Leaders in Supply Chain and Logistics with Radu Palamariu

#51: Wolfgang Lehmacher Former Head of Supply Chain and Transport Industries, World Economic Forum

August 07, 2019 Season 1 Episode 51
Leaders in Supply Chain and Logistics with Radu Palamariu
#51: Wolfgang Lehmacher Former Head of Supply Chain and Transport Industries, World Economic Forum
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Leaders in Supply Chain and Logistics with Radu Palamariu
#51: Wolfgang Lehmacher Former Head of Supply Chain and Transport Industries, World Economic Forum
Aug 07, 2019 Season 1 Episode 51
Radu Palamariu
Wolfgang Lehmacher, a global thought leader in the world of supply chain and former head of supply chain and transport industries for the world economic forum.
Show Notes Transcript

Wolfgang Lehmacher, a global thought leader in the world of supply chain and former head of supply chain and transport industries for the world economic forum. During his career, he has been heading and supporting country, regional and global innovation, expansion and investment projects of Fortune 500 and other leading companies, as well as startups, social enterprises, and not-for-profit organizations. 

Discover more details here.

Some of the highlights of the episode:

  • Initiatives at the World Economic Forum around transportation, logistics, and technology
  • The two mega-trends in the Supply Chain 
  • Shipping and aviation industries impacted by CO2 emission reduction bills
  • Which countries are leading the way in implementing tech 
  • AI, cybersecurity, and financing tools around the world
  • What is needed for the CEOs and board members of the future
  • What skills does the industry need most


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Speaker 1:
0:00
Hello and welcome to the leaders in supply chain podcast. I'm your host Rapala Mario, managing director of eloquent global. Our mission is to connect the supply chain ecosystem in Asia and globally by bringing forward the most interesting leaders in the industry. And it's my pleasure to have with us today. Fourth of all of them. [inaudible] a global thought leader in the world of supply chain and former head of supply chain and transport industries for the World Economic Forum during his career of all of them has been heading and supporting country, regional and global innovation, expansion and investment projects of fortune 500 and other leading companies as well as startups, social enterprises and and non-for-profit organizations in roles such as president and CEO, Joe Post Intercontinental, which is the express parcel holding a French post. Um, he's also been a TNT Europe in several regional management roles. And of course, uh, last, uh, last, uh, role that he held was as director of supply chain and transport industries at the world economic forum is numerous publications such as the books, how logistics shapes our lives, logistics in the light of urbanization and global supply chain. Explain the importance of supply chain transport and logistics for economy for society as well as the need for the continuous transformation of the global economy towards a more circular and sustainable model. A Vogan pleasure to have you with us today and thanks for your time.
Speaker 2:
1:18
Bravo. Thanks for the invitation. Um, so
Speaker 1:
1:23
let's, let's start a little bit with the, you know, World Trade Organization, a World Economic Forum, organizations that you know well, that you've been part of and that have basically been, um, uh, at the forefront of encouraging investment in new technologies to promote economic development. And maybe if you can tell us a little bit about some of the initiatives that you've been involved during your time there and, and, and what were the most interesting outcomes of it?
Speaker 2:
1:48
With pleasure. In my early days at the World Economic Forum, I was involved in the creating the global alliance for trade facilitation. The alliance brings together governments, businesses as equal partners to identify opportunities to address unnecessary red tape and delays at borders, uh, to uh, accelerate, uh, processing of imports and exports of the alliance is very, very practical. Um, it shows clear impact, for example, a 27% reduction in physical inspection of food products at Columbia's borders. Another initiative was for example, an open communication published at Forbes of 10 global CEOs including David Apnea, ups and uh, Cern School of AP Mother Mosque. They demanded the reboot of global trade. The communication was launched in January, 2018 to support the, uh, discussions and claims at the World Economic Forum and young meeting in Davos. And a key our asks have been to bring trade laws into the digital and services area and to, um, continue with trade facilitation measures in the world, which, uh, goes a bit backwards in, uh, in this respect, uh, to streamline customs and, uh, to make trades more inclusive. Finally, I have, uh, been involved in a lot of research and work around the nature and the impact of the fourth industrial revolution. Uh, the, uh, supply chain 4.0, if I may call it like that. And uh, in that respect, I, uh, published a numerous papers, facilitated them, worked with academics, uh, and international organization in this based off of logistics. The last paper was uh, uh, about the status of the implementation of the digital supply chain in Latin America, a joint project between the World Economic Forum and does
Speaker 3:
4:12
B. And as you've been exposed to different continents, different ways of uh, I mean different types of views or symptoms of the leaders, um, in, in, in the different parts of the world. Maybe you can you share with us a little bit the differences and the similarities in terms of how these initiatives, uh, take place shape up in the different parts of the world. Right. There may be North America versus Europe versus Asia, South Africa. There's some key points that you'll see.
