The Intersection of Value Creation & Industry 4.0 with Dave Sackett, CFO of ULVAC Technologies

What are the tools enabling Industry 4.0 and how should Finance Business Partners incorporate their promises into a broader value creation strategy?   CFO and Industry 4.0 Advocate Dave Sackett, shares the first application at his company, and why filtering a broad variety of information is critical to narrowing down the solutions you really need.  Dave also explains how these solutions are no longer the exclusive domain of large companies as SMBs also start feeling the benefit.  Listen in!

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Transcript

SPEAKER_02: 0:01

Hi, this is Matt Cooley, host of the podcast Upside Downside, where we explore what it takes to be the best finance business partners possible. I'm a finance business partner myself and former president of the New York City chapter of Financial Executives International. Prepare to meet professionals on the front lines of value creation and hear their stories. If you'd like to suggest a future guest for this podcast or be a guest yourself, please reach out. Now on to today's podcast. Please welcome Dave Sackett, CFO of Ulvac Technologies and an advocate of Industry 4.0. Welcome, Dave.

SPEAKER_01: 0:37

Hey, thanks, Matt. Great to be here.

SPEAKER_02: 0:39

Good. Glad to have you. And I think this is going to be a neat discussion today. Can you tell us a little bit about your business and how you came to the role that you have today?

SPEAKER_01: 0:49

Sure. So I started out my career in cost accounting. Started as a cost accountant in Ulvac and took over IT, took over all the accounting, and eventually made my way up to CFO. And my company is in the semiconductor equipment manufacturing business. A lot of high tech, a lot of crazy science, which I really like. And my interest in AI and Industry 4.0 also ties into the hardware side as my company also has that interest.

SPEAKER_02: 1:23

Okay, excellent. So somebody who started out in cost accounting, that's a good path. That's a good path. So you're a speaker on Industry 4.0 and I'm curious to get into that. It's very timely given all the changes that are going on right now. What exactly is Industry 4.0 for those folks that don't know? And for our finance business partners that are listening today, how would you say it intersects with value creation?

SPEAKER_01: 1:50

Yeah, so I would say Industry 4.0 are kind of the newer technologies that are out that are trying to convert everything to digital. And it's trying to use semiconductor technology to really advance value creation at companies with all sorts of technology. And you're seeing it more in bigger companies, but lately there's been some opportunity for the SMBs to take advantage of Industry 4.0 technology.

SPEAKER_02: 2:18

And what are those drivers? What's happening that's making it more applicable to SMBs, do you think?

SPEAKER_01: 2:24

Yeah, there's just so many advancements now of the technology where it can be applied to industry and especially finance. So now it's kind of, they're new, they're different, And it's, you know, one of my roles is try to simplify it for people and try to guide them to, well, how can I really maximize my organization by leveraging these technologies?

SPEAKER_02: 2:47

So, you know, an example. So if we talk about artificial intelligence for a moment, what's the long-term promise of AI from your perspective? And the reason I've asked this is AI seems to vary quite a bit depending on the vendor or company talking about it. And lately, I'm kind of thinking it's a journey that industries and societies are going to have to take themselves before they really understand what AI is. How would you define it? What's your take on it?

SPEAKER_01: 3:16

Yeah, AI is a really broad term. And they're doing some amazing things with AI in terms of medical research and being able to, you know, recreate photos and, you know, face capture, so many like really cool things. And when it comes to companies, you know, my first kind of taste to AI is robotic process automation. And that's where machine learning comes in. And you have a bot that has intelligence that can be upgraded over time. And that upgrade will include AI to kind of help understand the data, help manipulate the data into an ERP system.

SPEAKER_02: 3:57

So instead of a predefined algorithm that an RPA process would have, the system can start figuring figuring out what that process should be itself.

SPEAKER_01: 4:06

Yeah, it's more intuitive, I guess you'd call it, where you would certainly program at a machine level. Here's the invoice number. Here's the PO number. This is where you pull in the invoice amount and your freight and your sales tax. And you can kind of set it up to say, here's generally what you'll find. But over time, as it gets more experience, as it sees your invoices, and none of your invoices will be identical from vendor to vendor. So there has to be some learning, some kind of guessing from the AI to make it not error out into an exception. So as you introduce more and more data to AI, that's how it learns. That's how it helps kind of keep everything flowing.

