Category: Supply Chain

Digital Supply Chain and surviving coronavirus-driven supply chain disruptions – a chat with MSCG

Supply chains have never been hit with so many disruptions at once. A perfect storm of trade wars, an oil price crash, and then the coronavirus have seen global supply chains shocked like never before.

In the midst of this, via a chat on LinkedIn I discovered that MSCG held a webinar for partners and customers on this very topic, so I invited the two webinar hosts, Dr Dan Bhide and Odell Smith to come on the podcast and talk about the comments, concerns, and learnings folks came away from the webinar with.

I think it was a great chat, but don’t take my word for it (I may be a bit biased šŸ˜‰ ), have a listen using the player above and/or check out the transcript below, and let me know what you think.

 

Odell Smith [00:00:00] We’ve been in great times, you know, over the last over the last several years, and and the the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place.

 

Tom Raftery [00:00:19] Good morning, good afternoon or good evening. Where ever you are in the world. This is the digital supply chain podcast and I am your host, Tom Raftery.

 

Tom Raftery [00:00:31] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have two guests, Dan and Odell. Dan and Odell, would you like to introduce yourselves?

 

Dr Dan Bhide [00:00:45] Yes, happy to Tom. Thanks for having us on your podcast today. Really look forward to this conversation. My name is Dan Bhide. I’m a co-founder and partner at My Supply Chain Group. We are Enterprise consulting firm, helping our clients with supply chain stategy, process reengineering and solution implementation in multiple industry verticals.

 

Tom Raftery [00:01:07] Super, and Odell…

 

Odell Smith [00:01:09] Hey. Glad to be here. My name is Odell Smith. I have been with My Supply Chain Group for since it started over 11 years ago. I have been working in the supply chain space for over 30 years and specifically and in I.T. for the last 26 or so and build ITs, architect I.T. solutions for the supply chain.

 

Tom Raftery [00:01:38] Nice, nice, nice. Now, you guys held a webinar a week or so ago addressing specifically supply chain disruption, becauseĀ  we’re in a kind of a crazy mixed up world right now, this is April 2020, the 14th of April 2020. You know, everything in the world seems to have gone to pot. And you had about a hundred or so people on the webinar. And I was interested to maybe bring some of the learnings from that to the audience of his podcast. So, do you want to talk about the background to the webinar first and then we can get into some of the things that come out of it?

 

Dr Dan Bhide [00:02:20] Indeed, we had a lot of other clients calling us, asking, hey, you know, can you help us with these issues vs those issues? And we certainly engage in those activities. What turns out from our experience is this unlike many other disruptions that we have seen in the recent past, whether it was an earthquake or a tsunami, or a fire at a major airport, this one is unique in the sense that quite a few things have certainly assembly together themselves in one place at one time. You know, whether it’s the corona pandemic, whether it’s also the mix of the US-Sino trade war that’s actually been happening for the last couple of years whether it is this certain glut of oil and the rapid decline in oil prices because of that, the fear of recession. All those things are suddenly piled up on us. And a lot of companies that thought they had their business continuity plans put together are now finding that, you know, those weren’t after all that resilient. So that was the reason behind us saying lets take a big picture approach to helping our clients and prospects understand what happened, why it’s happening and what we can do about it. As we go on this conversation we can explain the fact that, you know, beyond going from just issues, impact and mitigation strategies, very able to help clients understand how to actually translate a mitigation strategy into the specific action plans and the specific tasks.

 

Tom Raftery [00:03:44] Okay. Odell, you want to jump in and add anything to that or…

 

Odell Smith [00:03:48] A lot of a lot of this kind of comes down to to information and in the sharing of information. And so one of the one of the only ways that any business is going to be able to get through this is is with collaboration. And so so there’s being able to have information to process and manage internally as well as being able to share with your your vendors and your customers.