Speaker 2:
4:42
The Global Alliance for trade facilitation focuses on emerging and uh, these developed markets. So they are, they are very practical and they are focusing on the foundations building, the foundations of trade facilitation. Their study in Latin America showed as well that, uh, Latin America is at the beginning of the awareness. Uh, and the understanding, um, major challenges in that in America for digital transformation, for example, low labor cost technology pays off when labor costs are, are high in the United States. I think the technology ecosystem is, is as active as, as ever, uh, despite, uh, some headwinds, uh, coming from Washington, um, in China and alternative ecosystem is emerging alternative to the, uh, tech power United States of America driving as well, uh, new standards into, uh, the world markets. And, uh, uh, do you see that in the telecommunication, uh, sector and, and the whole discussion around [inaudible], uh, knowing that club is, is very, very active in Europe.
Speaker 4:
6:10
Yeah.
Speaker 3:
6:10
Yes. Um, in terms of the mega trends and you've been, you've published several publications in articles and you've done quite a bit of research, um, over the course of the last couple of years and you see these mega trends that are shaping up at the global level. From a supply chain and logistics perspective, what do you see as the most prominent ones of this trends in the next five years and which are the more practical to implement once let's say in the world of business as well as government?
Speaker 4:
6:37
Okay.
Speaker 2:
6:40
The two trends which I would like to mention, uh, are related to to what I've said before, but also to my passion. And the, the first is technology and, uh, the digital transformation of the supply chain, which is a mega trend and a highly complex and uh, and brought. And then the second is about sustainability. And, uh, do you need for more responsible behavior but also practices? I believe that technology will transform the supply chain within the next five years. We are at the beginning and uh, I currently see, uh, Internet of things moving a fastest, uh, but that the Internet of things brings into play. Uh, the platforms, the analytics, uh, build around artificial intelligence, machine learning and deep learning. Also the telecommunication side. Um, the, the purpose of Internet of things, platforms, analytics is end to end visibility of the supply chain for, for many, this is a given, but it's not the reality.
Speaker 2:
8:02
And within the next five years we will see significant advancements here. What has to be seen are the developments around, uh, technologies like three d printing and blockchain. But I believe they will as well, um, play a bigger role, uh, in, in the field. Without technology, we can not achieve the, uh, sustainability targets to, uh, avoid massive damage to our civilization. And the movement has started on Oh six, October, 2016 governments industry and civil society representatives agreed on the global market based measure to control CO2 emissions for international aviation, for example, among the measures of weight reductions, higher efficiency of engines, biofuels and optimized optimized routes. And this is mainly about technology and using new materials, science, uh, et cetera. However, without effective offsetting schemes. And I would like to mention that the ambition ambitious targets will not be met. So we need to find ways to finance, for example, carbon sinks, uh, responsible then to use, uh, with, uh, the credits, the carbon, the carbon credits. Um, the shipping industry was, uh, following the, the aviation industry and, uh, cut the deal on 30th of April, 2018. And the measures around reducing or capping sulfur dioxide will come into forced first January, 2020. The compulsory switch will affect at least 60,000 vessels, and it's n is estimated by shipping executives to cost up to 50 billion US dollars industry-wide. So these are trends which will have significant impact on the way supply chains are designed and costs.
Speaker 3:
10:26
And it's already, I mean, what I'm, what we are also seeing in it, it happened, it's happening on a, on a global scale for sure. Like you rightfully mentioned. It's, it's across. So it's shipping is aviation, consumer goods packaging. Now it's a big trend in terms of developing new, um, sustainable, recyclable, reusable type of, uh, materials in terms of the packaging, uh, the goods. Um, as well. And I, I think you actually wrote about also this example, which I liked about a lot, um, in which three large banks teamed up with a supermarket chain, a Sainsbury, I think it was as well as the consumer good, um, company, Unilever to launch a distributed ledger system. So basically that's a blockchain I think in, in, in, in layman terms though a lot of people understand really why is blockchain, but, uh, basically a system that, um, that would reward the tea farmers who use sustainable methods with cheaper finance and to encourage them to keep, keep doing that. So that's another way. And another example in which the FMCG industry and the finance industries working together, which is, which is great, maybe, um, I wanted to also to kind of go into the, into the part where you have a lot of, um, issues around fraud and risks in terms of trade and international trade and international trade transactions. And I think, again, you had a very good example about one of the banks that apply the blockchain technology to reduce the time for submitting and
Speaker 2:
11:54
verifying these type of transactions from over a week to two, just two and a half hours, I think it was. So, um, maybe if you can give us some more examples in which technology, um, our successful technology implementations have been used to mitigate this fraud risks to create also more efficient financial systems within the world of trade.
