was becoming purpose different consumption. Now, 0:12:11.559 --> 0:12:14.600 the third part of your question is, you know, the 0:12:14.679 --> 0:12:17.160 kind of the dilemma that we find ourselves in right now. 0:12:17.679 --> 0:12:25.080 And obviously, with the global COVID nineteen pandemic, there was 0:12:25.440 --> 0:12:31.240 an immediate rush to people to kind of stock up 0:12:31.360 --> 0:12:35.920 and get basic goods. It was food, it was grocery, 0:12:35.960 --> 0:12:39.320 it was sanitary products, it was kitchen toweling, it was 0:12:39.400 --> 0:12:43.240 bathroom to um toweling, et cetera massive push for that. 0:12:43.760 --> 0:12:46.720 And and actually if you kind of look at them, 0:12:47.240 --> 0:12:49.880 the results and they're kind of they're publicly available on 0:12:49.960 --> 0:12:53.360 the stock market market and other reports that food and 0:12:53.480 --> 0:12:58.080 grocery and kind of basic sanitary health and wellness type 0:12:58.200 --> 0:13:01.920 category that is continuing have significant demand at the moment 0:13:02.040 --> 0:13:07.040 right now, albeit that the other categories of what we 0:13:07.080 --> 0:13:11.200 consider in retail have clearly experienced a slowing in this 0:13:11.360 --> 0:13:15.760 environment because of the fact that they can get to 0:13:15.840 --> 0:13:18.199 stores and there's only a certain amount of the business 0:13:18.240 --> 0:13:21.600 that's online. And so what is going to be interesting, 0:13:21.600 --> 0:13:23.920 and we can definitely unpack this a bit further, is 0:13:24.520 --> 0:13:27.920 what is going to happen. What are the implications of 0:13:28.000 --> 0:13:32.240 this pandemic continuing, and how it's going to change or 0:13:32.280 --> 0:13:35.480 alter different parts of what we see in the supply chain, 0:13:36.080 --> 0:13:38.160 and whether these things that we saw in terms of 0:13:38.200 --> 0:13:42.160 this convenience versus purpose, how how is that going to 0:13:42.720 --> 0:13:45.679 play out over time. One of the impacts that we 0:13:45.800 --> 0:13:53.720 see from COVID nineteen is that place and people are 0:13:53.800 --> 0:13:57.280 both increasing in importance um there of all, as Luke 0:13:57.400 --> 0:14:01.040 was saying that that to our purpose driven are thinking 0:14:01.040 --> 0:14:04.959 about broader issues, and some are thinking about sustainability, and 0:14:05.000 --> 0:14:08.840 they're thinking about their own personal values. What we're seeing 0:14:08.920 --> 0:14:15.120 now is that as safety and personal personal safety family 0:14:15.160 --> 0:14:21.640 health becomes paramount, more people are concerned about how things 0:14:21.680 --> 0:14:25.400 were made, where they made, and who's touched them along 0:14:25.400 --> 0:14:28.360 the way than they were, you know, just just eight 0:14:28.360 --> 0:14:32.480 weeks ago. Um. So, so that's becoming something that is paramount, 0:14:33.040 --> 0:14:36.800 perhaps even for some of those people who were otherwise 0:14:36.880 --> 0:14:40.440 predisposed towards price and convenience. Well, that's interesting that it 0:14:40.440 --> 0:14:44.600 makes me wonder about um unintended positive effect of even 0:14:44.680 --> 0:14:47.520 irrational concerns, Like I know that there were people who 0:14:47.520 --> 0:14:51.200 were concerned, um in the early days of the pandemic 0:14:51.200 --> 0:14:54.360 about products coming from China and like the idea that 0:14:54.400 --> 0:14:57.080 they could get infected by the virus from that, And now, 0:14:57.160 --> 0:15:00.080 of course, like that that's not a real concern, you know, 0:15:00.640 --> 0:15:02.840 the virus and by the time people were concerned about this, 0:15:02.880 --> 0:15:05.240 it was all over the world anyway, and the virus 0:15:05.280 --> 0:15:08.360 wouldn't survive the shipping time. So it's like a totally 0:15:08.400 --> 0:15:14.320 irrational concern, but could lead to people just generally being 0:15:14.400 --> 0:15:16.880 more aware of like, oh, wait a minute, the products 0:15:16.880 --> 0:15:19.520 I buy do have to come from a place and 0:15:19.600 --> 0:15:23.040 there's something behind them, and normally like uh, I mean 0:15:23.080 --> 0:15:25.000 I I can even admit this in myself. Most of 0:15:25.000 --> 0:15:27.080 the time, I just don't