 

Tom Raftery [00:04:20] Can I interrupt you Odell for a second just, rather than getting into that just yet, can we take a step back? And we’ve identified the kind of main factors, the drop in oil price, the trade wars and the sudden global pandemic that has shut almost everything down. Those are the big picture factors. But how is that affecting supply chains? How is that affecting organizations you work with? What is it? What are the problems that you guys are seeing out there for companies?

 

Odell Smith [00:04:55] OK. So an example is there’s there’s quite a bit of disruption in in not only in in some of the vendors and suppliers, especially with the the great focus that’s been happening over the last 10 to 20 years of outsourcing, a lot of stuff overseas. And and so there’s obviously enormous impact there with suppliers not being able to provide raw material and/or finished goods to to the supply chains. But in addition to that, there’s there’s logistics impacts as well. So take, for instance, one of our clients has asked us to help them build some what/if simulation capability around port closures. So as these as these products, in addition to the suppliers not being able to provide things, the government mandated closure of of logistics facilities and ports has been a significant problem and a concern with several companies in addition to health and safety measures for the people that work in those areas. So there’s just a couple of examples of of things where things that you wouldn’t normally expect. I mean, sometimes you have union strikes and these type of things, but they’re they’re known more ahead of time. Right. Sure. And there’s a way to be able to try to mitigate some of that. But this is this is urgent, immediate and unexpected in many cases.

 

Tom Raftery [00:06:36] Totally, totally unprecedented to use a word that’s been used an awful lot these days.

 

Odell Smith [00:06:43] Exactly.

 

Dr Dan Bhide [00:06:44] You know, if you think about it Tom, even in the last few big disruption that some of us have read about or been through we were, none of us were around for the 1929 Great Depression, many of us may not remember the 1973 oil shock, but none of them had this confluence of all the events and the disruption of demand, disruption of supply, the disruption of networks. And all that compounded by the fact that most of us are forced to stay home because of social distancing. Many people are losing jobs, and all this confluence of multiple impacts is fairly unprecedented.

 

Tom Raftery [00:07:18] It is. And we here in Spain, they’re now starting to allow some sectors go back to work again in a very limited capacity. But it looks like we’re coming out, you know, slowly, the other end of it. The curve is being flattened, but it’s still… There’s not going to be a vaccine widely available until mid to late 2021. So social distancing and those kind of measures you know, to Odell’s point in the workplace for health and safety. That’s going to be an ongoing factor and possibly access to supplies and things like that we can deal with these kind of things short term but is this something that we can manage for 18 months?

 

Dr Dan Bhide [00:08:11] I guess it’s more do we have a choice about how to manage it. You know one of the CEOs of a big retailer said, “Hey, you know what? There is no playbook. We are doing this on the fly.” And speaking to another client recently, he said because of social distancing requirements we really can’t even have the whole production staff on the floor, for example. And if earlier we were running the line with, say, 20 people on the line, now we have to make do with ten or twelve of them because of social distancing. And that means we are running our lines at says 60-70% of the capacity than I would usual. Now, this is where the ability to look at all kinds of what/if analysis now that I’m running at 70% for example can I open up the third shift? Can I open up Saturdays? And if I do that, do I have an ability to catch up on my demand? That kind of ability to on the fly do these kinds of different analysis and then figure alternative now that you know you have a different harder constraint of not getting everybody on the production floor becomes an issue. And how quickly are you able to do that kind of analysis to have right kind of decisions made becomes a significant challen. If you digitise your supply chains, then that kind of what/if capability becomes a little easier to achieve then if things are still disconnected and maybe worst, even on paper.

 

Tom Raftery [00:09:32] In the webinar that you guys ran what were the primary concerns that people had when they joined the webinar? What were the questions they were asking and what kind of answers did you have for them?