Speaker 4:
12:15
Okay.
Speaker 5:
12:17
Yeah, I think this is,
Speaker 5:
12:22
I think the example is the development in the attire economy. I think that digitalization per se makes processes transparent and therefore fraud more difficult, but it creates also new opportunities and new threats and supply chains have already been damaged. For example, following Pitt and not Petya ransomware attack in 2017, um, some companies had to write off significant amounts of money. Everything that is digitized can be analyzed though through AI Tools, uh, digital agents who can police our, our systems. And, and it is industry agnostic because everybody has email systems, customer databases, uh, backbones of the operation. So in fact, every one is exposed to too fraught crime and cyber attacks. And the AI developments are for me, the, the key enabler for protection. And it is a race because what you can do to protect you can also use to harm a system in terms of of efficiency. I think it's a question of, of how one digitize its, uh, just digitizing an inefficient analog process will not give you an efficient operations. So, um, digitization requires a rethinking of the way we do business that the business models but done well. Digitalization, yeah.
Speaker 2:
14:20
Have enormous impact. And that coming back to the world of trade, if you're thinking about, uh, uh, electronics in your windows, which, which is digitization of, of border processes in selling Senegal, um, these, uh, m proved, uh, processes in a digital way, uh, reduced politically preclearance and clearance processing time by 90% from an average of two weeks to just one
Speaker 5:
14:52
day. So that is a good example of how digitalization will change our world.
Speaker 3:
15:01
Fantastic. And I wanted to actually building upon that this question that kind of prompted in my mind, um,
Speaker 6:
15:09
okay.
Speaker 3:
15:10
I mean sending God is, is, is obviously for that to have been implemented, the government to step in, they had to have the foresight and the drive to make it happen. What do you see as differences in the World Economic Forum? Obviously it's a platform with which works extensively with governments in terms of countries and again, we don't need to name them necessarily. They'd make faster advancements in this direction versus countries that may be your governments that maybe take a little bit longer because this is, it seems like a almost like, um, uh, obvious, uh, I think to do for a lot of other countries. But, you know, probably a, as far as I know, there's not a lot of them that do the same thing as an analogy.
Speaker 5:
15:50
I think it's a always a question of leadership and the given context. So the first prerequisite is the leadership.
Speaker 6:
16:02
Okay.
Speaker 5:
16:03
Needs to be willing to make the change.
Speaker 5:
16:08
But even if a leadership team is willing to do this, they might find themselves caught in realities which are adverse to their plants. This could simply been be the, the legacy of, uh, uncoordinated activities of different ministries, uh, not clearly defined areas of activities. Um, this can be overcome. And we saw that here in Asia through the implementation of a coordination ministry. Um, it has to do with budgets because the systems are sometimes costly. Um, so I, I think, I think those are the tool. The two critical areas are willing government and, and the context. And if you take Europe, uh, Europe is a complex, uh, economic block and, uh, implementing the digital transformation plants is a, is a very heavy undertaking. Uh, we see this as well in other young, I think the first, the physical phase of, of integration went well. The digital layer causes a bit of a challenge.