SPEAKER_02: 4:50

Right. Super fascinating. So there are a lot of new data analytics and related tools out there and some that have been around for a while and that are getting more robust. Do those tools really tell us things about our customers, markets, risk, and so on that we don't already know? Or is this still something that most companies could figure out with pivot tables and simple algorithms if they're writing themselves? And I'm thinking, particularly for SMBs, it's not always clear where the value grows or diminishes with the implementation of another tool. So as a CFO in particular, how do you figure out what you really need versus just picking the shiny new tool that everyone else is buying? Putting you on the spot, Dave.

SPEAKER_01: 5:34

Yeah, no worries. That's an excellent question because it is such, you know, there's almost so much out there. It's hard to comprehend and it's hard to scale down. Something you hear that's awesome at a big company may not be appropriate at your SMB. So for example, I've been out to Johnson and Johnson and I know they're big into RPA. They've got 300 bots. They've got IBM Watson to kind of be the bot governor to make sure everything works properly. It's super tied into AI and RPA and a really cool infrastructure they've got to be and they can measure the return on investment and see how much more accurate their numbers are and more efficiency and speed and that's it's really an amazing thing so now how do you take that coolness and make it you know apply to a small company so in my case I looked at it saying okay where's the bottleneck in my business where are people slowing down where is the process kind of failing today and in my In my case, it was AP because we use a lot of parts in the tools we manufacture. And that was kind of my bottleneck that says, okay, in this, you know, the reason why it's a bottleneck, there's so much data entry. You know, you're taking a digital record that gets printed to paper. Then that paper comes to me, someone keys that back in to make it a digital record again. And then it goes through the process. And to me, that was a waste in our system. And, you know, through automation doesn't need to be that way. If I can get the data digitally, I should be able to take that digital data and move it all the way through the AP without an AP person even touching it. And for me, that's how I kind of introduced my company into industry 4.0 in the finance area.

SPEAKER_02: 7:19

Very cool. So even in an SMB type situation, there's not going to be vanilla applications of this necessarily. Correct. So you discovered that it was a big help in AP. Okay.

SPEAKER_01: 7:33

Yes. All right. another company it might be customer service maybe you want a chat bot because your customer service is being bogged down by phone calls from customers maybe it's you know accounts receivable you want to automate maybe you do a lot of billings to consumers and you want to speed up that function so depending on the business my suggestion is you kind of analyze your business today where's the issue where do you want to improve where do you want to get better sometimes it might be more people you need sometimes it might be technology might be automation technology in specific you know, specifically, and it's kind of that evaluation process where, you know, if you're leading the organization, where am I going to get that return? Where's, you know, how's my system going to improve? Is it going to be through technology, through people or a combination of both? So it's by analyzing your business, really figuring out what a vendor can do for you and what they cannot, and then seeing if you can apply it to your situation.

SPEAKER_02: 8:30

So I'm curious with your company, do you, uh, are you generally open door to vendors or do you invite vendors in after you've gone through that process you just discussed? I mean, how do you stay in touch with what's out there and then decide who to really talk to about solving your problems?

SPEAKER_01: 8:47

Yeah, so I look ahead as a CFO. I'm always kind of looking to see what's coming down, like what are other companies doing? What technology is out there? What are the trends in accounting changes and in finance? So I actively search to try to pull that information into me. I take cold calls on the phone. I take emails. I look up things on LinkedIn. I do all sorts of research and I'm super open to hearing if vendors can help improve my process.

SPEAKER_02: 9:16

I love that. Okay, great. So you heard it there from Dave. Not that all of you vendors should call, but it's not this week. What role can finance business partners play in all of this? Helping figure out these new technologies, how to create value as a company once they're implemented, etc. This podcast obviously is geared towards finance business partners and those folks can be in any size organization, any level of complexity. So where do finance business partners fit in?

SPEAKER_01: 9:52

I see that they fit in helping with strategy, helping with business mapping, helping with how do you grow as an organization? Like how can you learn about what's new? How can you be introduced to things that could help? And by doing that exploration, by doing that, more than just kind of gathering the numbers, I think it's more strategy. It's more, what are the numbers telling us? What is the data saying that we can, which direction should we go in? Where are we having problems? Where do we need to improve? I think that's the kind of advice from finance departments that are going to be more prevalent in the future. Okay, excellent.

SPEAKER_02: 10:36

And it sounds

SPEAKER_01: 10:36

fun

SPEAKER_02: 10:37

too,

SPEAKER_01: 10:37

right?