 

Odell Smith [00:09:44] I guess some of the main concerns were around again, back to the data thing trying to be able to understand the impact of a particular situation. In many cases there are there are several different impacts even inside of some of the same companies. Right. You can have massively increased demand in one business unit and devastatingly loss demand in another business unit even inside of the same corporation. So being able to quickly be able to get information on where we think that’s going to go and what the impact of that is going to be is important and being able to simulate what, how am I going to solve whichever side of that that I’m on? One of the things about this flattening the curve thing, Tom, is I get it. It’s important for for the medical response to this. But what that does, in effect is an indeterminately amount extend this issue and extend the supply chain impact for what you’re talking about, a very long duration. Right. That’s a whole purpose of that model of flattening that curve. And and so trying to to be able to put some data, the people that we were talking to were very concerned about how how to model that. Right. So that they could so that they could plan effectively and then try to, you know, come up with different scenarios where they might be able to make it through. There’s a lot of capability to do things to to try to substitute products where available and to be able to maybe, maybe delay demand spikes or, you know, change promotions and and pricing things that were going to affect demand and that type of thing to be able to shift some of those things around. Those are those are very doable. Those wind up affecting then the supply and how it’s supply is going to be able to make that. So there’s a balance that you can do with that. But being able to simulate that and see that have the visibility of those is some of the biggest concern, because a lot of people have not put in some of some of the new capabilities to be able to visualise that stuff. And that’s that’s an important piece of this concern anyway. Not being able to see.

 

Tom Raftery [00:12:30] So Odell, if I remember correctly, I think you said you’ve been in supply chain for 26 years. Yes. If this had happened 25 years ago as opposed to today you know, what are the differences in the supply chain solutions that are available today versus ones that were available 20 odd years ago? What can companies do now that they couldn’t do then? I mean, we were chatting away here on a podcast recording platform that allows us to see each other’s faces. We’re working from home using Zoom and similar technologies, things that could not have happened 25 years ago. How does the supply chain world compare?

 

Odell Smith [00:13:14] It’s even it’s it’s hard to even imagine back then the the being able to have a) this happening, but but the capability of being able to to function as well as we’re able to. I mean, there is still an amazing amount of business that’s being accomplished because of technology, just like what you’re what you’re describing here. So as an engineer, before you know, it got into the I.T. side of the supply chain working in manufacturing there, there were there were these same type of of of problems. But it seems like there has been this kind of just in time mentality that’s that has really shortened the supply chain, has reduced a lot of cost and has and has taken a lot of the flexibility out of the supply chain over the last several years. And and that that flexibility then is has done a great thing for reducing prices and increasing margins. And it’s a it’s a great thing for the business. But it also I think this is a bit philosophical, but it’s kind of, we’ve been in great times, you know, over the last over the last several years. And and that the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place. Back to your technology question. So there’s going to be a focus on that going forward that hasn’t been there in years. And this whole just in case logic that we discussed in our webinar is going to be much more tied to the just-in-time thing and there’s going to be a balance there. The new technologies that we’ve that we’ve seen come available, especially in the digital revolution, where we’re able to quickly put data in to a system and be able to get valuable results out of it from partners is probably one of the biggest, biggest benefits. So our being able to see the entire supply chain and then be able to collaborate with the cloud technologies with with partners on on from supplier side as well as in the in our manufacturing and processing as well as through to the end customer. And being able to collaborate is the biggest advantage that I’ve seen here in the technology. And that’s that’s a large piece of that is going from on-premise to the cloud. Right. And those those are the biggest the the biggest advantages. And then the tool sets inside of those that that allow more flexibility and visibility in the analytics that are real-time, where we used to have to wait days, you know, to be able to get data in a place where we could do analytics on it. Those are the main pieces for me.

 

Tom Raftery [00:16:32] All right. Dan, have you anything to add there?