Speaker 3:
17:38
And I'm moving a little bit into the area of ecommerce and, um, and we have marketplaces, huge marketplaces and obviously kind of a bipolar, bipolar. You're, I go by me buying a, no, anyways, it's between, um, I'm missing the word now, but he's between Alibaba and Amazon globally, pretty much. They're the largest, largest players in this, um, in this space. Um, Amazon has a major lending operation in terms of financing as well to small merchants. Um, Alibaba also have, um, uh, have a, obviously an arm that does financing. So I wanted to ask you if this two players they start acting more and more like banks, would this power over their merchants bill pose some risks to the merchants that eventually, how do you see this kind of dynamic
Speaker 6:
18:29
[inaudible]
Speaker 5:
18:30
first MSN and Alibaba have brought totally new services and experiences to the market, have given the merchants, uh, new possibilities which were not available before. And financing is a big, big topic, especially in the SMEs space. Um, the global financing gap is estimated to be around one point 5 trillion US dollars and the majority's in the Asia Pacific region. Having said that, there are always dark sides to a, to the opportunities and um, although efficiencies have been eliminated, new value opportunities created, there is always the risk that, and we speak about giants, that market power can be used to even slow down developments because it's not any more the market driving, uh, the, uh, the improvements, it's single players. And we have seen that with Microsoft. Uh, and the Microsoft case between, uh, the company and the European Commission is, is, is well known and it was just about the simple media player, but Microsoft blocked others to integrate. Um, they are players and uh,
Speaker 5:
20:10
I leave it up to others, but, uh, some say the Microsoft, uh, player was not as good as what others where we're offering. And as recently as last week, Amazon's use of merchant's data triggered an EU antitrust investigation. So, and it's not on the EU or Europe around the world, people think, uh, now a lot about whether the power of e-commerce giants is driving always the into the right direction. It's a very hard, hard call for, for the regulators. But, uh, they will make sheet, they will make sure that, uh, the use of data when not to, uh, lead to situations where a rivals are just shut out and consumers suddenly have to accept inferior product and service quality
Speaker 3:
21:19
and rightfully said it's happening. Um, I mean the one in Europe, um, by is probably than the newest one in, in, in the series related to, to Amazon. But a, you know, there's, there's more and more calls and more and more voices also arguing in different other parts of the world. Um, so I'm, I'm also suspecting that, that this will be a thorny issue that will have to be resolved at the government level because at the end of the day, um, there's some regulations that need to be put into place to make sure that the competitiveness of the market is still there. Um, and bringing a little bit the, the discussion to all the different, uh, digital initiatives that are happening in Asia specifically. Right. And we, we had, where we recording business. Singapore, Singapore has done a very good job in terms of, um, uh, creating a national trade platform, for example.
Speaker 3:
22:10
Um, you know, Dubai, anything, they have their, their blockchain initiatives. So there's a couple of initiatives also in the Middle East. Um, also in China for example, they, they did a tremendous job in terms of Fintech and pushing the adoption of, uh, payments, uh, done in that way. And you almost, uh, find, uh, find it very hard to pay anything with cash anymore in China. So there's been some tremendously fast advancements in terms of implementing of technology in Asia Pacific. Do you see, and it's a little bit of a leading question, but do you see that, um, there may be some of these countries have taken a lead. What have they done well? Are there, you know, certain things that other parts of the world can learn from them? How do you see this whole, um, situation?
Speaker 5:
22:55
Different cultures have different approaches to, to technology and uh, to shaping their worlds. Uh, for example, Germany is much more conservative than uh, the UK or France. What, what you explained is the, um, successful build up of ecosystems and uh, this in in favorable cultural and environment, um, in, in Europe you have also a Singapore, London is, is very similar in the approach to, uh, to Singapore when it comes to technology. It's building an environment which, uh, is incentivizing innovation
Speaker 5:
23:49
by relaxing a regulation in certain fields and supporting startups. And this is what, what Singapore is doing. What is amazing in Singapore for me is that it is probably the champion in importing innovation. Uh, Singapore itself is a platform of talent and exchange. Uh, the innovation comes usually from outside. A big, large, uh, uh, MNC is built the innovation centers here. Uh, Airbus airbases testing, flying taxis. Uh, they asked for, for proposals, for self driving trucks. They were the first, uh, developing a space for self driving vehicles. This is what, what I mean. Um, and uh, I think this is the, the DNA of Singapore from the beginning is to, to find ways to survive and thrive in a very competitive environment. When it comes to China. China has no choice. The sheer size of China it has really reach. Now, uh, also in terms of economy needs technology to remain manageable.
Speaker 5:
25:20
Just imagine that some companies have 200, 300,000 people. They are still growing, uh, significantly. How can you manage some, the 500,000 people without technology? At a certain point, the management, uh, understands that let's use AI. Uh, let's loot yet. Let's use robotics. Uh, because such a workforce in, in one country, you are not talking about the global organization. It's just not manageable anymore. And, uh, this can be transferred in many areas in, in the China system. And, uh, therefore China has from the top, uh, of, uh, now quite some time driven, the very aggressive, uh, technology revolution.
Speaker 4:
26:12
Okay.