even think about that. You 0:15:27.200 --> 0:15:29.800 just buy it at the store like that, that whole 0:15:29.920 --> 0:15:33.640 history is completely invisible. I think you're exactly right, whether 0:15:33.720 --> 0:15:37.000 it's something we're buying in a in a in a 0:15:37.040 --> 0:15:39.920 mall store, you know, home, something for the home, or 0:15:40.000 --> 0:15:44.640 something for for ourselves, or whether it's groceries you're buying 0:15:44.720 --> 0:15:48.800 and we're just so used to getting, you know, fresh tomatoes, 0:15:48.840 --> 0:15:53.040 fresh fruits and vegetables in the winter, we probably don't 0:15:53.080 --> 0:15:57.520 really think that all of those were grown and transported here. Um, 0:15:57.600 --> 0:16:00.320 And now I would agree with you there is going 0:16:00.360 --> 0:16:03.920 to be a bit more awareness of that across the board. 0:16:04.280 --> 0:16:08.800 I mean, what, of course has occurred with the pandemic 0:16:09.160 --> 0:16:12.960 has been a massive lockdown of people pretty much around 0:16:13.120 --> 0:16:15.400 the entirety of the world, all be at different times, 0:16:16.280 --> 0:16:21.880 and a lockdown of transportation systems, initially people, but also 0:16:22.960 --> 0:16:28.960 harder controls around borders, much less flight transportation, and of 0:16:29.000 --> 0:16:32.400 course every time a plane flies to a country, not 0:16:32.520 --> 0:16:35.080 only is it taking people to but it's also taking 0:16:35.120 --> 0:16:38.600 some kind of produce, typically as as part of the cargo. 0:16:39.120 --> 0:16:43.280 And so one of the consequences of the pandemic is 0:16:43.360 --> 0:16:48.840 that the availability of supply in this globally connected network 0:16:48.880 --> 0:16:51.560 that we have that delivers us anything any time anywhere 0:16:52.280 --> 0:16:55.080 has had to deal with this massive contraction in the 0:16:55.200 --> 0:17:00.880 practicalities of transportation and logistics and are tightening up, and 0:17:01.880 --> 0:17:05.199 that combined with the peaks in demand, and we know 0:17:05.320 --> 0:17:07.840 what kind of demand peaked early on, and we talked, 0:17:07.840 --> 0:17:10.320 we talked about the sanitary products, but also what peaked 0:17:10.400 --> 0:17:16.280 very early on where things like packaged products, tins of soup, 0:17:16.320 --> 0:17:19.040 whether it's Campbell, Super Hinds or whatever your your preference is. 0:17:19.520 --> 0:17:24.760 And what also peaked is things like dried products like pasta. Um. Now, 0:17:24.760 --> 0:17:28.520 I live in London and I live in Europe, and 0:17:29.000 --> 0:17:33.639 most of our dried pastor comes from Italy. Yeah, and 0:17:33.680 --> 0:17:36.040 of course Italy was one of the countries that was 0:17:36.600 --> 0:17:39.640 locked down the hardest and impacted the hardest early on 0:17:40.840 --> 0:17:45.440 in Q one and consequently, and it's still taken a 0:17:45.480 --> 0:17:47.240 little bit of time. You know, it took quite a 0:17:47.240 --> 0:17:50.360 long time for dry light pastor to be readily available 0:17:50.359 --> 0:17:52.919 back on the shelves because there was a disruption in 0:17:52.960 --> 0:17:56.879 that supply chain. Now what what what starts to occur is, 0:17:56.920 --> 0:18:01.040 of course the supply chains are gradually recovering, transportation opens up, 0:18:01.080 --> 0:18:03.520 and so it's kind of less of that shock, but 0:18:03.600 --> 0:18:06.560 The other thing that's occurring is that if you've got 0:18:06.840 --> 0:18:11.040 demand for products, um, you know, and you are in 0:18:11.080 --> 0:18:14.040 the business of providing those products to let's keep with 0:18:14.080 --> 0:18:17.480 food and grocery to your customers, you're going to start 0:18:17.480 --> 0:18:21.280 to work through alternative sources of supply. And so what 0:18:21.359 --> 0:18:25.760 this is also driven is companies starting to look at 0:18:25.800 --> 0:18:27.880 alternative sources of a supply so that they can meet 0:18:27.880 --> 0:18:31.800 their demand. And that in itself is driving because of 0:18:31.800 --> 0:18:37.840 this constraint on transportation, a shift from global demand to 0:18:37.960 --> 0:18:40.360 what I kind of global local, which is I need 0:18:40.400 --> 0:18:42.439 to be more balanced and if I can get