 

Dr Dan Bhide [00:16:34] Sure. You know, just as the technology has evolved, you know, most of us hadn’t. Maybe the word digital supply chain wasn’t coined 25 years ago. Now it’s a reality for us. You know, and some of us had been leaders, some companies had been forced to follow that, you know. The expectations of consumers have changed as well over the last 25 years, you know, when you thought of getting a product within a week was good enough. Now, here are the Amazons of the world offering the products overnight or even sometimes the same day. So some brick and morter have been forced to go there as well. What that has done is we all talk about the 3 V’s of supply chain, the velocity of supply chain has been forced to increase big time. The visibility also is required to go literally not just within your own silos or breaking the silos, now we’re talking about visibility across the whole network you know from supplier’s supplier to customers, customers. And then there’s also expectation of variability how do I reduce my variability in my supply plan so that I can assure for Tom delivery of his product that he ordered tomorrow morning or even today evening. So expectation of reduced variability, expectation of increasing velocity and expectation of increased visibility has been forced upon the client companies as well.

 

Tom Raftery [00:17:51] And we’re at to almost 18 minutes mark now and I like to keep this podcast to about 20 minutes. For people who are listening who were unable to attend your webinar. What advice would you give them going forward where we’re headed into a world of possibly 18 months of social distancing. You know, maybe there’s a vaccine comes out sooner and maybe it’s, you know, nine or twelve months or whatever it is. But we’re heading into a world of a lot of unknowns, you know, and we’ve had this triple whammy hit us now, what advice would you give to people who are running supply chains now moving forward?

 

Dr Dan Bhide [00:18:33] You know, one of the things a caution is that this priming the pump, once things start getting normalised to a new normal, I mean, is going to be excruciatingly complex and time consuming. So that is something that they’re already dealing with. But this priming the pump, meaning getting back to a new normal, is going to take weeks, possibly months to happen. And that means that we have to now look beyond the short-term mid-term plans to look at the Long-Term Plans, having the business continuity plans in place and also literally doing a monthly new scenario’s of what/if, and to mitigate the risk and most importantly focus on the fact that what you do now is going to redefine your competitive ecosystem as well, because some companies will be able to handle this well, some won’t. And that’s going to create a new normal and a new competitive landscape. So see this as much as an opportunity, as a disruption or threat.

 

Tom Raftery [00:19:32] Ok Odell…

 

Odell Smith [00:19:32] So there’s there’s a lot of companies where executives are down on the shop floor packing warehouse boxes right now, trying to to to be able to just get through this. Right. And and that is absolutely required. You just have to do what you have to do to be able to make to make this work. All hands on deck. But at the same time, there has to be some level of strategy where you do like Dan was saying, where you you look for ways that you can take advantage of this and that you can get out of execution and start trying to do some of that forward planning and being able to being able to focus on the entire chain inside of your corporation with a value chain, but the entire supply chain and work on collaboration, with your suppliers and with your customers, to see what they are seeing right as what their demand is and to be able to figure out how you can best supply that, you have to you have to spend some time on that, even in the middle of, you know, working 14 hours a day packing boxes to try to get things out. And so the it’s not necessarily a time to to go and do a full system implementation, but there are there are ways that technology can help in this digitisation, the digitisation that we’ve just talked about. That was a little bit tough to get out! There are there are ways that that you can use information to help expedite that collaboration. And I couldn’t I couldn’t emphasize the collaboration with customers and vendors enough in that scenario.

 

Tom Raftery [00:21:25] OK. Last question, guys. Is there anything that we haven’t talked about that you think we should have talked about? Anything that you’d like to bring up that we haven’t hit on just yet?

 

Dr Dan Bhide [00:21:36] One quick comment from me and as I was referring to earlier, it’s one thing to comprehend the big picture and talk about mitigation strategies. I would align that to maybe a 80 to a 20 thousand feet level thinking, but it’s a whole another world translating those mitigation strategies into really what enables us to translate that mitigation strategy into action plans. So this is where the expertise matters. How do you translate the so-called one-liner mitigation strategy into 20-30 action items or tasks, whether they’re on the system side, on the people side, on the process side, on the policies and practices side, how do you come up with the new KPIs for resilience as against traditional KPIs for efficiency and just-in-time because those are the challenges that one needs to really think through.