Speaker 1:
26:14
Moving a little bit to the practical companies specific, uh, field and um, the MNCs and the, and the, the, the world of a business. What do you think are some, let's call them no regret, actions that companies can and should make? Um, SAP in terms of when, when it comes to technology to innovation to things that they can implement to make themselves better ready for the future.
Speaker 5:
26:47
Those who can, should replace their it legacy systems, don't those who can. Um, it is not an easy undertaking as we have seen with the torture post. DHL, uh, there went wrong in one of their, their business units and had to write off 345 million euro in 2015. I think that shouldn't hold us back. Uh, because the system, they plan to replace, uh, dates back more than 30 years, so they have to do something about this. Uh, and I'm sure they will work on this again. Um, and speaking about DHL, they are with the innovation center. They are very active in adding technology to their business model. And, uh, in all the fields I mentioned before, which is iot platforms, artificial intelligence, robotics, um, what is important, um, for maybe the smaller companies is that they think through what are their pain points. So what are their, their struggles, they are not able to resolve with the technology.
Speaker 5:
28:09
They have it at hand and then either with their own resources or with the help of others, uh, establish a technology roadmap for relevant technologies which might be able to, to solve these, um, issues. And, um, this also leads to, um, to partnerships. So there's definitely value in setting up and leveraging partnerships in the space of monitoring, but also in the space of development, development, uh, experimentation. Why do it alone? Why not do a, doing it with other companies in the ecosystem that also, uh, reduces the risk. It's not a, an initiative term driven by one, but by the collective. And, uh, everybody is aware and, and can work, uh, towards the common goal. And, and finally, digital transformation, uh, and the fourth industrial revolution is as much about people as it is about technology, meaning the successes driven by people, not by the technology. The technology delivers the ingredients for solutions which have to be built by humans and have to be implemented by humans and have to be used it and monitored by, by humans. So, so the, the human factor and the, and the whole training, governance, structuring of the business is part of the thinking process around, uh, digital transformation.
Speaker 1:
29:59
If I may just add on the point of, um, uh, it and legacy systems. And we also live in increasing the age of speed. And, uh, there's a lot of, there's been a boom literally in the, in this space of supply chain logistics of software as a service providers that are coming up, um, really fast. And there's different solutions out there that are able to aggregate, crawl and get your data in a, in a very, uh, fast manner. So I was to the point where you can create a digital factory in two to four weeks. Um, you know, the solutions for that. On the logistics side, you can, um, you can implement a new system within four to six weeks. I mean, of course the fundamentals and sometimes there's, there's a lot of things that need to come into play, but there are ways to do it in a pretty fast way.
Speaker 1:
30:48
Um, also the models, what I'm seeing at least is that the, uh, more maybe what's holding back some of the companies that they feel they need to own the IP to own the solution when, whereas if they were to let go a little bit and say, look, we can't develop this as fast as we as fast as some other people that are working on it and maybe being bringing it back to the point of DHL eventually they went actually for cargo wise and cargo wise as a, as a solution. Um, as well as well adopted across the industry. They have a lot of plants and it may be easier, right? If you kind of balance it out. Okay. What's the core of our business. We want to own that part. Right? But whatever is maybe not escort, let's use the best in class and let's implement it as fast as we can.
Speaker 1:
31:27
So, um, so that can help in terms of the it side. Um, and, and also I could not agree more on the human capital side. A literally we were sharing a literally last night I was part of a panel and, uh, we tend to get into the flesh a discussions about technology and it and AI and all of this, but ultimately people that implemented or not, uh, and make it successful or not. So that, that point as well. Um, I wanted to also ask you about, because this is, this is like probably the biggest so far project in the history of, of um, of the world, right? The one belt one road. It's a, it's an incredibly massive undertaking, um, in terms of infrastructure and, and trade routes and streamlining, uh, transportation of goods from Asia to Europe. Um, I think it's been already funded by around 50 to 60 billion from the Chinese government. What do you see from your perspective as pluses and challenges of this huge project? And obviously also it kind of leads to a lot of tensions right in between the different geo political parties of the world. I,
Speaker 5:
32:35
I can't agree more with you that this is the largest area development project of all types. More than 150 countries and international organizations in Europe, Asia, Middle East, Latin America, and Africa have signed on in one way or the other, uh, to the, uh, initiative. The belt and road initiative helps countries to connect better and, uh, connectivity is destiny as we know well now and countries can enrich their own development plans and use the belt and road resources to accelerate them. It is not about adding new things. It can be just about accelerating what we have in mind anyway, or it can be about revitalizing existing assets in our territories. The global demand for infrastructure investment is estimated at around three point 7 trillion US dollar annually, only two point 7 trillion, ah, invested is each year. Hence we are talking about and a gap of 1 trillion US dollars. And um, the, uh, budget for the belt and road, which is estimated between one and 8 trillion US dollars can contribute to close that it, that gap
Speaker 5:
34:28
in respect to upgrading and revitalizing existing infrastructure. I like to cite the uh, investment in the Greek port of Curios. The port ranked 93rd among the hundred biggest ports of the world. Now it has reached 36th position. Of course this is through the rerouting of the Costco volumes, but uh, it has significantly improved the position of that port but not only the port benefits from this, it's the entire Greek ecosystem and economy while the Belden road can, can help in a various set areas as as highlighted. They also, the initiative also changes the relation between China and other countries because China has moved as outlined by an EU commission document, uh, called EU China strategic outlook from a strategic partner to a negotiation negotiation partner, which means it is now time that your hub defines its own strategy towards the belt and road and the new developments.