it locally, 0:18:42.480 --> 0:18:44.639 it might be more of a preference. Now, at a 0:18:44.760 --> 0:18:49.120 very practical level, you can see that if you are, 0:18:49.160 --> 0:18:52.000 you know, going out and if you're still buying food, 0:18:52.080 --> 0:18:55.640 because what's what's occurring if you're going out to buy 0:18:55.640 --> 0:18:58.399 your food is not everyone is going to a supermarket 0:18:58.480 --> 0:19:01.720 or a big superstore. What they're doing is they're combining 0:19:01.800 --> 0:19:05.680 that shop with a greater propensity to buy from local stores, 0:19:05.720 --> 0:19:10.000 whether it's the local vegetable store or the local butcher's store. 0:19:10.440 --> 0:19:13.919 And so what is occurring is a greater awareness of 0:19:13.920 --> 0:19:17.320 where things are available, and I think that's been driven 0:19:17.400 --> 0:19:19.919 very much by a kind of a needs perspective. But 0:19:20.000 --> 0:19:24.159 I think over time these two forces, this kind of 0:19:24.240 --> 0:19:26.880 longer term trend that we talked about around purpose driven 0:19:26.880 --> 0:19:32.320 consumption and people starting to be more aware of where 0:19:32.359 --> 0:19:34.960 food is coming from or where goods are coming from 0:19:35.000 --> 0:19:38.920 and what the alternatives are, is going to drive a 0:19:38.960 --> 0:19:41.920 different mix in that supply chain that we talked about 0:19:42.440 --> 0:19:46.520 to be more more regional rather than global. And I 0:19:46.560 --> 0:19:51.320 think that might mean over time us UM ultimately driving 0:19:51.320 --> 0:19:55.000 a better a better carbon footprint for the for the 0:19:55.040 --> 0:19:59.240 food that we consume, but also it might also help 0:20:00.000 --> 0:20:04.040 at a better redistributional value in that food value chain 0:20:04.480 --> 0:20:08.280 to allow the smaller corner shop to survive alongside the 0:20:08.280 --> 0:20:10.920 big store formats UM and I think we were seeing 0:20:11.359 --> 0:20:14.400 some of those changes start to ripple through. So Luke 0:20:14.480 --> 0:20:20.000 and Carl, have there been any um major challenges from 0:20:20.080 --> 0:20:23.919 like from food supply and demand or in other industries, 0:20:24.000 --> 0:20:27.240 even things that would be considered non essential like clothing 0:20:28.240 --> 0:20:31.480 that have been presented by the pandemic situation that we 0:20:31.520 --> 0:20:33.840 haven't talked about yet that that you would like to address. 0:20:34.560 --> 0:20:38.199 On one of the things that that we've seen with 0:20:38.520 --> 0:20:46.720 COVID is that the food business runs to parallel but 0:20:47.640 --> 0:20:51.639 largely disconnected supply chains. UM. It all starts all the 0:20:51.640 --> 0:20:54.920 food starts on farms, not always the same farms, but 0:20:54.920 --> 0:20:59.160 but certainly starts on farms. And then from there, part 0:20:59.200 --> 0:21:02.200 of that food runs through the supply chain that ends 0:21:02.280 --> 0:21:05.040 up on a grocery store shelf that we as consumers 0:21:05.080 --> 0:21:07.600 go out and buy and bring home. Part of that 0:21:07.680 --> 0:21:11.640 food runs through a different supply chain that ends up 0:21:11.720 --> 0:21:17.520 in either restaurants or food service. UM. As food service 0:21:17.760 --> 0:21:23.040 and restaurants effectively shut down, you know, near shutdown of 0:21:23.080 --> 0:21:26.480 most of those across most of the US and frankly 0:21:26.520 --> 0:21:30.600 most of the world, that supply chain dried up, and 0:21:30.720 --> 0:21:35.920 we were left in a situation where the consumer supply 0:21:36.080 --> 0:21:40.199 chain had shortages. UM, we had shortages of you know, 0:21:40.240 --> 0:21:44.400 fresh goods and dry goods, shelf stable goods, and yet 0:21:45.040 --> 0:21:50.879 we also had situations where farmers and distributors to the 0:21:51.480 --> 0:21:55.000 UM to the restaurant food service supply chain had an 0:21:55.000 --> 0:21:58.480 overstock of goods. And so that one of the challenges 0:21:58.560 --> 0:22:03.359 has been how can we figure out a way to 0:22:03.640 --> 0:22:07.720 better integrate those supply chains or at least provide better 0:22:07.840 --> 0:22:12.640 visibility of what actual products exist where, so that there 0:22:12.640 --> 