 

Tom Raftery [00:22:31] Odell…

 

Odell Smith [00:22:31] I think being able to look back at this and be able to think of what worked and what didn’t work is going to what is going to wind up being of value as well. It’s it’s almost impossible to do that while you’re in the trenches. But take take notes about about what’s going on and and what worked and what didn’t work and then where you might want to, where you might want to have things perform differently in the future. Most of our planning solutions are are based on data that happened in the past. These anomalistic times that we’re in are going to cause many, many outliers. But there is also going to be a new normal that’s going to come out of that. There’s going to have to be a focus and an analysis on that data to have good plans going forward in the future. And that’s probably a complete separate podcast discussion around innovations and that type of thing. And, you know, being able to use advanced machine learning and AI to be able to support some of those quick decisions. But that anyway, that’s that’s that’s something that’s necessary to do for sure.

 

Tom Raftery [00:23:52] Gentlemen, thank you very much. If people want to know more about yourselves, Dan and Ordell or MASC Gee, where would you have me point them?

 

Dr Dan Bhide [00:24:01] They can go to my supply chain group dot com and they can call us as well. But my supply chain group dot com, one word is the place they can reach out to us.

 

Tom Raftery [00:24:13] In that case, gentlemen, thank you very much for your time and your expertise today. It’s been it’s been a pleasure talking to you.

 

Dr Dan Bhide [00:24:20] Thanks for having us Tom. It’s my pleasure.

 

Odell Smith [00:24:22] Yes. Really enjoyed it. Thanks for the time.

 

Tom Raftery [00:24:30] OK. We’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot com if you’d like to show. Please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find a show.

 

Tom Raftery [00:24:57] Thanks. Catch you all next time.

 

[00:28:56] Super. Super. That’s great. Claudio’s that’s been fantastic. Thanks a million for coming on the show today.

 

[00:29:10] OK, we’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot com if you’d like to show. Please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find show.

 

[00:29:38] Thanks. Catch you all next time.

 

And if you want to know more about any of SAPā€™s Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please donā€™t forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

 

 

 

Life in Spain under lockdown

Today is April 14th 2020 and it is our 32nd day under the Coronavirus lockdown orders here in Spain.

 

I thought I’d paint a little picture for you of how life has been for us since the state of emergency was declared by the government on March 14th. Spain has one of the tightest lockdowns outside of China with people being required to stay home except for trips to the grocery store, trips to the pharmacy for medication, and to walk dogs. Dog walking can only be undertaken by a single adult (no couples, no kids) from a household and has to be within close proximity to home. Fines starting at ā‚¬600 and up to ā‚¬30,000 are meted out for any infractions.

Sign announcing Parks Closed
Sign announcing Parks Closed

I took my dogs out for a walk on the first morning of the lockdown and passing a kids playground I saw a sign from the local council stating that the park was closed due to the Coronavirus. Schools had been shut the previous day so the council didn’t want children congregating in parks, potentially infecting one another. The sign was dated the day before the the state of emergency lockdown, and so the Stay at Home order very quickly made it redundant!

 

Empty meat counter shelves
Empty meat counter shelves

I went grocery shopping on day one as well, and found that while there was no shortage of toilet roll in the shop (!), the meat and fish counters had been stripped bare. The only thing remaining was a few plant basedĀ Beyond Meat burgers, so I finally had an excuse to introduce them to my family (two of us loved them, the other two, not so much).

 

Store sign requiring use of gloves
Store sign requiring use of gloves

In the following days, the supermarkets’ supply chains stepped up and now there are no shortages in the stores. Practices in shopping have changed though. Shops are pushing people to shop online and choose home delivery as much as possible. Delivery times are typically reasonable and usually come within 24-48 hours though you can be unlucky. If you do need to go to the store, shops now provide disposable gloves for shoppers and require their use when using a trolly or shopping basket.