Speaker 5:
36:07
Some circuits understand the belt and road as a, a vehicle to exert a soft power. And on partners. Um, I think that historically China has not been a colonial power, but a nation of great business people and, um, any country investing billions abroad is looking for some political and economic cloud. The Marshall Plan that aim that rebuilding the nation stone by World War Two had also its economic and political agenda, namely to limit the expansion of communism. Three Lanka had the challenge with repaying the China tapped, uh, which fueled concerns about the belt and road initiative being adapted, trap diplomacy. Uh, the, the concrete result of that inability to repay was the 19 nine year lease of combined total port to China. China rejects the debt trap accusation, but it also admits that maybe sometimes things got a little bit out of hand. And, uh, I see a, a clear change in the way of how China communicates and positions, uh, itself. And, uh, looking at the development in Malaysia, the renegotiation of the deal there, uh, shows that there is room for, uh, for balance deals, which always was what, what China promised. And I think it's, it's, it's easy to push all the responsibility to, to China. I think there is also responsibility at the receiving and to do the proper due diligence and come up with projects which are sustainable. We've, we've spoken about and you've mentioned the artificial intelligence,
Speaker 3:
38:30
I'm wanting to ask you also this question in terms of own time and or deliveries because in the last mile in the logistics sector, that's becoming more and more of a big, big theme. How do you see to happening? There's an example, for example in Germany like that you have auto, which is an ecommerce merchant which is able to predict sales behaviors for the next next 30 days. And obviously that leads to much more accurate predictability in the supply chain. But how do you see the role of artificial intelligence and machine learning and all of this
Speaker 6:
39:04
great.
Speaker 5:
39:06
You point out the last mile, the last mile is just the ultimate consequence of supply chain design and management overall. The holy grail of supply chain management is demand forecasting, I believe the one who knows who buys what and where can reduce lead times and redundancies in the chains to the absolute minimum. And the key to achieve this is artificial intelligence, machine learning, deep learning. Hence that is an end of innovation and revolution. Uh, still to come. You mentioned auto and auto seems to be on the good way. There is also Amazon who has a very active there and, and working on pre-positioning inventories to be able to deliver that market to their customers faster. But I think primarily to reduce costs, auto SAS, they created a system that analyzes around 3 billion transactions and 200 variables including sales data, websites, searches and weather information. And they claim that they purchase around 200,000 items a month without human intervention. So that's massive in terms of, um, stuff reduction and efficiency improvements. Surplus stock has declined by fifths and product returns by more than 2 million items a year. This is good for productivity. This is good for customer satisfaction and the planet because, uh, we drive less kilometers. AI will change the supply chain, but it will be a gradual change, uh, led by the large corporations that use the creativity entity teams of smaller startups to drive the innovation.
Speaker 6:
41:32
Okay. Okay. Um,
Speaker 3:
41:34
in terms of the fundamentals a, what you just shared prompted another question in my mind and I I guess bring it to the layer of really practicality because also AI is a term that is may be overused or most nowadays, uh, in, in layman's terms and in, in a layman process. Let's say that you are now a company or manufacturer or it can be a supermarket as well. And then you want to to at the end of the day to more accurately be able at some point, not now, but at some point predict your, your, your demand and, and be more accurate around those predictions. But what would be some of the fundamental steps that you need to make sure that you have, you know, it may be data, it may be other things, but what would be those steps and how do you see, it's almost like step on step two, step three, because usually AI only works if you have the fundamentals, right?