0:22:16.479 could potentially be some intermixing. This is this is one 0:22:16.560 --> 0:22:22.959 of those things that the move toward efficiency over the 0:22:23.000 --> 0:22:28.400 past plus years UM at the expense of agility, has 0:22:28.480 --> 0:22:31.480 cost us. And I think what we see going forward 0:22:31.600 --> 0:22:36.480 is a little bit more balanced between efficiency and agility 0:22:37.040 --> 0:22:42.760 such that you can make a brand, um, manufacturer, retailer, 0:22:43.040 --> 0:22:45.600 you know, anyone involved in the in the supply chain 0:22:46.840 --> 0:22:51.480 can make different decisions in a more dynamic manner and 0:22:51.640 --> 0:22:54.520 change things on the fly because because there are hurdles 0:22:54.520 --> 0:22:58.320 I understand in the way of taking say pasta that 0:22:58.480 --> 0:23:01.280 was in the restaurant supply chain and switching it over 0:23:01.359 --> 0:23:05.240 to the consumer individual consumer supply chain. Yes, there there 0:23:05.240 --> 0:23:08.399 are hurdles. There are some hurdles that and it depends 0:23:08.440 --> 0:23:10.520 on the product category. There are some hurdles that are 0:23:10.560 --> 0:23:14.800 regulatory in nature. UM. There are some hurdles in terms 0:23:15.000 --> 0:23:19.280 of the not as much as the manufacturing process, but 0:23:19.440 --> 0:23:23.360 potentially the quantities and the pack sizes. UM. There are 0:23:23.400 --> 0:23:27.840 some hurdles in the packaging and how those goods are 0:23:27.880 --> 0:23:31.960 aggregated together. I know, just you know, my family, we 0:23:32.440 --> 0:23:37.480 uh purchased some fresh seafood from a seafood purveyor that 0:23:37.640 --> 0:23:43.280 normally sells to restaurants, and it was one excellent but 0:23:43.440 --> 0:23:45.520 to the quantity that you have to buy is not 0:23:45.640 --> 0:23:48.160 the normal amount that you might buy in a grocery store, 0:23:48.359 --> 0:23:51.160 so you have to you know, they've had to adjust. Um. 0:23:51.200 --> 0:23:54.600 They're also not used to bringing things directly to consumers. 0:23:54.880 --> 0:23:57.640 You know, they're used to a simpler supply chain. Um, 0:23:57.720 --> 0:24:01.120 they're not used to transacting by credit card with consumers. 0:24:01.520 --> 0:24:03.600 You know. So there are a lot of hurdles in 0:24:03.680 --> 0:24:06.439 the you know, the making and moving of things. There 0:24:06.480 --> 0:24:08.720 are also a lot of hurdles on the transactional side. 0:24:10.160 --> 0:24:12.080 So this is interesting. Yeah, so that kind of thing. 0:24:12.119 --> 0:24:15.560 Would that explain why we could see these strange disconnects 0:24:15.560 --> 0:24:18.120 where say, I don't know that the dairy shelf fit 0:24:18.200 --> 0:24:20.879 your grocery store might be very bare, and yet you 0:24:20.960 --> 0:24:24.439 also see video online of dairy producers having to like 0:24:24.560 --> 0:24:29.920 discard unused things. Yes, exactly exactly, and you can see 0:24:30.520 --> 0:24:32.879 you know, on on one and so so one the 0:24:33.040 --> 0:24:35.200 there are short you know, the shortages. So the dairy 0:24:35.200 --> 0:24:38.960 shelves being empty also then drives up the price to 0:24:39.040 --> 0:24:42.960 the consumer because there is as as Luke was saying 0:24:42.960 --> 0:24:45.919 earlier there's a big mismatch in supply and demand in 0:24:46.040 --> 0:24:49.320 one piece of the supply chain, yet in another piece, 0:24:49.840 --> 0:24:52.400 the mismatch and supply and demand is the opposite. There's 0:24:52.440 --> 0:24:56.960 an excess of demand. So despite the higher price consumers 0:24:56.960 --> 0:24:59.880 are paying for milk, farmers are having to get rid 0:24:59.880 --> 0:25:02.000 of milk because they don't have anywhere to put it 0:25:02.040 --> 0:25:05.560 in any any place, to any place to sell it into, 0:25:05.600 --> 0:25:08.800 because they may not have that same access um to 0:25:09.040 --> 0:25:12.760 the supply chain that that serves consumers directly. Actually, I've 0:25:12.800 --> 0:25:17.719 been very impressed with what some of the major grocers 0:25:17.720 --> 0:25:21.480 in the US have been doing, where they're actually starting 0:25:21.480 --> 0:25:25.960 to now buy up access supply and sometimes incorporated into 0:25:26.000 --> 0:25:29.159