 

Keep your distance and pay by credit card
Keep your distance and pay by credit card

Physical distancing is enforced when queuing to pay, and most shops now shun cash in favour of contactless credit card payments.

Interestingly Amazon delivery times are way out of whack. I don’t know if this is just a Spanish thing, but ever since the pandemic hit delivery estimates have been in the order of weeks for most orders. However, having then placed the order, it more often than not arrives in a day or two rather than the weeks that had been estimated. I’m assuming Amazon are still adjusting their logistics, taking on lots more companies, onboarding them, etc. so this too will be sorted in time. The good thing is that they are erring on the safe side, not promising delivery in a day or two, and then taking weeks to deliver!

 

Graph of penetration of Fibre to the Home internet connections by country
Graph of penetration of Fibre to the Home internet connections by country

Apart from the good weather, another advantage of being based in Spain is that at 44%, Spain has by a significant margin the highest penetration of Fibre to the Home (FttH)Ā internet connections of any country (Portugal is next closest with 37%). This investment in infrastructure is now paying big dividends with so many people needing to work, or continue their education online. My home connection is a 600mb synchronous connection, so four people simultaneously video conferencing doesn’t put too much strain on the connection. Very occasionally there are glitches in the video connections, but I put that down to upstream congestion with the increased traffic on the network.

Classes are being delivered online
Classes are being delivered online

Classes are being delivered online using a combination of Zoom, and Google Classroom. Fortunately the school my sons attend made a decision a couple of years back to issue all the kids with iPads, and deliver all their educational material that way (i.e. they have no physical textbooks). The unintended positive consequence is that all the kids in the school have their own tablet containing their curriculum, and because of the high penetration of fibre, most have a decent internet connection. As a result of this, the school hit the ground running and the transition to delivering lessons online was made that much easier. This is a public school btw.

 

Virtual family lunch
Virtual family lunch

Other changes – traditional big extended family lunches at weekends have been replaced by virtual get togethers with the family on Zoom. It is not the same, to be sure but it helps maintain a semblance of normality.

Finally, I do venture out to walk the dogs daily. Part of my walk brings me past a (formerly) busy intersection. Now that intersection is eerily still with only the very occasional car passing. And now you hear the sound of birdsong there instead of the constant growl of heavy traffic.

 

Air quality February 2020
Air quality February 2020

 

Air quality March 2020
Air quality March 2020

The air quality has improved, as you’d expect as well. I carry a Plume Flow personal air quality meter with me at all times so I have air quality data for this area going back many months. The two screens above show the air quality in February (before the lockdown) and March (two weeks after the lockdown) respectively with the February screen having large portions of the air quality map being either yellow (moderate air quality with an Air Quality Index (AQI) of 21-50) or red (high pollution with an AQI of 51-100). Two weeks after the lockdown though and the air quality index is reading under 20 almost for the entire walk, which is a vast improvement.

 

Daily new Coronavirus cases in Spain
Daily new Coronavirus cases in Spain
Daily new deaths data from Coronavirus in Spain
Daily new deaths data from Coronavirus in Spain

These last few weeks of lockdown from the pandemic haven’t been easy, there is no doubt. But the outcome speaks for itself. The cleaner air is welcome, sure. But the fall in new infections and the fall in the number of people dying daily from this pandemic here in Spain is very welcome. If you are in the early stages of a lockdown, look at those two graphs. This will happen where you are too if the proper measures are taken to enact and enforce a lockdown.

 

Yesterday the Spanish government partially re-opened sectors of the economy to allow some people back to work. They required everyone travelling on public transport to wear face masks and they had police and volunteers in every public transport station handing out masks to those people who didn’t have any.

Was it too soon to re-open the economy? Possibly it was. We will know in one-two weeks time if we see the number of new cases increase once more. We are all just feeling our way in this new world. Until there is a universally available vaccine I think we will have to proceed extremely cautiously on all fronts. Stay healthy, stay safe, and above all, stay SANE!!!