Speaker 5:
42:29
It starts with the data and the first step is to look into the data a company has already, the data sits very often in silos. And breaking these silos by making them visible is the first step. The second step is understanding what data is still missing. Once you have analyzed the um, the um, existing data and uh, this requires, uh, on the operational level to uh, add more sensors and uh, on the external layer to tap into the ecosystem data, which is big data once the data level has been resolved. The next is building the platform and the analytics. Um, the first step in analytics is to have a baseline meaning to use that data to clearly understand what is going on in the business and use graphs, dashboards to make that data understandable. And that's also heavy work. And the third step is, is building tools to optimize your process processes. First in design you see how different workstations perform and there are gaps and you can look into the gaps and see how they differ the stations, different design and then improve the ones performing less well. And you can use analytics to increase decision making. Speed meaning data and having data is wonderful. But with a big data operational data, small data, uh, you will reach very easily the point. And that's a question of days that you realize you cannot handle all this, this data meaning, uh, the,
Speaker 6:
45:18
okay.
Speaker 5:
45:19
The improvements require artificial intelligence algorithm that filter out of the 100,000 data sets, the five data sets which are relevant and then drive decision making and corrective action.
Speaker 6:
45:37
Okay.
Speaker 3:
45:39
In terms of the human capital and moving a little bit to the side where it's about people, it's about skill sets. It's about, you know, what type of leadership do you need to, to drive all this innovation, all these technologies. I'm specifically talking first and foremost about skills. And there was a quote I think I saw from the CEO of Upwork, uh, Stefan, Stephane Kasriel, I think he is his name. He was saying that they will not be a shortage of jobs in the future. That they will be a shortage of skills in the future. In the realm of, of the supply chain, industry, logistics industry. What do you see as the
Speaker 6:
46:16
okay
Speaker 3:
46:16
skills, uh, that will be in badly need now or in the next couple of years. And maybe you already seeing some shortages of those skills in certain places.
Speaker 6:
46:30
[inaudible]
Speaker 5:
46:31
looking at vacancies and companies and what they are looking for and what they talk about. There are certain jobs which are growing fast and very short in, in demand. And, and uh, the most mentioned is probably, uh, the data scientists and data analysts. Uh, but as I have mentioned before, it is not about one person, it's about teams that can deliver. Um, then on the next level is probably software and applications developers and analysts, uh, uh, industrial and production engineers, process automation specialists. And it becomes clear that these are all the skills and, uh, people needed to, to do what we have spoken, uh, about before. And, uh, what I would like to mention here is that there were also jobs which, uh, become less important and, uh, that it's not only about finding new people from outside, it's also about retraining people insight. Although this is hard and it depends very much on how, how the DNA of a company looks like. But, uh, there is a surplus of factory workers. There is a surplus of data entry clerks, there is a surplus of accountants and auditors, um, bookkeepers, et cetera. And these people have all their life worked with data, analyze data and some can for sure be retrained to fill the gaps. Uh, in the, in the, let's say fourth industrial revolution, uh, requirement's space. It's a, it's an excellent point.
Speaker 1:
48:39
Um, regarding c level executives and board members and basically the people leading companies, how do you see some of the attributes that this, uh, level of management needs in order to keep their companies relevant for the foreseeable future?
Speaker 5:
48:57
At the core, leadership will never change. Leadership is about doing the right thing and knowing how to do it. There is that famous HBR article which talks about great and good leaders. So you can be very good in the house, uh, meaning you can be very well aware of your impact on people. You can be a great sense maker and understand the context. You can be a great communicator and the dictators of this world and some of them have been great in this field, but that doesn't mean that what the leader does leads to the right outcome. And, uh, in today's world, uh, where we reaching the limits of our planet and proper probably also, uh, the limits of our social coherence. Um, it is very important that leaders act responsibly and, uh, take a position of positive contribution to society and the environment. In the fourth industrial revolution, of course the tactics will change and a will continues, lead change. Uh, we get new channels of communication, uh, new media. Uh, but in fact I see it to a large extent as an evolution of previous channels. Uh, radio became podcasts and TV, Facebook videos. Mm.
Speaker 1:
51:05
In terms of, to, to dwell a little bit deeper, um, not to go a little bit deeper into them this side, cause it's, it's ultimately, it's, um, is the, the make or break of a company, you know, it comes from the top. I mean if the top is, is, is um, leading the company in a good way, obviously the company will be successful and the other way around, of course it's, it's, it's as um, applicable. Um,
Speaker 5:
51:30
okay.