SPEAKER_02: 10:38

Here's your report, boss. Let me know what you want me to do next.

SPEAKER_01: 10:43

Yeah, it's like, yeah, as the finance person, I gave you a report. And by the way, it looks like, you know, this area of our business needs improvement. This area isn't growing as fast as we want. Our margins are too low in this area. We should probably raise them. You know, things like that, where you're trying to, you know, offer value to your company, not just as someone who reports. It's like you're actually using that data to help influence decisions.

SPEAKER_02: 11:07

What do you think is going, tying it back to the technology aspect that we started this discussion with, what What do you think will help finance business partners be able to talk and counsel openly about how these technologies might help?

SPEAKER_01: 11:24

Yeah, I mean, just getting education, I think, is the first step. Finding out what light companies are doing and finding value. Doing the research in the technology. Being able to kind of have a strategy that says, yeah, we do want to move forward in technology A or B. We think it can help in this way. And leveraging your partners and your vendors to kind of work together on a solution. Test it out. If it works, then you go live.

SPEAKER_02: 11:55

It doesn't sound that different from, let's say, 20, 25 years ago when that conversation might have been around an ERP, a new ERP implementation or perhaps a new tool. It almost feels like you could insert the new stuff into that conversation and being that value creation business partner is still largely the same role, but less reporting than in the past. But what would your take on that?

SPEAKER_01: 12:26

Yeah, no, I agree. ERP systems, that's one thing we did here back in 2013. We had an old legacy Unix system from the late 80s that we were using. We were doing workarounds. We couldn't upload any information. It couldn't auto- email. It wasn't robust at all. And we decided as a company, we really got to get with the times. We need automation. We need more data capacity. We need to be able to automatically upload anything we want into the ERP to reference it to then add automation in the future. So my automation journey really started in 2013. And then since then, I've tried to hook in all these technologies to my my modern ERP system. And that's, you know, when I'm adding things like, you know, document management, making sure that my RPA system can talk to my ERP system easily and to push and pull information. Also to do APIs to something like UPS and FedEx. You know, my ERP system should be able to push out, here's all my information UPS. And then UPS should say, okay, Dave, here's your tracking number. Here's the cost. Here's everything. everything else and pull it back in. So it's, you know, having modern technology and then leveraging kind of these newer things is really the way to go for my organization. When I started here, we had 12 people in finance. Now we're down to five. And we, instead of adding people, we've kind of, as people left, we've added technology solutions to kind of be more efficient and use technology.

SPEAKER_02: 14:06

Oh, very cool. Sounds like that's been a core part of what you've been doing there. That's very cool.

SPEAKER_00: 14:12

Yeah.

SPEAKER_02: 14:14

So where is the finance business partner role headed from your perspective? And think, you know, small all the way up to very large companies. And we talked a little bit about training and stuff like that. But what else should people be doing to prepare for that future now?

SPEAKER_01: 14:28

Yeah. You know, really see where the industry is going. See what people are doing. Getting in the mindset of growth and getting into the, you know, the future. Like what's going to think to yourself, what's going to make me successful in the future? What do I need to do today to be there? And what are the characteristics of employment? What do you think AI is going to do? Is that going to take over all the manual data entry? It's kind of having strategy. It's looking ahead with a plan and some predictions to say, OK, I think the industry is going to be this. And what should I do now to be stronger and to meet that challenge? One thing, for example, data scientists. I would guess as we get rolling with AI and things, you have more and more data to analyze and to hopefully leverage to make you more profitable. People are talking about data scientists being part of the finance group. So they're the people who make sure all your data is tagged properly, it's clean, they can test it, they can find outliers, they can make sure that the data that you're producing is clean, it's accurate, and can be analyzed. properly

SPEAKER_02: 15:44

I like how you frame this because it's basically having a plan and making some predictions and then steering your career in that direction but also you're in between the lines I'm reading you know let's not be too dogmatic because we don't really know how it's going to change so flexibility and resiliency are going to be critical as well

SPEAKER_01: 16:06

yeah absolutely

SPEAKER_02: 16:08

okay Dave it's been great discussing this with you today and I am really appreciate you taking the time.

SPEAKER_01: 16:14

Yeah, no, thanks for having me. This is really cool.

SPEAKER_02: 16:16

All right. And thank you to our subscribers for listening to this episode of Upside Downside. We will see you next time.