Speaker 1:
51:30
If I'm to ask you what would be the two or three words or um, you know, whether it is a, it is also authenticity or walking the talk or vision or, I mean I'm, I'm just throwing some, a menu list, right? But what would be some of this type of characteristics that would stand out for you in terms of what makes a
Speaker 4:
51:52
yeah,
Speaker 1:
51:52
good leaders. So definitely they need to look after the sustainability factor as well. But just in terms of the, you know, the, the lead that's called what makes lead, what is leadership.
Speaker 5:
52:01
Okay. Leadership is responsibility and good leaders care. They care about the people that work in the organization. They care about customers, they care about the ecosystem.
Speaker 4:
52:21
Okay.
Speaker 5:
52:21
They all operating in, they have the courage to take the right decisions. They have the ability to federate the forces within the company to execute on the good strategies. That's what I, I think is at the, at the center. This requires also very good, uh, communication skills. But that's, that's all a given. That's done. The normal set, uh, I leaders have to master in the digital age. I think leaders have also to show example and work digitally as well. And I think there is a shortage on the shortcoming. Um, uh, with new generations, this will definitely change, but you can hardly a make an enterprise, a digital enterprise, uh, by continuing at the top, uh, with analog practices.
Speaker 1:
53:38
I have, I will the, I will just throw my 2 cents in because I have a very strong opinion in terms of the, um, the communication and the digital engagement with which a lot of them c level are still not doing, at least in terms of specifically specifically in terms of social media, which I see as a great channel. That free channel almost. Um, uh, I mean it's not almost, it's a free channel in terms of both externally as well as internally because if you put out something on social media, also your organization that sees it. And that's also something that I feel very strongly than much more, uh, leaders should be doing, should be using, shouldn't be tapping on both to showcase their companies, their values, their culture and what they stand for and attract talent to the company as well as, uh, clients. Um, and he's not done enough. I think it's about 60, 65% of the people that are not, um, a c level and not on social media tall. And, um, and just, it's, it's, it seemed like a fundamental digital native strategy for, for a lot of executives to do. And they're not doing it yet at least. Um, I don't know. Do you have a view on that or,
Speaker 5:
54:45
I believe that a social media can be a very useful tool. The speed, uh, new smooths today is unprecedented. And, uh, for the general public, it comes at the end to the, to the leader and the reactions of the leader to certain events when they are happening. And social media is a very effective tool in moments of crisis to uh, take a position and show and assume responsibility and show that the company and the management is, is ready and able to take the right decisions. Um, in general, social media is a very cost effective and I agree with you, a branding tool and a also profiling tool for the executives and you need credibility of executives to be an effective organization.
Speaker 1:
56:03
So to your point with, um, you know, the coming back a little bit to the skillsets and that the fact that data scientists are in high demand, but you know, if we look also at the five to 10 year horizon now, if, if that we might end up in a situation where there's going to be a surplus of them. Right? So how do you see things and the skills may be needed in the five to 10 year type of timeframe,
Speaker 5:
56:25
rather you absolutely right. What I was speaking about this, the current demand of, of jobs and we will be flooded by data scientists by programmers and five to 10 years. And then we will face executives who ask, I need people who are creative. I need people who can think critically. I need people who are strategies. I need people who have very strong social skills, who can deal with this data driven people. And I think we need to start now to prepare for this because the preparation for building the next wave of data scientists and programmers as well on the way. Excellent. Well thanks a lot for the sharing. Um, appreciate your time, appreciate all the good examples and, and thanks. Um, big, big thanks for joining us today. My pleasure. Ratto
Speaker 1:
57:28
thank you for listening to our podcast. If you liked what you heard, be sure to follow us on Rapala mario.com/podcast for all the show notes, links and extra tips covered in the interview. Make sure also to subscribe to our emailing list to get the news in the nick of time. If you're listening through a streaming platform like iTunes or stitcher and you liked what we do, please kindly review and give us five stars so we can keep the energy flowing and get more people to find out about our podcast. I'm most active on Linkedin, so do feel free to follow me to stay tuned for our latest articles as well as future guests for the podcast. And if you have any suggestions or any other ideas, please feel free to write to me. I respond to all, and also please make sure not to miss our next episode where we will be having a few other c level and top leaders in supply chain joining us. Stay tuned.
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